Business asset sale taxability depends on proof of prior taxable sale and documentary evidence of second sale status.

A trader's sale of a business asset is taxable where the transaction falls within the statutory meaning of business and the sale is incidental to that business. A claim that the transfer is only a second sale escapes tax only if the assessee produces the relevant sale bill or cash memo showing that tax was already collected and paid on the prior sale, as required by rule 32(13) of the Kerala General Sales Tax Rules, 1963. If the earlier owner was not a dealer and the asset was a personal car, the chain does not establish a prior taxable sale. In the absence of proof, the sale is treated as the first taxable sale.

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Issues: Whether the sale of a business asset by a registered dealer was liable to sales tax under the Kerala General Sales Tax Act, 1963, and whether the assessee had established that the transaction was only a second sale not attracting tax.

Analysis: The transaction is taxable when the earlier sale was by a dealer liable to pay tax under the Act. If the previous owner was not a dealer and the car was a personal asset, the sale to the assessee would not attract tax as a first taxable sale in the chain. Where the assessee claims that tax had already been collected on the prior sale, the relevant sale bill or cash memo showing such collection and payment must be produced in terms of rule 32(13) of the Kerala General Sales Tax Rules, 1963. In the absence of such proof, the assessee's sale is treated as the first sale liable to tax. A trader's sale of a business asset in the course of business falls within the statutory meaning of business under clause (b) of section 2(vi) of the Kerala General Sales Tax Act, 1963.

Conclusion: The sale of the car was taxable, and the assessee failed to establish that it was a non-taxable second sale.

Ratio Decidendi: Sale of a business asset by a trader is taxable when it is incidental to business, unless the assessee proves that prior taxable sale had already occurred.

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