Resale declaration breached when tax-free chemicals were converted into mixtures and sold as a different commodity.

A registered dealer who obtained acids and chemicals without sales tax on a declaration that they were meant for resale breached that declaration when the goods were used to prepare mixtures and sold in altered form. The decisive test was whether the same goods were resold as purchased; a manufacturing process was not the key inquiry. Because the chemicals lost their identity and the mixtures were a different commercial commodity, the goods were not resold as declared. The earlier tax concession therefore became withdrawable, and tax was recoverable under the proviso to section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act, 1947.

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Issues: Whether a registered dealer who purchased acids and chemicals free of sales tax on a declaration that they were intended for resale, but used them in preparing mixtures for sale, violated the declaration and became liable to tax under the proviso to section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act, 1947.

Analysis: The statutory scheme contemplated single-point taxation and postponed the levy until the goods reached the consumer or an unregistered dealer. The benefit of purchase without tax depended on the declaration that the goods were bought for resale. Once the dealer used the chemicals to prepare mixtures and sold them in that altered form, the goods purchased had not been resold as such. The question was not whether a manufacturing process had taken place, but whether the goods were resold in the form represented in the declaration. Since the chemicals lost their identity in the mixtures and the mixtures were not the same commodity as the chemicals, the declaration condition was breached and the earlier tax benefit became withdrawable.

Conclusion: The dealer was liable to pay tax under the proviso to section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act, 1947, and the Tribunal was wrong in holding otherwise.

Ratio Decidendi: Where a registered dealer obtains purchase without tax on a declaration of resale, the decisive test is whether the same goods are resold as purchased; if the goods are transformed into a different commercial commodity, the declaration is violated and the deferred tax becomes recoverable.

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