Strict construction of concessional sales tax declarations: transfer of intermediate goods for further manufacture breached the declared use.

Concessional purchase tax under the Orissa Sales Tax Act was available only where declared raw material was used within the State in manufacturing or processing goods for sale. The expression "for sale" qualified the manufacturing use, and the concession had to be strictly construed. Where raw material was used to make an intermediate product that was not sold but transferred to other units for further manufacture, the use fell within "any other purpose" under the proviso. The declaration was therefore contravened, and differential tax became payable.

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Issues: Whether purchasing raw material at concessional tax rate on the declaration that it would be used within the State in the manufacture or processing of goods for sale was violated when the intermediary product manufactured from such raw material was transferred to other branches for further manufacture of the final product and not sold as such.

Analysis: The concessional levy under the fifth proviso to section 5(1) of the Orissa Sales Tax Act, 1947 was available only where the declared goods were used within the State in the manufacture or processing of goods for sale. The expression "for sale" governed the manufacturing use contemplated by the declaration, and a tax concession had to be construed strictly. On the facts, the raw material was used to manufacture bulk premix, but that product was not sold; instead it was transferred to other units for further processing into bulk explosive. Such transfer was treated as use for "any other purpose" within the meaning of the proviso, attracting liability to pay the differential tax.

Conclusion: The declaration was contravened and the assessee was liable to pay the differential tax. The appeals were therefore dismissed.

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