Processed gram becomes a distinct commodity in trade, triggering the sales tax proviso on declared purchases.

Green gram and black gram processed into dal were treated as commercially distinct commodities, because the change in form altered their identity in ordinary market understanding. On that basis, the sale of dal was not a resale of the goods in the same form in which they were purchased. The proviso to section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act, 1947 applies where goods bought on declaration are used otherwise than as declared, so the original purchase value is brought back into taxable turnover. A declaration referring to a class of goods did not prevent the proviso from operating when the purchased goods and the sold goods were substantively different.

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Issues: (i) Whether green gram and black gram converted into dal retain the same identity as the original goods. (ii) Whether the proviso to section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act, 1947 is attracted when the goods purchased on declaration are converted into dal and sold within the State.

Issue (i): Whether green gram and black gram converted into dal retain the same identity as the original goods.

Analysis: The decisive test is whether the goods remain the same in ordinary commercial understanding after processing. Conversion of gram into dal is not a mere continuation of the same commodity in the same form. The goods are understood differently in the market, serve different purposes, and are treated separately in commercial parlance. The change in form brings about a change in identity of the goods.

Conclusion: Green gram, black gram, and dal are different commodities.

Issue (ii): Whether the proviso to section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act, 1947 is attracted when the goods purchased on declaration are converted into dal and sold within the State.

Analysis: The main provision allows deduction of purchases made from registered dealers against a declaration that the goods are intended for resale in Orissa. The proviso brings the purchase value back into taxable turnover if the goods are used for a purpose other than that declared. Since the purchased grams were not resold in the same form but were converted into dal before sale, the original undertaking was not fulfilled. The fact that the registration certificate referred to a class of goods does not prevent the proviso from operating where the goods purchased and the goods sold are not the same in substance and form.

Conclusion: The proviso to section 5(2)(A)(a)(ii) is attracted.

Final Conclusion: The reference was answered in favour of the revenue, and the purchase turnover of the goods became liable to inclusion in taxable turnover under the proviso.

Ratio Decidendi: Goods that undergo processing and emerge as commercially distinct commodities are not treated as the same goods for the purpose of a declaration-based tax deduction, and the proviso to the deduction provision applies when the goods are not resold in the form in which they were purchased.

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