Inter-State trade character of commission-agent purchases exempted tax where goods moved for out-of-State principals.

Purchases of foodgrains, oil-seeds and mahua flower through a commission agent for ex-U.P. principals were held to be inter-State transactions because the true character of the arrangement depended on the movement of goods pursuant to the out-of-State principal's purchase. A commission agent was treated as the extended hand of the principal, so the purchases were attributable to the principal and fell within inter-State trade and commerce. Filing declaration forms did not change the real nature of the transaction, and the earlier authorities cited were found inapplicable. No tax was leviable on the assessee under the relevant provisions.

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Issues: Whether purchases of foodgrains, oil-seeds and mahua flower made by a commission agent on behalf of ex-U.P. principals were purchases in the course of inter-State trade and commerce so as to escape levy of tax under the relevant provisions.

Analysis: The decisive factor was the true character of the transaction. Where goods are purchased through a commission agency for an out-of-State principal and their movement from the State occurs in pursuance of that arrangement, the purchase is attributable to the principal and falls within inter-State trade and commerce. A commission agent acts only as an extended hand of the principal, and the filing of declaration forms does not alter the real nature of the transaction. The earlier authorities relied upon by the Tribunal were held inapplicable on the facts.

Conclusion: The purchases were in the course of inter-State trade and commerce and no tax was leviable on the assessee under the relevant provisions.

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