First dealer under sales tax law must be a dealer within the State, not a non-resident seller.

Additional sales tax under rule 6 of the Travancore General Sales Tax Rules was attracted only where the first dealer in the State was a dealer within the State. The Supreme Court held that the phrase "the person who in the State is the first dealer in such goods" could not be extended, by reference to the constitutional fiction in the explanation to article 286(1)(a), to treat non-resident sellers as the first dealer under the Act. On that construction, the non-resident sellers were not chargeable as first dealers in the State, and the appellant remained liable to the tax.

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Issues: Whether the appellant was liable to additional sales tax under section 3(2) of the General Sales Tax Act read with rule 6 of the Travancore General Sales Tax Rules, 1950, on the footing that the non-resident sellers were the first dealer in the State.

Analysis: The liability turned on the meaning of the expression "by the person who in the State is the first dealer in such goods" in rule 6. The Court held that the person who is to be treated as the first dealer must be a dealer within the State and not outside it. The ordinary and grammatical meaning of the words did not permit extension of the fiction under the explanation to article 286(1)(a) of the Constitution to the definition of "dealer" under the Act. The non-resident sellers therefore could not be treated as the first dealer in the State for the purpose of the additional tax.

Conclusion: The appellant was liable to the tax and the contention that the non-resident sellers alone were chargeable was rejected.

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