TaxTMI 
TaxTMI 
1990 (7) TMI 332
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....11,443 respectively. Aggrieved by the order of the assessing officer, the appellant preferred an appeal to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner, on a perusal of the records, found that some of the local purchases of iron and steel for a sum of Rs. 1,10,110 out of Rs. 1,51,747.66 were from persons who were registered dealers and hence the same could not be subjected to tax when the appellant-assessee disposed of the same. Accordingly, the Appellate Assistant Commissioner deleted from taxable turnover Rs. 1,10,110. 3.. The Board of Revenue, while reviewing the order of the Appellate Assistant Commissioner, found that the turnover amounting to Rs. 1,10,110 represents the purchases from three dealers, namely, Peeman Steel Corporation, Mohideen Traders and Manickam Enterprises of which, excepting Peeman Steel Corporation, the other two dealers, though were originally registered dealers, closed their business during 1973-74 and, therefore, the sales of iron and steel by those two dealers cannot be considered as taxable sales enabling the appellant to claim exemption on the sales of goods purchased from them. Accordingly, a notice was issued, invit....
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....e dealers from whom the appellant-assessee purchased iron and steel ceased to carry on business at the time of purchase, it cannot be considered that the assessee has proved that there were taxable sales to claim exemption. Therefore, the Board of Revenue was right in including the turnover in dispute in the taxable turnover. He also distinguished the cases cited by the learned counsel for the appellant-assessee. 8.. To appreciate the rival submissions, it is advisable to set out the ratios laid down in the judgments cited above. 9.. In [1975] 35 STC 50 (Mad.) (Govindan & Co. v. State of Tamil Nadu), Ramanujam, J., speaking for the Bench, has held as follows: "Though the order of the Tribunal is one upholding the remit order passed by the Appellate Assistant Commissioner, the learned counsel for the petitioners contends that the direction of the Tribunal that the petitioners are to prove that the twelve dealers from whom they purchased the goods were real persons and that they had in fact paid the tax on the iron and steel is not correct and that it is not the duty of the petitioners to prove that their sellers have in fact paid the tax on their sales. The learned counsel ....
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....nsaction of first sale, and the onus cannot be thrown on the assessee to show that the first sale has suffered tax. The onus on the subsequent seller is only to point out that there has been a first sale and the onus is not on him to show that the first sale has, in fact, suffered tax. This is the view this court has taken in two earlier decisions reported in Govindan & Co. v. State of Tamil Nadu [1975] 35 STC 50 and Deputy Commissioner (C.T.) v. Vijayalakshmi Mills Ltd. [1977] 40 STC 463. Thus, the contention advanced by the learned Government Pleader in this case that the onus is on the assessee to show that the first sale has suffered tax cannot legally be sustained." In State of Tamil Nadu v. J.C. Electricals [1984] 57 STC 16 (Mad.) and State of Tamil Nadu v. Devendra Electricals [1984] 57 STC 17 [App.] (Mad.), the Division Bench has applied the ratio in [1975] 35 STC 50 (Mad.) (Govindan & Co. v. State of Tamil Nadu). In [1984] 57 STC 137 (Mad.) (State of Tamil Nadu v. C.K Gajapathy and Co.) which, on facts, is nearer to the facts of the present case, the learned Judges, following the decision in [1975] 35 STC 50 (Mad.) (Govindan & Co. v. State of Tamil Nadu) and [1983] 52 S....
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....ier Steel Distributors are not dealers and the sales effected by them were only casual and the sales have not been effected in their capacity as registered dealers. Once Messrs. Premier Steel Distributors are found to be dealers engaged in the manufacture or purchase or in the business of purchase and sale of stainless steel vessels, all sales effected by them are taxable sales. It has been held by the Court in Govindan & Co. v. State of Tamil Nadu [1975] 35 STC 50 and State of Tamil Nadu v. Chamundeswari Enterprises [1983] 52 STC 124 that if there is a prior sale in the State, the subsequent sales cannot be taken to be exigible for tax under the Act as second sales." In [1985] 59 STC 144 (Mad.) (State of Tamil Nadu v. Raichael Chacko) again, the ratio laid down on this issue is to the following effect: "The substantial question before us is whether the Tribunal is right in holding that the sales to the assessee being second sales are not taxable in the assessee's hands. In this case, the Tribunal has specifically found that the said two persons, Thompson and Jacob, were registered dealers on the books of the Sales Tax Department and their registration certificate Nos. were R....
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.... On going through the decisions reported in M.S. Viswanathan & Co. v. State of Tamil Nadu [1990] 76 STC 221 (Mad.) and State of Tamil Nadu v. Abdul Muthaliff [1991] 82 STC 405 (Mad.) supra; [1989] 31 STL 77 (Mad.), we find that they are not quite apposite for the present purpose. 11.. From a perusal of the various judgments referred to above and the ratios laid down therein, it can be safely taken that if an assessee establishes that a particular turnover represents second sales of goods taxable at the point of first sale and the first sale was by a dealer liable to pay tax, then the Revenue cannot deny the exemption on the second sales merely on the ground that the registration certificate of the first seller was cancelled during the assessment year in question or immediately before the purchase by the assessee, namely, the second seller. We must, however, add that the assessee (second seller) must establish that the first sale was a taxable sale, and whether the tax had been paid by the first seller or not is not the concern of the assessee (second seller). We would like to add that the Revenue cannot take advantage of the fact of cancellation of the registration certificate o....