Second sale exemption for imported textile goods upheld where resident agent effected the first sale in Madras.

Imported textile goods were treated as first sold in Madras when the resident agent of the non-resident supplier released the documents after payment, because the agent satisfied the statutory definition of dealer and the property in the goods passed in the State. The court rejected importing the special movement rule in section 3(b) of the Central Sales Tax Act, 1956, into the Madras General Sales Tax Act, 1939, and held that "import" in the State Act bore its ordinary meaning. On that basis, the assessee's later resale was a second sale and not liable to additional tax; the assessment and tribunal orders were set aside.

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Issues: Whether the assessee's sales of textile goods were second sales not liable to additional tax under the Madras General Sales Tax Act, 1939, on the footing that the first sale had already been effected in the State by the resident agent of the non-resident supplier after import of the goods.

Analysis: The liability turned on whether the resident local agent of the non-resident principals answered the definition of dealer and whether the transaction chain showed a first sale in Madras before the assessee's resale. The Court held that the assessee, who claimed exemption as a second seller, bore the burden of proving that the earlier sale had already occurred in the statutory sense. On the facts, the goods were consigned by the non-resident dealer to self, the railway receipts were dealt with by the Madras agent, and the property in the goods passed in Madras when the agent released the documents after payment. The Court rejected the revenue's attempt to import the special movement rule in section 3(b) of the Central Sales Tax Act, 1956, into the earlier State Act, holding that the word import in the proviso to section 3(2) of the State Act bore its ordinary meaning. It further held that the reporting officer's contrary approach was erroneous and offended natural justice, and that the resident agent satisfied the statutory ingredients of dealer under the explanation to section 2(b).

Conclusion: The resident agent of the non-resident supplier was a dealer, the first sale took place in Madras on import, and the assessee's sales were second sales not liable to the additional tax.

Final Conclusion: The assessment orders and tribunal orders were set aside, and the petitions succeeded with costs.

Ratio Decidendi: Where goods imported into the State are first sold through the resident agent of a non-resident dealer and the assessee thereafter resells the goods, the assessee's sale is a second sale outside the scope of the additional tax on the first sale.

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