Second-sale exemption under single-point sales tax depends on earlier taxable sale, not proof of prior tax payment.

Under a single-point sales tax scheme, a dealer claiming second-sale exemption need only show that there was an earlier taxable sale in the State and that its own transaction was a subsequent sale; proof that the first seller actually paid tax is not required. The commentary also states that Item 3 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959, which refers to motor vehicles including motor cars, is not confined to new motor cars and extends to second-hand motor cars as well. On that reading, tax attaches only at the first sale point, and later sales remain exempt.

---

---

Issues: (i) whether an assessee claiming that its sale is a second sale must prove that the earlier seller had in fact paid tax; and (ii) whether Item 3 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959, applies only to new motor cars or also to second-hand motor cars.

Issue (i): whether an assessee claiming that its sale is a second sale must prove that the earlier seller had in fact paid tax.

Analysis: The statutory exemption turns on whether there was an earlier taxable sale in the State and whether the assessee's sale is only a subsequent sale. The assessee is not required to establish actual payment of tax by the earlier seller. The burden is limited to showing the existence of the earlier taxable sale and the character of the assessee's sale as a second sale.

Conclusion: The contention that proof of actual tax payment by the first seller is necessary was rejected.

Issue (ii): whether Item 3 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959, applies only to new motor cars or also to second-hand motor cars.

Analysis: Item 3 uses the expression 'motor vehicles including motor cars' and does not draw any distinction between new and second-hand motor cars. The single-point levy under the item attaches to the first sale in the State, whether of a new vehicle or a second-hand vehicle, and all later sales are exempt. Reading the item as confined only to new motor cars would defeat the statutory scheme.

Conclusion: Item 3 was held to cover both new and second-hand motor cars.

Final Conclusion: The revision failed because the assessee's sale was treated as a second sale and the taxable entry applied only at the first sale point in the State.

Ratio Decidendi: For a claim of second-sale exemption under a single-point sales tax scheme, it is sufficient to prove an earlier taxable sale in the State; actual payment of tax by the first seller need not be established, and a tax entry covering 'motor vehicles including motor cars' extends to both new and second-hand vehicles unless the statute expressly limits it.

---