Deeming mere use of goods as a sale exceeds taxing power; writ relief remains available against an ultra vires levy.

The settled meaning of "sale of goods" requires transfer of property for consideration, so a State cannot use a deeming provision to treat mere user of goods from stock as a sale and enlarge its taxing field beyond constitutional competence. On that reasoning, the second proviso to section 2(12) of the Assam Sales Tax Act, 1947 was ultra vires and the assessments based on it were invalid. Where the levy itself rested on a void provision, Article 226 relief was available despite statutory remedies, and the assessment orders were liable to be quashed and their enforcement restrained.

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Issues: (i) Whether the second proviso to section 2(12) of the Assam Sales Tax Act, 1947, deeming use of goods from stock to be a sale, was beyond the legislative competence of the State Legislature under the relevant constitutional entries and therefore invalid. (ii) Whether writs under Article 226 could issue to quash the assessments and restrain enforcement despite the availability or exhaustion of statutory remedies.

Issue (i): Whether the second proviso to section 2(12) of the Assam Sales Tax Act, 1947, deeming use of goods from stock to be a sale, was beyond the legislative competence of the State Legislature under the relevant constitutional entries and therefore invalid.

Analysis: The expression "sale of goods" in the constitutional entries was held to bear its settled legal meaning, requiring transfer of property from seller to buyer for consideration. Mere user of goods from stock did not satisfy those elements. The addition of the word "use" could not enlarge the taxing field beyond Entry 54 of List II of the Seventh Schedule to the Constitution of India, nor could it be justified as a tax on purchase, since the proviso in terms dealt with use and not with a completed sale or purchase within the State. A State Legislature could not by deeming fiction convert user into sale and thereby tax transactions outside the constitutional grant, especially where purchase had taken place outside the State.

Conclusion: The second proviso to section 2(12) was ultra vires and unenforceable, and the assessments made under it were invalid.

Issue (ii): Whether writs under Article 226 could issue to quash the assessments and restrain enforcement despite the availability or exhaustion of statutory remedies.

Analysis: The assessments were founded on a provision found void. In such a situation, the statutory remedy could not be treated as an adequate or efficacious bar to constitutional relief. The existence of alternative remedies did not prevent interference where enforcement of an ultra vires levy would perpetuate injustice, and the impugned orders were without legal authority.

Conclusion: Writ relief was maintainable and justified, and the assessment orders were liable to be quashed with prohibition against enforcement.

Final Conclusion: The impugned taxing provision was held unconstitutional, and the resulting assessment orders were set aside with consequential writ relief in favour of the petitioner.

Ratio Decidendi: A State Legislature cannot, under the constitutional power to tax sales or purchases of goods, deem mere user of goods to be a sale and thereby enlarge its taxing competence beyond the settled legal meaning of sale of goods; when a levy rests on such an ultra vires provision, writ relief under Article 226 is maintainable notwithstanding ordinary statutory remedies.

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