Second sales exemption cannot be denied merely because the first seller's registration was cancelled.

Cancellation of a seller's registration certificate does not by itself render the seller unidentifiable or non-existent. The decisive distinction is between an identifiable real dealer and a fictitious or non-existent dealer. Where the purchaser produces registration particulars, invoices, way bills, and other material showing actual movement of goods, and the department does not dispute issuance of the bills, the burden of showing purchases from an identifiable dealer is satisfied. On that basis, second sales exemption cannot be withdrawn merely because the first seller's registration was later cancelled.

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Issues: Whether exemption on the ground of second sales could be withdrawn merely because the first seller's registration certificate had been cancelled, and whether the assessee had established the purchases from an identifiable dealer.

Analysis: Cancellation of a dealer's registration does not by itself make the dealer unidentifiable or non-existent. The decisive distinction is between a real and identifiable dealer on the one hand and a fictitious or non-existent dealer on the other. Where the assessee furnishes the registration particulars, purchase invoices, way bills, and material showing actual movement of goods, and the department does not dispute issuance of bills by the seller, the assessee satisfies the burden of showing that the purchases were made from an identifiable dealer. The authorities relied upon by the Revenue were found inapplicable because they concerned fictitious or non-existent dealers.

Conclusion: The exemption could not be withdrawn on the sole ground of cancellation of the first seller's registration, and the assessee's claim to second sales exemption was upheld.

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