Reading down of fiscal provisions preserves constitutionality by confining trade tax collection to intra-State transactions.

Section 8-E of the U.P. Trade Tax Act was analysed as a fiscal provision that, on a literal reading, could extend to inter-State, outside-State and export transactions and therefore risk constitutional invalidity for exceeding legislative competence. The commentary applies the presumption of constitutional validity and the doctrine of reading down, stating that where two constructions are reasonably possible, the interpretation that preserves the provision should be preferred. On that basis, section 8-E is confined to intra-State sales and purchases and treated as a valid collection mechanism within the State's taxing power. The detention notices were also not quashed, as compliance with section 13-A(1-A) remained for the authority to examine.

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Issues: Whether section 8-E of the U.P. Trade Tax Act, 1948 is constitutionally valid and can be upheld by reading it down to apply only to intra-State sales and purchases.

Analysis: Section 8-E, on a literal reading, was capable of covering inter-State, outside-State and export transactions, which would have brought it into conflict with the constitutional distribution of legislative powers. The Court applied the settled principle that where two constructions are reasonably possible, the one that sustains constitutionality should be preferred. Relying on the presumption of constitutional validity and the doctrine of reading down, it held that the provision could be narrowly construed so as to operate only in respect of intra-State sales and purchases. On that construction, the provision was treated as a valid collection mechanism within the State's taxing competence. The challenge based on the detention notices also did not succeed, as the authority was left to examine whether the conditions under section 13-A(1-A) were satisfied.

Conclusion: Section 8-E was upheld as constitutionally valid by limiting its operation to intra-State transactions, and the writ challenge to the notices failed.

Ratio Decidendi: A fiscal provision that is otherwise vulnerable to invalidity must be construed narrowly, if reasonably possible, so as to preserve its constitutionality and confine it within the legislature's legislative competence.

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