The State of Tamil Nadu vs Tvl. Meenakshi Asphalts

F.M. Ibrahim Kalifulla, J.—The Revenue has come forward with this revision raising the following questions of law:

(1) Whether in the facts and circumstances, the Tribunal is legally correct in setting aside the order of remand ordered by the first appellate

authority in respect of a turnover of Rs. 4,33,657/- for verification of the place of business and registration of the selling dealer shown in the

disputed bills?

(2) Whether the consequential deletion of surcharge, penalty by the Tribunal is also legally sustainable?

The Appellate Assistant Commissioner remitted the matter back for ascertaining the liability. The Tribunal applying the law laid down by this

Court, set aside the order of the Appellate Assistant Commissioner as well as the Assessing Authority.

The question for consideration is whether the respondent/assessee is entitled for tax exemption on the ground that its sale was a second sale.

The only contention raised on behalf of the Revenue was that the first sale was not by a registered dealer and therefore, the respondent''s claim for

exemption on the ground of second sale, cannot be permitted. Such a contention was raised on behalf of the petitioner on the footing that the

registration of the local dealer from whom purchase was made by the respondent/assessee, was cancelled with retrospective effect and therefore,

on the date of purchase by the respondent/assessee, the seller did not have a valid registration. The question raised was directly covered by a

decision of this Court in State of Tamil Nadu v. C.K. Gajapathy and Co. (1984) 57 S.T.C. 137 and the Division Bench has held as under:

...If the assessee is able to show that there has been merely a taxable sale and its sale was only a second sale, it is entitled to claim exemption of its

sales as second sales.... It is not the case of the Revenue that all sales effected by unregistered dealers are not liable to be taxed under the Act. As

a matter of fact, if that were to be the position, all registered dealers would like to have their registration cancelled for the purpose of escaping from

tax. Therefore, we are not in a position to accept the contention of the learned Government Pleader that merely because Messrs. Premier Steel

Distributors were not registered dealers at the time when they sold the goods to the assessee, their sales are not taxable sales.... Once Messrs.

Premier Steel Distributors are found to be dealers engaged in the manufacture or purchase or in the business of purchase and sale of stainless steel

vessels, all sales effected by them are taxable sales. It has been held by this Court in Govindan & Co. v. State of Tamil Nadu 1975 (35) STC 50

and State of Tamil Nadu v. Chamundeswari Enterprises (1983) 52 STC 124 that if there is a prior sale in the State, the subsequent sales cannot

be taken to be exigible for tax under the Act as second sales.

Having regard to such a categoric pronouncement by this Court, and the questions of law raised in this revision petition which are directly

covered by the above said decision, we do not find any scope to interfere with the order of the Tribunal and the questions of law are answered

against the Revenue. The Tax Case (Revision), therefore, fails and is dismissed. No costs.