The State of Tamil Nadu vs A.R. Duraisamy Chettiar and Brothers

Ramanujam, J.—In this tax case filed by the State, the decision of the Tribunal holding that the turnover of Rs. 1,86,912 represents second

sales and therefore the same is not taxable has been challenged before us. The case of the assessee as regards the said disputed turnover is that all

his sellers were registered dealers in the State and therefore their sales alone are taxable and not the sales of the assessee of the same goods, which

amounts to second sales in the State. It has not been disputed by the revenue that the sellers of the assessee are registered dealers and they have

also issued sale bills for the sales to the assessee. The assessee claims exemption in relation to the said turnover which according to it represents

second sales effected by the assessee. According to the revenue, since the sellers though registered have not paid tax on their sales the assessee

cannot have the benefit of second sales with regard to the said turnover. Referring to the decisions in Govindan & Company v. State of Tamil

Nadu [1975] 35 STC 50, Deputy Commissioner (C.T.) v. Vijayalakshmi Mills Ltd. [1977] 40 STC 463 and State of Tamil Nadu v.

Chamundeswari Enterprises [1983] 52 STC 124, the Tribunal held that it is not for the assessee, who is the subsequent seller, to show that the first

sale has been taxed, that the onus on the subsequent seller is only to point out that there has been an earlier sale in the State and that the onus is not

on the assessee to show that the first sale has in fact suffered tax. Though the said decision has been challenged before us, we are not in a position

to interfere with the order of the Tribunal as it is consistent with the view uniformly taken by this Court on the said issue. Whenever the assessee

shows that his sale is second sale and that the sale by his vendor is the taxable sale, the assessee is entitled to claim exemption on the ground of

second sales, even though the earlier sale has not been taxed within the State. In this case, the assessee has shown that he has purchased the

commodities from a registered dealer, who had issued necessary sale bills for the sales. Once the purchase is shown to have been from the

registered dealer, then it is for the revenue to proceed against that dealer in respect of the sales effected by them which are first sales, and it is not

for the assessee to show that the dealer''s sale has in fact suffered tax for getting the benefit of the concession towards second sales.

In Govindan & Company v. State of Tamil Nadu [1975] 35 STC 50 this Court held as follows :

To claim the benefit of tax on the ground that the sales effected by the assessees are second sales, the assessees need not show that their sellers

have in fact paid tax. It is enough for them to show that the earlier sales are taxable sales and that the tax is really payable by their sellers.

In State of Tamil Nadu v. Chamundeswari [1983] 52 STC 124 this Court observed as follows :

The learned counsel for the revenue contends before us that the assessee must, for getting exemption in relation to his sale, not only show that his

sale was not the first sale but also prove that the first sale has suffered tax in the State. We are not inclined to accept this proposition of law as

correct. If the sale effected by the assessee is not the first sale, then under the provisions of the Act that sale cannot be brought within the net of

taxation and it is for the revenue to search the first seller and levy tax on the first sale. It is not for the assessee, who is the subsequent seller, to

show that the first sale has been taxed. Once it is found that the assessee''s sale is a subsequent sale and there has been a first sale in respect of the

same goods earlier in the State, then it is for the authorities to proceed to levy that transaction of first sale, and the onus cannot be thrown on the

assessee to show that the first sale has suffered tax. The onus on the subsequent seller is only to point out that there has been a first sale and the

onus is not on him to show that the first sale has, in fact, suffered tax. This is the view this Court has taken in two earlier decisions reported in

Govindan & Company v. State of Tamil Nadu [1975] 35 STC 50 and Deputy Commissioner (C.T.) v. Vijayalakshmi Mills Ltd. [1977] 40 STC

463.

Having regard to the said decisions of this Court, the Tribunal''s decision does not call for interference and the tax case is therefore dismissed.