Second sale exemption fails where purchase bills are bogus and issued by non-existing dealers, sustaining section 7-A liability.

Second sale exemption on purchase turnover is unavailable where the supporting purchase bills are proved bogus and traceable to non-existing dealers. The claimant bears the burden of establishing genuine entitlement to the exemption, and that burden is not discharged by merely producing invoices if the Department shows that the sellers had no real business, addresses were fictitious, summons went unanswered, and cheque proceeds were received by an unrelated person. On those facts, liability under section 7-A can be fastened on the purchaser, and the assessment-based levy is sustainable.

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Issues: Whether the petitioner was entitled to claim exemption on the purchase turnover as second sales when the purchases were supported by bills from dealers found to be non-existing and bogus, and whether liability under section 7-A could be fastened on the petitioner.

Analysis: The petitioner claimed that the purchases were made from registered dealers under valid bills and that the revenue should have proceeded against the selling dealers. The findings recorded by the assessing authority, the revisional authority and the Tribunal showed that the alleged selling dealers had no real business, their addresses were bogus, summons were returned undelivered, and the cheques were encashed by a person unconnected with those dealers. On those facts, the revenue established that the bills relied on by the petitioner were not genuine. A dealer seeking the benefit of second sale exemption must establish the factual basis for that claim, and once the Department shows that the supporting documents are bogus, the exemption cannot be sustained.

Conclusion: The petitioner was not entitled to the claimed exemption and the levy under section 7-A was upheld.

Final Conclusion: The writ petition failed on the merits and the assessment-based liability was sustained, while the incidental finding regarding another agency was vacated as unnecessary.

Ratio Decidendi: A claim to second sale exemption fails where the revenue proves that the purchase bills are bogus and issued by non-existing dealers, because the burden rests on the claimant to establish genuine entitlement to the exemption.

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