Conditional sales tax deduction fails when resale undertaking is breached; constitutional bars under Article 286 do not apply.

A conditional deduction under section 5(2)(a)(ii) of the Orissa Sales Tax Act, 1947 allowed exclusion from taxable turnover only so long as goods purchased for resale in Orissa were in fact so used; once the undertaking in the registration certificate was breached, the statute required the sale price to be included in the purchaser's taxable turnover. The transactions were not shown to be inter-State trade or commerce, so Article 286(2) did not bar assessment. Article 286(1)(a) also did not prevent tax on the first sale within Orissa where the statutory condition attached to the deduction had failed, and the inclusion of the amounts in taxable turnover was upheld as valid.

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Issues: Whether the inclusion of sale prices in the assessee's taxable turnover, after breach of the undertaking in the registration certificate under section 5(2)(a)(ii) of the Orissa Sales Tax Act, 1947, was valid and whether Articles 286(1)(a) or 286(2) of the Constitution barred such assessment.

Analysis: The deduction allowed under section 5(2)(a)(ii) was conditional, because the statute itself provided that where goods purchased on the footing that they would be resold in Orissa were used for other purposes, the price of such goods would be included in the purchaser's taxable turnover. The transactions in question were not shown to be in the course of inter-State trade or commerce, so Article 286(2) did not apply. Nor did Article 286(1)(a) prevent the State from taxing the first sale within Orissa on the basis of the statutory condition attached to the deduction. The assessment was therefore supported by the scheme of the Act and by the constitutional position.

Conclusion: The challenge to the assessment failed, and the inclusion of the amounts in taxable turnover was upheld as valid.

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