Inter-State purchase character and first dealer liability rejected where local purchases did not trigger single point tax reassessment.

Purchases of cycles and accessories were not treated as inter-State purchases in the appellants' hands because the movement of goods from outside the State to Salem was not occasioned by any contract between the manufacturer and the appellants. The Madras dealer functioned as importer and sole distributor, so the appellants' transactions with that dealer were local purchases and did not make them the first dealers for single point tax purposes. On that basis, the revision of assessment under section 32(1) of the Tamil Nadu General Sales Tax Act, 1959 was unsustainable and the reassessment failed.

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Issues: Whether the appellants' purchases of cycles and accessories were inter-State purchases attracting liability as the first dealer in the State, or local purchases not so liable, and whether the revision of assessment under section 32(1) of the Tamil Nadu General Sales Tax Act, 1959 was sustainable.

Analysis: The movement of goods from outside the State to Salem was found not to have been occasioned by any contract between the manufacturer and the appellants. The materials indicated that the Madras dealer acted as importer and sole distributor, and that the appellants' transactions with that dealer did not constitute inter-State purchases in their hands. The Tribunal applied the statutory scheme governing the stage of levy for imported goods and the principle that, where the purchase by the assessee is not itself inter-State in character, the assessee cannot be treated as the first seller for single point tax purposes.

Conclusion: The appellants were not the first dealers liable to single point tax, and the reassessment made under section 32(1) of the Tamil Nadu General Sales Tax Act, 1959 was unsustainable.

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