Purchase tax on branch transfers remains within State competence when taxable event is purchase, not later consignment.

A levy on Schedule C goods under the Punjab General Sales Tax Act was treated as purchase tax, not consignment tax, because the taxable event remained the purchase of the goods and not their later transfer to branches outside the State. The branch transfer or consignment only determined when the deferred tax became payable at the prescribed purchase stage, including the last-dealer stage specified by section 5(3). The Court held that the levy did not fall within the exclusive parliamentary field under Entry 92B and was within the State Legislature's competence. Goodyear was distinguished and Hotel Balaji treated as controlling.

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Issues: Whether the levy of purchase tax on goods in Schedule C of the Punjab General Sales Tax Act, when the goods are transferred or consigned by the dealer to its own branches outside the State, is a tax on purchase within the State and within the legislative competence of the State Legislature.

Analysis: The taxing scheme under the State Act treated sale and purchase as distinct taxable events and adopted a single-point system. Goods in Schedule C, including wheat, paddy and rice, were liable to purchase tax at the stage specified by section 5(3), with liability falling on the last dealer liable to pay tax, or in the case of wheat, the first dealer liable to pay tax. The Court held that the taxable event under the impugned provisions remained the purchase of the goods and not their later despatch to branches outside the State. The branch transfer or consignment merely fixed the point at which the deferred purchase tax became payable. The decision in Goodyear was held distinguishable on facts and, in any event, was treated as no longer good law in Hotel Balaji. On that footing, the levy could not be characterised as a consignment tax falling within the exclusive parliamentary field under Entry 92B.

Conclusion: The impugned provisions were held to be intra vires the State Legislature and the purchase tax levy on the petitioner was upheld.

Final Conclusion: The petition challenging the constitutional validity of the purchase-tax levy failed, and the writ petition was dismissed.

Ratio Decidendi: A levy imposed on the purchase of goods at the last-purchase stage does not become a consignment tax merely because liability crystallises when the goods are later sent to branches outside the State; such a levy remains a purchase tax within the State's legislative competence.

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