State of Tamil Nadu vs Chamundeswari Enterprises

Ramanujam, J.—The assessee in this case has sold the lorry TNS 6251 for Rs. 60,000 during the assessment year 1978-79. The assessing

officer assessed certain other turnover as also Rs. 60,000 representing sale value of lorry at 15 per cent for 1978-79 on the ground that the sale of

the lorry is a first sale in the State. On appeal the Appellate Assistant Commissioner has agreed with the assessing officer and has upheld the

assessment on the turnover of Rs. 60,000. The matter was taken to the Sales Tax Appellate Tribunal and before the Tribunal it was contended that

the lorry TNS 6251 was purchased from Mercantile Credit Corporation, Coimbatore, for Rs. 39,000 by his vendor and that as the lorry has

suffered tax already the second sale in the hands of the assessee is not exigible to tax. The revenue, on the other hand, contended that the seller,

Mercantile Credit Corporation, is not a dealer in trade and that as the assessee''s vendor had not paid tax on his sale it cannot be said that the lorry

has already suffered tax. The Tribunal, after investigation of the facts, found that the sale by the Mercantile Credit Corporation was the first sale

and that the sale by the assessee was not a first sale in the State. Once it is found that the assessee''s sale is not the first sale it cannot obviously be

taxed for under the General Sales Tax Act the sale of motor vehicles is taxable only on the first sale in the State, the subsequent sales being

exempted. In view of the finding of the Tribunal that the assessee''s sale of the lorry is not the first sale in the State, the assessee is entitled to claim

exemption on the ground that his sale is not the first sale even if the first sale has not suffered tax.

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

Thus, the contention advanced by the learned Government Pleader in this case that the onus is on the assessee to show that the first sale has

suffered tax cannot legally be sustained.

Therefore, no interference is called for with the order of the Tribunal in this case. The tax case is, therefore, dismissed.