Tax exemption on purchase turnover upheld where the first seller was identifiable and assessed tax liability remained recoverable from the seller.

Exemption from tax on the disputed turmeric purchase turnover was available where the first seller was a real and identifiable dealer within the State and the department had already assessed tax on that seller's turnover. The purchaser's claim could not be rejected merely because the first seller had not actually discharged the assessed tax, since any statutory tax liability remained recoverable from the seller by lawful means. On that basis, the petitioner's entitlement to exemption was sustained and the disallowance of the claim was held unsustainable.

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Issues: Whether the petitioner was entitled to exemption from tax on the disputed turmeric purchase turnover on the ground that the goods had already suffered tax in the hands of the first seller.

Analysis: The relevant test was whether the first seller was a real and identifiable dealer within the State and whether mere non-payment of tax by that seller could defeat the purchaser's claim to exemption. The existence and identity of the vendor were not in dispute, and the record showed that the department had assessed tax on the vendor's turnover. The purchaser's entitlement could not be denied merely because the vendor had not actually discharged the assessed tax, since the statutory liability, if any, remained recoverable from the vendor by lawful modes.

Conclusion: The petitioner was entitled to exemption in respect of the disputed turnover and the disallowance of the claim was unsustainable.

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