Second-sale exemption requires proof of non-liability, and unexplained stock variation may sustain taxable turnover additions.

A dealer claiming second-sale exemption under the Kerala General Sales Tax Act must affirmatively prove that the disputed turnover is not taxable. Where no evidence shows that the goods were already taxed, and the record reflects unaccounted purchases, stock shortage, seizure of documents and related departmental findings, the assessment may be sustained as properly based on taxable turnover. The commentary notes that unexplained sales and stock variation can justify addition when the statutory burden to disprove tax liability is not discharged, and that such an assessment is not arbitrary or illegal on the available record.

---

---

Issues: Whether the assessee, claiming exemption as a second seller, discharged the burden of proving that the turnover was not liable to tax, and whether the addition made on the basis of unaccounted sales and stock variation was arbitrary or unjust.

Analysis: Under section 12 of the Kerala General Sales Tax Act, 1963, the burden of proving non-liability to tax rests on the dealer claiming the exemption. The assessee produced no evidence to establish that the disputed turnover represented second sales or that the unaccounted purchases and stock shortage were traceable to locally purchased goods already subjected to tax. The record also showed inspection, seizure of documents, detection of unaccounted sales, and departmental compounding, which supported the assessing authority's findings. In these circumstances, the assessment and the restricted addition sustained in appeal could not be treated as arbitrary or illegal.

Conclusion: The assessee failed to prove entitlement to exemption as a second seller, and the assessment was rightly upheld.

Final Conclusion: The revision was rejected because the assessee did not discharge the statutory burden to disprove tax liability, and the assessment findings were sustained.

Ratio Decidendi: A dealer claiming second-sale exemption must affirmatively prove non-liability to tax, and unexplained unaccounted purchases or stock discrepancies can be assessed as taxable turnover when no evidence shows that the goods were already taxed.

---