First-sale taxation principle bars sales tax on liquor stocks bought before amendment and later resold in the State.

A taxing entry that levies sales tax only on the first sale in Haryana did not extend to liquor stocks already purchased before the amendment date and later resold by the petitioners. After omission of the exemption entry and substitution of the taxing entry, the subsequent sale of those pre-existing stocks was treated as a second or later sale, not the first sale in the State, and the demand raised on that basis could not be sustained. The document applies strict construction of taxing statutes and states that the amended wording did not authorise taxation of sales already effected before 25 June 2001.

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Issues: Whether sales tax could be levied on liquor stocks already in the petitioners' possession on the midnight of 25 June 2001, after omission of the exemption entry and substitution of the taxing entry under the Haryana General Sales Tax Act, 1973.

Analysis: The levy under the Act attached to the first sale in the State of Haryana. Until 25 June 2001, sale of Indian-made foreign liquor enjoyed exemption under Schedule B, Entry 24A. On omission of that entry and substitution of the relevant entry in Schedule C, the tax became payable only at the stage of sale made for the first time in the State by an excise licensee. Stocks already purchased within the State before the amendment, when later sold by the petitioners, would constitute a second or subsequent sale and not the first sale. A taxing statute had to be construed strictly, and the wording of the amended entry did not authorise ignoring sales already effected before the amendment date.

Conclusion: The stocks purchased by the petitioners up to the midnight of 25 June 2001 were not liable to sales tax on their subsequent sale in the State, and the demand raised on that basis could not be sustained.

Final Conclusion: The demand based on opening stock as on 25 June 2001 was set aside in principle, and the matter was left to be reconsidered on the stated legal basis.

Ratio Decidendi: Where a taxing entry levies duty only on the first sale in the State, sales of goods already purchased before the amendment and later resold after the amendment do not attract tax as they are not the first sale.

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