1983 (2) TMI 271 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the sale of a motor car by the assessee qualifies as a second sale exempt from tax under the Tamil Nadu General Sales Tax Act, 1959.
2. Whether the assessee is required to prove that the tax on the first sale has been paid to claim the benefit of exemption.
3. Whether the single point scheme of taxation under Item 3 of the First Schedule applies to both new and second-hand motor cars.

Analysis:
1. The case involved the sale of a motor car by the assessee, who claimed it to be a second sale exempt from tax as per the provisions of the Tamil Nadu General Sales Tax Act, 1959. The assessing authority initially brought the turnover for assessment, but the Sales Tax Appellate Tribunal ruled in favor of the assessee, stating that the sale was indeed a second sale, thereby setting aside the assessment on the turnover of the motor car.

2. The State, aggrieved by the Tribunal's decision, contended that the assessee must prove not only that there was an earlier taxable sale but also that the tax on the first sale had been paid to claim exemption. However, based on previous judgments, including Govindan & Co. v. State of Tamil Nadu and State of Tamil Nadu v. Chamundeswari Enterprises, the Court held that the onus on the subsequent seller is only to establish that there was an earlier sale in the State, and it is not necessary to prove that the tax on the first sale has been paid.

3. The Court addressed the applicability of the single point scheme of taxation under Item 3 of the First Schedule to the Act to both new and second-hand motor cars. It emphasized that Item 3 does not distinguish between new and second-hand motor cars and taxes only the first sale in the State. Referring to previous cases, including State of Tamil Nadu v. Chamundeswari Enterprises, the Court concluded that the expression "motor vehicles including motor cars" in Item 3 encompasses both new and second-hand vehicles, ensuring all subsequent sales in the State are exempted.

In conclusion, the Court dismissed the tax case, upholding the Tribunal's decision in favor of the assessee, emphasizing that the single point scheme of taxation applies to all motor cars, regardless of whether they are new or second-hand, as specified under Item 3 of the First Schedule.