Single-point sales tax on machinery barred tax on later sale, and the consequential penalty also failed.

Machinery sold by the assessee was treated as a subsequent sale in the chain, and the relevant statutory scheme made such goods single-point taxable only at the first sale under the First Schedule. On that basis, the later sale could not be assessed to sales tax, so the assessment was unsustainable. Because the penalty was consequential to the failed assessment, it also could not stand independently and had to be cancelled.

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Issues: Whether the sale of machinery by the assessee was a second sale of goods taxable only at the point of first sale under section 3(2) and item 23 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959, so as to render the assessment unsustainable and the penalty consequentially liable to be cancelled.

Analysis: The turnover related to machinery that had already been purchased by the assessee from the original seller. On the admitted facts, the assessee's sale was only the subsequent sale in the chain, while machinery remained single-point taxable goods under item 23 of the First Schedule for the relevant year. Since the statutory scheme then in force made such goods liable only at the first sale point, the later sale by the assessee could not be brought to tax under the State sales tax assessment. Once the assessment failed, the penalty could not survive independently.

Conclusion: The assessee's sale was not exigible to tax and the assessment and penalty were both unsustainable.

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