Situs of inter-State sales must be determined first before applying the "first sale in the State" tax rule.

Levy under the notified point of sale for Schedule I goods depended on first determining the situs of the alleged inter-State sales under section 4 of the Central Sales Tax Act, 1956. The Tribunal had to decide whether purchases from Madras dealers could be treated as sales outside the State, or whether their situs was within the State so they would count in the chain of sales liable to tax. Only if the sales were situated within the State would it become necessary to decide whether "first sale in the State" meant the first in point of time or the first taxable sale. The Tribunal's decision was set aside and the matter remitted for fresh determination of situs.

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Issues: Whether the Tribunal was required to determine the situs of the inter-State sales before deciding whether the petitioner's sales were the first sales in the State liable to tax under the notification.

Analysis: The levy under section 5(vii) of the General Sales Tax Act, 1125 depended on the point of sale fixed by notification for goods in Schedule I. The dispute turned on whether the purchases from Madras dealers could be disregarded as inter-State sales not taxable under the State Act, or whether their situs was within the State so that they would count in the series of sales. The correct approach required the situs of the inter-State sales to be determined in the light of section 4 of the Central Sales Tax Act, 1956. Only if those sales were situated within the State would the further question arise whether the expression "first sale in the State" meant the first in point of time or the first taxable sale.

Conclusion: The Tribunal's decision was set aside and the matter was remitted for fresh determination of the situs of the inter-State sales.

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