Second sale exemption for declared goods upheld where the prior sale was taxable and Revenue failed to disprove seller identity.

Second sale exemption for declared goods cannot be denied merely because the first seller is alleged to be non-existent or the registration number in the bills appears to belong to another dealer. The assessee need only show that the earlier transaction was a taxable first sale; it is not required to prove that the first seller actually paid tax. Here, the seller's registration, renewal for the relevant years, and departmental Form-XX supported the seller's existence and identity, while the Revenue had not effectively established the contrary. The burden to trace and tax the first seller lay on the Revenue, so the exemption was allowed.

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Issues: Whether the assessee was entitled to second sale exemption for the purchase and sale of iron and steel when the selling dealer's registration number was found to relate to another dealer and the seller was alleged to be non-existent.

Analysis: The assessment was revised on the footing that the selling dealer was not available at the stated address and that the registration number used in the sale bills belonged to another dealer. The Court noted, however, that the selling dealer had been registered with the Department, the registration certificate had been renewed for the relevant assessment years, and Form-XX delivery note had been issued by the Department, which supported the existence and identity of the seller. The assessee had shown that the earlier sale was a taxable sale and that the tax was really payable by the seller. In law, for claiming second sale exemption, the assessee is not required to prove that the first seller had in fact paid tax; it is sufficient to show that the earlier sale was taxable and that the burden to trace and tax the first seller lies on the Revenue. The goods involved were declared goods, and the exemption could not be denied merely because the Revenue treated the seller as a bill trader without taking effective steps to establish otherwise.

Conclusion: The assessee was entitled to second sale exemption, and the revision failed.

Ratio Decidendi: For second sale exemption, the assessee need only establish that the prior sale was a taxable first sale; proof that the first seller actually paid tax is not required, and the burden lies on the Revenue to proceed against the first seller.

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