Second sales exemption requires proof of the prior taxable sale, and false dealer particulars can sustain penalty.

A dealer claiming second sales exemption must prove the anterior taxable sale, and the burden remains on the dealer to show that the turnover is not liable to tax. Mere invoices are insufficient where the alleged sellers are not produced and the dealer registrations of the named vendors are not established. If the exemption claim is supported by fictitious dealer particulars and false details, the conduct may also justify penalty for wilful non-disclosure of assessable turnover under the Tamil Nadu General Sales Tax Act, 1959.

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Issues: (i) Whether the assessee had proved entitlement to second sales exemption on the disputed turnover; (ii) Whether penalty was sustainable for wilful non-disclosure of assessable turnover.

Issue (i): Whether the assessee had proved entitlement to second sales exemption on the disputed turnover.

Analysis: The claim for exemption depended on proof of an anterior taxable sale. Mere invoices were insufficient, and the assessee neither produced the alleged sellers nor established that the stated dealer registrations belonged to the named vendors. Under Section 10 of the Tamil Nadu General Sales Tax Act, 1959, the burden to prove that the turnover was not liable to tax lay on the dealer claiming exemption. The fact that actual payment of tax by the first seller was not required could not assist the assessee, because the foundational fact of first sale itself was not proved.

Conclusion: The claim of second sales exemption failed and was rightly rejected.

Issue (ii): Whether penalty was sustainable for wilful non-disclosure of assessable turnover.

Analysis: The claim of exemption was founded on fictitious dealer particulars and false supporting details, while no attempt was made to substantiate the alleged first sales. On those facts, the conduct was treated as falling within the scope of wilful non-disclosure of assessable turnover, and the absence of a successful exemption claim supported the penalty under Section 16(2) of the Tamil Nadu General Sales Tax Act, 1959.

Conclusion: The penalty was upheld.

Final Conclusion: The concurrent orders of the authorities were sustained, and the challenge to the tax demand and penalty did not succeed.

Ratio Decidendi: A dealer claiming second sales exemption must prove the anterior taxable sale and bears the burden under Section 10 of the Tamil Nadu General Sales Tax Act, 1959; where the claim rests on fictitious supporting particulars, penalty for wilful non-disclosure may also be sustained.

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