Inter-State purchase test requires instruction, pursuit, and clear dispatch correlation; remand for transaction-wise scrutiny upheld.

The Allahabad HC upheld a Tribunal remand for transaction-wise scrutiny under the U.P. Trade Tax Act, holding that the assessing authority had not examined each purchase individually before rejecting the claim. The Tribunal was entitled to require reconsideration where the nature of the purchases depended on the legal test for inter-State transactions and purchases made by a commission agent for an ex-U.P. principal. Such purchases qualify as inter-State only when made on the principal's instruction, in pursuance of that instruction, and when the subsequent dispatches can be clearly linked to those purchases. The remand was therefore sustained.

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Issues: Whether the Tribunal was justified in remanding the matter to the assessing authority for examination of each transaction in the light of the legal test governing inter-State purchases and purchases made by a commission agent on behalf of an ex-U.P. principal.

Analysis: The revisional court held that the Tribunal had power under Section 10 of the U.P. Trade Tax Act, 1948 to remit the matter for reconsideration. Since the assessing authority had not examined each transaction and had rejected the claim without such scrutiny, the Tribunal was right in requiring a transaction-wise examination. The governing principle was that purchases can be treated as inter-State purchases only when they are made on the instruction of the ex-U.P. principal, in pursuance of such instruction, and the subsequent dispatches bear a clear correlation with those purchases.

Conclusion: The remand was upheld and the challenge to the Tribunal's order failed.

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