Last sale tax principle: department must prove the sale was the final intra-State sale before denying exemption.

For tax on cotton yarn at the point of last sale in the State, the department must prove that the assessee's sale was in fact the last intra-State sale. A sale to a registered dealer is not automatically exempt, but the assessee's claim that the sale was not the last sale must be accepted unless the department establishes that the goods were consumed, consigned, exported, or otherwise did not undergo a further intra-State sale. The later movement or disposal of the goods may be examined only to determine the character of the original sale, and not to shift the taxable event to another year.

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Issues: Whether cotton yarn sold by the assessee was liable to tax as the last sale within the State under Entry 10 of the Third Schedule, and whether the department had to establish that the goods were consumed, consigned, exported, or otherwise did not undergo a further intra-State sale before denying exemption.

Analysis: The entry taxed cotton yarn at the point of last sale in the State, but its practical operation depended on tracing the movement of the goods after the assessee's sale. A sale to a registered dealer was not, by itself, exempt; the decisive question was whether that sale in fact turned out to be the last sale in the State. The Court held that the difficulty created by the wording of the entry could be managed by placing the burden on the department to establish taxability. If the assessee claimed that its sale was not the last sale, the claim had to be accepted unless the department proved that the goods were consumed by the purchaser or consigned or exported outside the State. The Court also held that the subsequent fate of the goods could be examined without shifting the taxable event to a later assessment year, because the original sale remained the sale under examination for determining whether it was the last sale.

Conclusion: The cotton yarn sales were taxable where the department established that the sale was the last sale in the State, and the assessee's challenge to the entry as unworkable did not succeed.

Final Conclusion: The revisions failed, and the assessment principle based on last sale was upheld on the facts of the case.

Ratio Decidendi: For a tax at the point of last sale, the department must prove that the assessee's sale was in fact the last sale in the State; the later movement or disposal of the goods may be examined only to determine that character, not to shift the taxable event to another year.

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