Inter-State purchase characterization requires clear factual proof that the contract caused movement of goods across State boundaries.

Inter-State character of purchases depended on a clear factual finding that the contract or conduct of the parties occasioned movement of goods from one State to another. The Tribunal had relied on earlier precedent without identifying the evidence or conduct that satisfied this test, so its conclusion on pulses purchases could not stand and required fresh consideration. The same approach applied to rice purchases from Nepali dealers, where the nature of the transaction and the alleged purchasing-agent arrangement had not been properly examined on the facts. The disputed turnover issues were therefore remitted for reconsideration on merits.

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Issues: (i) Whether the Tribunal could treat purchases of pulses made by the dealer for ex-U.P. principals as inter-State purchases without recording a clear factual finding that the contract occasioned movement of goods outside the State; (ii) Whether purchases of rice from Nepali dealers for ex-U.P. principals were liable to be examined afresh as transactions falling within the inter-State trade provisions.

Issue (i): Whether the Tribunal could treat purchases of pulses made by the dealer for ex-U.P. principals as inter-State purchases without recording a clear factual finding that the contract occasioned movement of goods outside the State.

Analysis: The benefit of the principle governing inter-State transactions could be invoked only when the facts showed that the purchase contract, even if oral or inferred from conduct, occasioned movement of the goods from one State to another. A mere reproduction of observations from earlier decisions was not enough. The Tribunal had not stated what conduct or evidence established that the disputed purchases satisfied that test, and therefore there was no proper finding of fact to support the application of the earlier precedent.

Conclusion: The Tribunal's conclusion on these purchases could not be sustained and the matter had to be reconsidered afresh.

Issue (ii): Whether purchases of rice from Nepali dealers for ex-U.P. principals were liable to be examined afresh as transactions falling within the inter-State trade provisions.

Analysis: In respect of the rice transactions, the record showed a dispute as to whether the goods moved under a contract of purchase or whether the arrangement fell within the relevant inter-State provision. The revising authority had proceeded on the basis that the assessee acted as a purchasing agent, but the factual foundation for that conclusion was not adequately examined. Since the nature of the transaction depended on the surrounding facts and not on assumption, the proper course was to send the matter back for a fresh determination on merits.

Conclusion: The Tribunal's decision on the rice purchases also required reconsideration on the factual matrix.

Final Conclusion: The revision succeeded, the impugned order was set aside, and the disputed purchase turnover issues were remitted to the Tribunal for decision afresh on merits.

Ratio Decidendi: The exemption or inter-State character of purchases can be determined only on a clear finding that the contract or conduct of the parties occasioned movement of goods from one State to another, and where such factual finding is absent, remand is warranted.

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