Inter-State purchase tax liability cannot be fastened through a State deeming fiction when the transaction falls outside State taxing power.

Section 12-A(2) of the U.P. Sales Tax Act, 1948 could not be used to treat the assessee as the first purchaser and impose purchase tax where the rice purchases were inter-State transactions made for and on behalf of ex-U.P. principals. The deeming fiction operated only in relation to a dealer's claim of non-liability under section 3-D and could not extend State taxing power to transactions already falling within the Central Sales Tax regime. Mere issuance of declaration form III-C(1) did not convert an inter-State purchase into a State-taxable first purchase. The Tribunal's sustained levy was therefore unsustainable, and relief was granted against the purchase-tax demand.

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Issues: Whether section 12-A(2) of the U.P. Sales Tax Act, 1948 could be invoked to treat the assessee as the first purchaser and fasten purchase-tax liability where the purchases were held to be inter-State purchases and the assessee had not claimed exemption under section 3-D of that Act.

Analysis: The purchases of rice were found to have been made for and on behalf of ex-U.P. principals and were, therefore, purchases in the course of inter-State trade or commerce. Such transactions did not attract levy under the State enactment. The deeming fiction in section 12-A(2) operated only where a dealer claimed that he was not liable to tax under section 3-D in respect of a purchase transaction. It could not be used to convert an inter-State purchase, otherwise falling within the Central Sales Tax regime, into a State-taxable first purchase merely because declaration form III-C(1) had been issued. The provision relied upon by the Revenue was also read in the light of the earlier binding view that it did not extend to transactions outside the State taxing power.

Conclusion: Section 12-A(2) did not apply to the assessee's transactions, and the levy sustained by the Tribunal was unsustainable.

Final Conclusion: The writ petition succeeded, the Tribunal's order was set aside, and the assessee was granted relief against the State purchase-tax demand.

Ratio Decidendi: A State deeming provision for first-purchase liability cannot be applied to inter-State purchases that fall outside the State's taxing competence and are not transactions to which the statutory exemption claim under the State provision properly relates.

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