- (1.) The appellant-hereinafter referred to as "the assessee"-is a registered dealer under the Madras General Sales Tax Act, 1939, and carries on the business of buying and selling cloth in the town of Madras. For the assessment year 1956-57 the Deputy Commercial Tax Officer assessed, for purposes of sales tax, the turnover of the assessee from sale of cloth at Rs. 11,33,355-12-6. This turnover included a sum of Rs. 7,88,352-0-9 which represented turnover in respect of sale of goods purchased by the assessee from dealers not residing within the State of Madras. The assessee claimed that when he sold the goods, he was not the first dealer, and he was on that account exempted from liability to pay sales tax on turnover in respect of goods purchased from the non-resident dealers. The Deputy Commercial Tax Officer rejected the contention of the assessee and the order was confirmed in appeal by the Commercial Tax, Officer and the Sales Tax Appellate tribunal. A revision application filed against the order of the Sales Tax Appellate tribunal before the High court of Madras also proved unsuccessful.
(2.) In this appeal the assessee relying upon section 3 (2) of the Act claims exemption from liability to pay tax on a turnover of Rs. 7,88,352. 09. To appreciate the contention raised by the assessee it is necessary to set out certain material provisions of the Act. "dealer" is defined in section 2 (b) of the Act as meaning "any person who carries on the business of buying, selling, supplying or distribution goods, directly or otherwise, whether for cash or for deferred payment or for other valuable consideration. Explanation-a Hindu joint family, or any association, co-operative Society, or club or any firm, which, or a commission agent, broker, del Iredere agent, auctioneer or any other mercantile agent, 384 by whatever name called, who, carries on such business, is a dealer within the meaning of this clause;"
(3.) S. 3 (2) of the Act at the material time provided : " On the first sale of any of the goods mentioned below by a. dealer who is not exempt from taxation under the next. succeeding sub-section, the dealer shall pay a tax at the rate specified as applicable thereto; and the tax shall be paid by the dealer on his turnover in each year relating to such goods and shall be in addition to the tax to which he is liable under Ss. (1) on his total turnover for the year: Provided that, in the case of goods imported into the State of Madras either from outside the territory of India or from any other State in India, the tax shall be levied on the first sale effected in the State of Madras by a dealer who -is residing in the State of Madras and who is not exempt from taxation under the next succeeding subsection, after the import of the said goods into the State of Madras. * * * * *";