The revising authority has referred the following three questions of law for the opinion of this Court :

" (1) Whether, under the facts and circumstances of the case, the Additional Revising Authority, Gorakhpur Range, Gorakhpur, was legally justified to hold that the purchases of foodgrains and oil-seeds in U. P. by agents of ex-U. P. principals were not liable to tax under section 3-D being inter-State purchases within the meaning of section 3 (a) of the Central Sales Tax Act ?

(2) Whether, under the facts and circumstances of the case, the assessee is liable to pay tax under section 3-D (2) of the U. P. Sales Tax Act on sales of foodgrains made by him to unregistered dealers on behalf of ex-U. P. principals ?

(3) If the answer to the first question is in the negative and to the second question in the affirmative then whether the Additional Judge (Revisions), Gorakhpur, was justified in setting aside the assessment ?"

The assessee dealt in foodgrains and oil-seeds. It purchased these commodities on its own account as also on commission for ex-U. P. principals. The purchases made for ex-U. P. principals were from three sources, (i) from registered dealers, (ii) from cartmen, and (iii) from agriculturists. In the case of purchases made from the registered dealers, the assessee paid the price of the commodity purchased and thereafter the registered dealers used to despatch the goods to the ex-U. P. principals. In the case of purchases made from cartmen and agriculturists, the assessee after purchasing the goods used to despatch them on the same day if railway wagons were available but, in case they were not available, the longest interval not being more than three days. The Sales Tax Officer assessed these purchases under section 3-D of the Act. He repelled the assessees contention that the purchases made were in the course of inter-State trade and commerce. Apart from these transactions, the assessee also sold foodgrains received in its commission agency from the ex-U. P. dealers. These sales were taxed under section 3-D (2), although the assessee contended that he was not the first purchaser of these commodities. The view taken by the Sales Tax Officer was upheld on appeal but the revising authority held in favour of the assessee.

It will be convenient to take up the second question first, as the discussion is short. In order to answer this question, it is necessary to extract the relevant part of section 3-D (1) and section 3-D (2) :

" 3-D. (1) Except as provided in sub-section (2), there shall be levied and paid, for each assessment year or part thereof, a tax on the turnover, to be determined in the prescribed manner. . . . . .

3-D. (2) Where in respect of any goods notified under sub-section (1), the purchaser or, as the case may be, the first purchaser, whether on his own account or on account of any one else, is a person other than a registered dealer, there shall be levied and paid, for each assessment year or part thereof, a tax on the turnover, to be determined in the prescribed manner, of sale of such goods by the dealer who sells the goods or through whom the goods are sold to such purchaser, and the rate of tax shall be the same as notified under sub-section (1 ). "

Although the language of section 3-D (2) is little involved, but a close perusal thereof indicates that where goods notified in sub-section (1) are first purchases by a person, who is not a registered dealer from a selling agent, the turnover will be assessed in the hands of the selling agent. In the present case, the unregistered dealers had purchased from the assessee, who was the selling agent of ex-U. P. principals. Thus, two of the conditions required for the applicability of section 3-D (2) are fulfilled, viz. , the purchases should be made by an unregistered dealer and the sale should be made by a purchasing agent. The question, however, remains as to whether the purchases made by the unregistered dealer from the assessee was fir