Second-sale tax exemption for laminated sheet scraps: subsequent sale outside the charging net where first sale was exempt.

Sale of laminated sheet scraps purchased from the Tamil Nadu Electricity Board under an exemption notification was held not taxable as a second sale under section 3(2) of the Tamil Nadu General Sales Tax Act, 1959. The second proviso to section 3(2) applies only to goods in the First Schedule that are taxable at the point of first sale, with tax chargeable on the first or earliest successive dealer. Where the assessee was not the first seller, its subsequent sale did not enter the charging net merely because the earlier sale had not suffered tax. The Tribunal's view that the exemption continued to operate for successive dealers was accepted.

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Issues: Whether sale of laminated sheet scraps, purchased from Tamil Nadu Electricity Board under an exemption notification, was liable to tax as a second sale under section 3(2) of the Tamil Nadu General Sales Tax Act, 1959, notwithstanding the second proviso to that provision.

Analysis: The exemption notification under section 17(1) covered the sale of iron and steel by the Board, and the dispute turned on whether the assessee's sale could still be taxed as a second sale. The second proviso to section 3(2) applies to goods in the First Schedule that are taxable at the point of first sale, and tax is payable by the first or earliest successive dealer. Where the assessee's sale is not the first sale, that sale does not fall within the charging net merely because the earlier sale has not suffered tax. The Tribunal's view that the exemption attached to successive dealers was consistent with this position.

Conclusion: The sale was not liable to tax as a second sale, and the revision failed.

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