Second-sale treatment for wheat products upheld; reassessment failed where earlier tax incidence and bona fide purchases were established.

Wheat products were treated as second sales where the assessee's purchases were supported by vouchers, check-post seals, and a Tribunal finding that the Revenue had not traced the alleged first seller or disproved the bona fides of the transactions. The Department's inability to proceed against the original seller was insufficient to fasten first-sale tax liability on the assessee when the record indicated that the goods had already suffered tax at an earlier stage. On that basis, reassessment under section 16 of the Tamil Nadu General Sales Tax Act and the related demand could not be sustained.

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Issues: Whether the wheat products sold by the assessee were liable to tax as first sales or were exempt as second sales, and whether the reassessment under section 16 of the Tamil Nadu General Sales Tax Act could be sustained.

Analysis: The assessee's purchases were accepted as genuine on the evidence of purchase vouchers, check-post seals, and the Tribunal's finding that the Revenue had not traced the alleged first seller or disproved the bona fides of the transactions. The mere inability of the Department to proceed against the original seller did not justify fastening tax liability on the assessee as a first seller, especially when the materials on record supported the case that the goods had already suffered tax at an earlier stage. On that footing, the basis for reassessment and the related tax demand failed.

Conclusion: The assessee was only a second seller of the wheat products and the reassessment and tax demand under section 16 could not be sustained; the issue is decided in favour of the assessee.

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