Tax on stock losses cannot stand where no taxable sale exists and the statute gives no authority for recovery.

Tax could not be levied under the U.P. Sales or Purchase of Motor Spirit, Diesel Oil and Alcohol Taxation Act, 1939 on losses of motor spirit and diesel oil, because the charging provision applied only to the first sale and the Act defined sale as a transfer for consideration. Losses arising from evaporation, transit, or shrinkage did not amount to a taxable sale, and in the absence of statutory authority the audit-objection-based demand lacked legal basis. The consequential recovery proceedings were therefore unsustainable, and the impugned demand notices and recovery were quashed.

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Issues: Whether tax could be levied under the U.P. Sales or Purchase of Motor Spirit, Diesel Oil and Alcohol Taxation Act, 1939 on losses of motor spirit and diesel oil, and whether the consequential recovery proceedings were sustainable.

Analysis: The charging provision levied tax only on the first sale of motor spirit and diesel oil, and the definition of sale contemplated a transfer by a dealer for cash, deferred payment, or other valuable consideration. Losses arising from evaporation, transit, or shrinkage did not amount to a sale within the meaning of the Act. In the absence of any statutory provision authorising levy on losses, and without any prior assessment or finding justifying the demand, the audit-objection-based recovery could not stand.

Conclusion: Tax could not be levied on losses under the Act, and the demand and recovery proceedings were unsustainable.

Final Conclusion: The writ petition succeeded, and the impugned demand notices and consequential recovery were quashed.

Ratio Decidendi: A tax can be imposed only on the taxable event expressly created by the charging provision, and in the absence of statutory authority a loss not amounting to a sale cannot be subjected to levy or recovery.

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