Second-sale exemption fails where seller registration alone cannot prove genuine purchases from non-existent dealers.

Second-sale exemption was denied where the alleged sellers were shown not to have carried on business during the relevant assessment years and the purchase bills were treated as bogus. The court noted that reopening under section 16(2) of the Tamil Nadu General Sales Tax Act was supported by direct evidence from premises owners, and that registration certificates or marketing permits alone could not prove genuine purchases. A seller's valid registration was therefore insufficient when the material on record established non-existent business activity. The assessment and penalty were upheld in favour of the Revenue.

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Issues: Whether the assessee was entitled to claim second-sale exemption on purchases allegedly made from registered dealers when the evidence showed that the sellers had not carried on business during the relevant assessment years and the purchase bills were treated as bogus.

Analysis: The assessment was reopened under section 16(2) of the Tamil Nadu General Sales Tax Act on the basis that the alleged sellers had ceased business or were non-existent during the relevant years. The finding of the Tribunal was supported by direct evidence from the owners of the premises where the sellers were said to have carried on business, and that evidence was not displaced by the mere existence of registration certificates or marketing permits. The case relied on by the assessee was found inapplicable on facts, since there the dealer's registration and departmental inaction stood on a different footing. A valid registration certificate by itself was held insufficient to establish genuine purchases where the material on record showed that no business was actually carried on by the alleged sellers.

Conclusion: The claim for second-sale exemption was rightly rejected, and the orders restoring the assessment and penalty were upheld in favour of the Revenue.

Ratio Decidendi: A purchasing dealer cannot claim exemption on the strength of a seller's registration alone when cogent evidence establishes that the alleged seller was not carrying on business during the relevant assessment year and the purchase documents are not genuine.

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