First sale within the State under sales tax law marks the taxable point for beedi sales

The phrase "first sale effected in the State" under section 5(vii) of the Madras General Sales Tax Act was construed as identifying the taxable point in the chain of sales, distinct from later sales of the same goods. The provision was read to require that the sale be the first sale, be effected within the State of Madras, and be made by a dealer not exempt from taxation. On that construction, the petitioner's beedi sales fell within the charging provision and were liable to assessment under section 5(vii).

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Issues: Whether sales of beedi were liable to tax under section 5(vii) of the Madras General Sales Tax Act on the footing that the clause applied to the first sale effected in the State of Madras by a dealer who was not exempt from taxation.

Analysis: The expression "first sale" was held to distinguish the sale taxable under the provision from other sales of the same goods effected in the State. The clause was read as containing three requirements: the sale must be the first sale, it must be effected within the State of Madras, and it must be by a dealer not exempt from taxation. On that construction, the petitioner's sales satisfied the statutory conditions and were within the charging provision.

Conclusion: The sales effected by the petitioner were liable to assessment under section 5(vii) of the Madras General Sales Tax Act, and the revision was decided against the assessee.

Ratio Decidendi: The phrase "first sale effected in the State" identifies the taxable point in a chain of sales and attracts tax where the sale is the earliest taxable sale within the State by a dealer not exempt from tax.

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