Purchase tax levy fails when taxable event is post-purchase use, consignment, or export-linked disposal beyond State power.

Section 3-AAAA of the U.P. Sales Tax Act, 1948 was analysed as a levy that operated only when the purchasing dealer did not resell the goods in the same form and condition, so the charge was triggered by post-purchase use, consignment outside the State, or export-linked despatch rather than by the purchase simpliciter. On that construction, the provision sought to tax matters falling outside State legislative competence, and the non-resale wording was treated as a substantive charging condition, not a mere exemption. The provision was therefore considered unconstitutional and void.

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Issues: Whether section 3-AAAA of the U.P. Sales Tax Act, 1948 was beyond the legislative competence of the State Legislature because, in substance, it imposed tax on the use, consignment, or export-related disposal of goods rather than on the purchase itself.

Analysis: The charging provision was construed as operating only when four cumulative conditions were satisfied, with the decisive condition being the purchasing dealer's non-sale of the goods in the same form and condition. On that construction, the levy was not triggered by the purchase simpliciter, but by subsequent acts after purchase that made such resale impossible. Those subsequent events included use of the goods in manufacture, despatch outside the State otherwise than by sale, and despatch in the course of export. The Court applied the principle that the taxable event is the event that immediately attracts the charge, and relied on the later Supreme Court decision holding that a levy which in substance falls on consignment, manufacture, use, or export-linked movement is outside State competence. The Court also rejected the argument that the non-resale wording was merely an exemption clause, holding that it was a positive condition forming part of the charging mechanism.

Conclusion: Section 3-AAAA, as amended, was held to be unconstitutional and void because it sought to tax matters falling outside the legislative power of the State.

Final Conclusion: The petitions were allowed, the impugned assessments and recovery proceedings were quashed, and the assessees obtained complete relief.

Ratio Decidendi: A levy styled as purchase tax is invalid where, on a true construction, the taxable event is not the purchase itself but the post-purchase use, consignment, or export-linked disposal of goods, because such matters lie outside State legislative competence.

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