Declared goods taxed once at first intra-State sale cannot be retaxed on later local resale after return to the State.

Declared goods under the State sales tax regime were taxable only at the point of first sale inside the State. Where cotton yarn had already suffered tax on the first intra-State sale after inter-State movement, its later return to Madras and local resale could not be treated again as the first taxable sale. The same turnover could not be taxed a second time merely because the goods later came back into the State and were sold locally.

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Issues: Whether cotton yarn purchased by the assessee in Madras and delivered to its branches in other States, and thereafter transferred back to Madras and sold locally, could again be treated as the first sale in the State and taxed under the local sales tax law.

Analysis: Cotton yarn was declared goods under the Central sales tax regime and, under the State Act, was liable to tax only at the point of first sale in the State. The Court accepted that the initial sale by the Madurai Mills to the assessee in Madras, pursuant to the inter-State movement and delivery to branches outside the State, was the first sale inside the State and had already borne tax. Once that sale had been taxed, later dealings with the same goods after their transfer back to Madras did not create a fresh taxable first sale under the State law. The Court found no basis to tax the same turnover again merely because the goods later came back into the State and were sold locally.

Conclusion: The disputed local sales were not liable to be taxed a second time under the Madras General Sales Tax Act, 1959, because the goods had already suffered tax at the first sale inside the State.

Ratio Decidendi: Where declared goods have already suffered tax at the first sale inside the State, a subsequent sale of the same goods after inter-State movement and return to the State cannot again be treated as the first taxable sale under the local sales tax law.

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