Single-point sales tax levy cannot be sustained where the department fails to prove a prior taxable sale in an indivisible transaction.

Turnover from the supply of telephone insulators and accessories was held not liable to a second sales tax levy under the single-point first-sale scheme. The arrangement was found, on the correspondence and delivery documents, to be a consignment-based supply under which the goods moved directly to the Electricity Board and property passed on delivery there; the transaction could not be artificially split into two sales. The department had to prove a prior taxable sale in favour of the Eastern Electric Company, and that burden was not discharged, so the assessment failed.

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Issues: Whether the turnover arising from the supply of telephone insulators and accessories was liable to sales tax as the first sale under the single point levy, or whether the transaction was one indivisible sale already taxed at the point of first sale.

Analysis: The correspondence and delivery documents showed that the goods were supplied on a consignment basis to enable the Eastern Electric Company to fulfil its contract with the Electricity Board. The substance of the arrangement was that the goods moved directly to the Board and property passed when delivery was made to it. The Court held that the transaction could not be notionally split into two sales merely to sustain a second levy. Under the statutory scheme, sales tax on electric materials was exigible only at the first sale in the State, and the department had to establish that there was a prior taxable sale in favour of the Eastern Electric Company. That burden was not discharged.

Conclusion: The turnover was not taxable as a second levy could not be supported, and the assessment failed.

Final Conclusion: The revision succeeded because the disputed turnover was held to fall outside taxable turnover under the single point levy scheme.

Ratio Decidendi: Where the substance of the dealings shows one indivisible transaction and the department fails to prove a prior taxable sale, a second levy cannot be sustained under a first-sale single point tax scheme.

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