Consignment transfers cannot defeat tax where tax-free purchases against a registration certificate are later used to evade levy.

Goods dispatched on consignment are not sales in the ordinary sense, but the proviso was held applicable where foodgrains and oil-seeds were purchased against a registration certificate without payment of purchase tax and later sent outside the State in a manner inconsistent with that tax-free facility. The court treated the subsequent consignment transfers as an attempted tax avoidance device, bringing the purchases within the second proviso to Section 5(2)(a)(ii) of the Punjab General Sales Tax Act, 1948. The assessment was upheld and the challenge failed.

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Issues: Whether the petitioner was rightly assessed to tax under the second proviso to Section 5(2)(a)(ii) of the Punjab General Sales Tax Act, 1948 on foodgrains and oil-seeds purchased against its registration certificate and thereafter sent outside the State on consignment basis.

Analysis: Goods sent on consignment basis are not sales in the ordinary sense, but the petitioner had purchased the commodities against its registration certificate without paying purchase tax and thereafter attempted to avoid sales tax by dispatching them outside the State as consignment transfers. The statutory proviso was attracted because the registration certificate had been used in a manner inconsistent with the tax-free purchase facility and the subsequent disposal of the goods was an attempt to evade tax.

Conclusion: The assessment under the second proviso to Section 5(2)(a)(ii) of the Punjab General Sales Tax Act, 1948 was upheld and the challenge failed.

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