1985 (2) TMI 238 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the turnover of Rs. 1,86,912 represents second sales and is not taxable.
2. Whether the assessee, as a subsequent seller, is entitled to claim exemption on the ground of second sales without proving that the first sale has been taxed.

Analysis:
1. The High Court of Madras addressed the issue of the taxability of a turnover of Rs. 1,86,912, which was claimed by the assessee to represent second sales. The Tribunal held that the turnover does indeed represent second sales and is not taxable. The assessee argued that since all the sellers were registered dealers in the State and issued sale bills, only their sales should be taxable, not the subsequent sales by the assessee. The revenue contended that since the sellers did not pay tax on their sales, the assessee cannot claim exemption for second sales. The Tribunal, citing previous decisions, held that the burden is on the revenue to tax the first sale by the registered dealers, and the subsequent seller (assessee) is entitled to claim exemption for second sales if the purchase was from a registered dealer.

2. The Court referred to previous judgments in Govindan & Company v. State of Tamil Nadu [1975] 35 STC 50 and State of Tamil Nadu v. Chamundeswari Enterprises [1983] 52 STC 124. In these cases, it was established that the subsequent seller (assessee) does not need to prove that the first sale has been taxed to claim exemption for second sales. The onus is on the revenue to tax the first sale, and once it is proven that the subsequent sale is a second sale, the benefit of exemption can be claimed. The Court reiterated that it is not the responsibility of the subsequent seller to demonstrate that the first sale has suffered tax. As the Tribunal's decision was consistent with previous rulings, the Court dismissed the tax case, upholding the exemption claimed by the assessee for the turnover representing second sales.