First-sale verification in sales tax matters is essential before treating purchases as taxable first sales.

Goods claimed to have suffered tax at the first sale stage could not be assessed again as taxable first purchases without verifying that foundational fact on the material placed before the authorities. The assessee produced declarations and bills suggesting prior taxation in the hands of the first seller, but the revisional authority and Tribunal proceeded on an assumption that the purchases were made at Chandigarh and treated the transactions as liable in Punjab. The High Court noted that, if the first sale had already been taxed, proof of movement of goods by the assessee would not by itself determine liability. The tax demand was therefore unsustainable on the findings recorded and required reconsideration after proper verification of the first-sale issue.

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Issues: Whether the turnover in question was liable to tax as a first sale in the State or was exempt as a second sale on which tax had already been paid, and whether the assessee was entitled to have the foundational fact of the first sale properly verified before liability was fastened.

Analysis: The assessee had produced declarations and bills indicating that the goods had already suffered tax in the hands of the first seller. The revisional authority and the Tribunal proceeded on an assumption that the purchases were made at Chandigarh and treated the transactions as taxable first purchases in Punjab, without first verifying the correctness of the assessee's plea that the first sale had already taken place in favour of M/s. Kamakhya, Zirakpur. Where the claim was that the goods had already been taxed at the first stage, the assessing and revisional authorities were required to examine that issue on the material placed before them. If the first sale had been taxed, proof of movement of goods by the assessee would not be determinative of liability in the manner assumed by the authorities below.

Conclusion: The tax demand could not be sustained on the basis of the findings recorded by the revisional authority and the Tribunal, and the matter had to be reconsidered after proper verification of the first-sale issue.

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