Resale deduction survives conversion of scrap into rods and rounds when goods remain within the same taxable category.

A purchasing dealer who bought scrap for resale and later converted it into rods and rounds before sale was not treated as having used the goods for any purpose other than resale. Applying the literal meaning of the proviso to section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act, the conversion did not defeat the resale deduction because the provision does not require resale in the identical form of purchase. The goods remained within the broad category of iron and steel, so the second proviso was not attracted and the additional demand could not stand.

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Issues: Whether a purchasing dealer who buys scrap on a declaration for resale in Orissa and thereafter sells the goods after converting the scrap into rods and rounds can be said to have utilised the goods for any other purpose so as to attract the second proviso to section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act.

Analysis: The statutory scheme permits deduction for purchases made for resale, and the second proviso is attracted only when the goods purchased for resale are utilised for a purpose other than resale. The provision does not require resale in the identical form in which the goods were purchased. Applying the ordinary meaning of the words used and the literal rule of construction, the conversion of scrap into rods and rounds, both falling within the same broad taxable category of iron and steel, does not amount to utilisation for any other purpose. The Court also found no basis to read into the proviso a restriction that would deny the exemption merely because the goods underwent conversion before resale.

Conclusion: The second proviso to section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act was not attracted, and the additional demand raised by the assessing authority could not stand. The writ applications were therefore allowed in favour of the assessee.

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