Tax-free purchase certificate breach attracts first-sale tax when goods are not resold in the State.

Goods obtained tax-free on a certificate for resale in Orissa attracted tax on the first sale when the stated resale condition was not fulfilled. The purchaser did not resell the timber and sleepers in the State but exported them outside it, so the exemption failed and the proviso to section 5(2)(a)(ii) of the Orissa Sales Tax Act applied. The levy was treated as independent of the later supply to the Sleeper Control Officer and was not barred as an inter-State sale under Article 286. The earlier authorities' finding of tax liability was upheld and no referable question of law survived.

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Issues: Whether the appellant was liable to sales tax on the first purchase of timber and sleepers under the proviso to section 5(2)(a)(ii) of the Orissa Sales Tax Act, 1947, when the goods were obtained against a certificate stating that they were intended for resale in Orissa.

Analysis: The goods were purchased tax-free on the basis of the appellant's certificate that they would be resold in Orissa. The appellant did not resell them in the State but exported them outside the State, so the condition on which exemption had been granted was not fulfilled. The tax was levied on the first sale to the appellant, which was independent of the subsequent supply to the Sleeper Control Officer and was not an inter-State sale. In these circumstances, the proviso to section 5(2)(a)(ii) applied and the earlier authorities rightly held the tax payable. No open question of law survived for reference.

Conclusion: The liability to tax under the proviso was upheld and the appeal failed.

Ratio Decidendi: Where goods are purchased tax-free on a certificate for resale in the State, failure to comply with that certificate attracts tax on the first sale under the proviso to section 5(2)(a)(ii), and such levy is not barred by Article 286 when the purchase is not itself an inter-State sale.

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