Commercial identity of processed timber breached resale declaration and triggered the sales tax proviso.

Round timber logs and sized timber were treated as distinct commercial commodities, because processing logs into sized timber created a market product with a different commercial identity. Where the purchaser had undertaken to resell the timber bought under declaration, converting it before sale breached that undertaking. The sale of the converted product therefore attracted the proviso to section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act.

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Issues: Whether conversion of round timber logs into sized timber resulted in a different commercial commodity and thereby violated the undertaking in the declaration so as to attract the proviso to section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act.

Analysis: Round timber logs and sized timber were held to be distinct commercial commodities in the market, catering to different needs, even though sized timber is obtained from logs by processing. The purchaser had undertaken to resell the timber purchased under the declaration, but instead processed it into sized timber and sold that product. On that basis, the conversion amounted to bringing into existence a different commodity from the one purchased, and the declared undertaking was breached.

Conclusion: The question was answered in the affirmative. The conversion of logs into sized timber created a different commercial commodity, and the sale of that commodity violated the undertaking, making the assessee liable under the proviso to section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act.

Ratio Decidendi: Where a dealer purchases a commodity on the undertaking to resell that very commodity, conversion of that commodity into a commercially distinct product before sale constitutes breach of the declaration and attracts the relevant taxing proviso.

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