Reading down cannot expand State tax power over inter-State transactions; factual determination of transaction nature remains essential.

State taxing power is confined by the constitutional distribution of legislative competence, so a fiscal provision cannot operate against inter-State transactions that fall outside State jurisdiction. The doctrine of reading down applies only where statutory language is reasonably capable of more than one meaning; it cannot be used to rewrite a clear provision or to confer an unexpressed restriction. The nature of the transaction must first be determined on evidence, and if it is inter-State, the State levy cannot apply. On that basis, section 8-E could not be sustained to cover inter-State sales or purchases.

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Issues: Whether section 8-E of the Uttar Pradesh Trade Tax Act, 1948 could be sustained by reading it down so as to apply only to intra-State sales and purchases, and whether it could validly be invoked in relation to inter-State transactions.

Analysis: The statutory power of a State to levy or collect tax is confined by the constitutional distribution of legislative competence and by the prohibition against imposing tax on sales or purchases taking place outside the State or in the course of import or export. The doctrine of reading down applies only where the statutory language is reasonably capable of more than one construction; it cannot be used to rewrite a provision or to supply a restriction that the Legislature did not express. Where the challenge concerns inter-State transactions, the relevant inquiry is factual and not to be resolved by assuming the character of the transaction from the tax provision itself. The authority must determine, on evidence, whether the transaction is intra-State or inter-State, and if it is inter-State, the State provision cannot operate against it.

Conclusion: Section 8-E could not be read down so as to authorise its application to inter-State transactions, and it could not be sustained on that basis against the constitutional objection.

Final Conclusion: The appeal succeeded to the extent that the matter was remitted for factual determination of the nature of the transactions, and the impugned provision was held inapplicable to inter-State transactions.

Ratio Decidendi: The doctrine of reading down cannot be invoked to alter the clear scope of a fiscal provision or to confer State taxing power over inter-State transactions prohibited by the Constitution; the nature of the transaction must first be determined on facts.

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