Territorial limits cannot be implied into sales tax exemptions where the declaration is complied with in express terms.

Section 5(2)(a)(ii) of the Bengal Finance (Sales Tax) Act, 1941 was construed without reading in any territorial limit, so "resale", "manufacture" and "sale" were not confined to transactions inside Delhi unless the statute expressly said so. The Court treated the deduction and second proviso as turning on the declared intended use of the goods, not on where the later resale or manufacture occurred. Where registered dealers furnished declarations in the prescribed unamended form and the goods were in fact resold or used in manufacture in accordance with that declaration, the purchase price could not be added to taxable turnover and penalty could not be sustained absent proof of a different actual use.

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Issues: (i) Whether, for the purpose of section 5(2)(a)(ii) and the second proviso of the Bengal Finance (Sales Tax) Act, 1941, the expressions "resale", "manufacture" and "sale" were confined to transactions taking place inside Delhi. (ii) Whether the price of goods purchased by registered dealers could be included in their taxable turnover under the second proviso, and whether penalty could be imposed, where the declarations were in the unamended prescribed form and the goods were resold or used in manufacture outside Delhi.

Issue (i): Whether, for the purpose of section 5(2)(a)(ii) and the second proviso of the Bengal Finance (Sales Tax) Act, 1941, the expressions "resale", "manufacture" and "sale" were confined to transactions taking place inside Delhi.

Analysis: The statutory language used no territorial limitation after the words "resale", "manufacture" or "sale". In a taxing statute, words cannot be read in by implication unless that is plainly necessary to avoid absurdity or unworkability. The scheme of the Act showed that the deduction under section 5(2)(a)(ii) depended on the declared intended use of the goods, while the second proviso operated only when the purchaser used the goods for a purpose different from that declared. The Court held that there was no cogent reason to insert the words "inside the Union Territory of Delhi" into the provision, especially when the Legislature itself later amended only "manufacture" and "sale" but did not restrict "resale".

Conclusion: "Resale" under section 5(2)(a)(ii) included resale outside Delhi, and before the amendment "manufacture" and "sale" also were not confined to Delhi.

Issue (ii): Whether the price of goods purchased by registered dealers could be included in their taxable turnover under the second proviso, and whether penalty could be imposed, where the declarations were in the unamended prescribed form and the goods were resold or used in manufacture outside Delhi.

Analysis: The declarations furnished by the purchasing dealers were in the prescribed unamended form and stated only that the goods were purchased for resale or for use as raw materials in the manufacture of goods for sale. Since that declaration was literally complied with when the goods were resold outside Delhi or used in manufacture outside Delhi and the manufactured goods were sold outside Delhi, there was no breach of the declared intention. The second proviso could not be invoked to add the purchase price to the purchasers' taxable turnover. Penalty was also unsustainable because it depended on the same misconstruction, and there was no proof that the goods had been used for any purpose other than that declared.

Conclusion: The purchase price was not includible in the assessees' taxable turnover under the second proviso, and the penalty order could not stand.

Final Conclusion: The appeals and writ petitions succeeded, the adverse assessments and penalty were set aside, and the matters were directed to be reconsidered only on the limited question left open by the decision.

Ratio Decidendi: In a taxing statute, a geographical restriction cannot be read into an exemption or deduction provision unless the language plainly requires it, and a purchaser cannot be saddled with liability under a proviso when the declaration furnished by him has been complied with according to its express terms.

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