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6. The petitioner is one of the oil companies named in Explanation-II. It is not in dispute that the petitioner purchases products of petroleum from another oil company viz., Mangalore Refinery and Petrochemicals Limited (MRPL), which is also a dealer registered under the provisions of the Act and the same also finds place in Explanation-II. It is also not in dispute that the petitioner, upon purchasing the products of petroleum from MRPL, effects the sales to other oil companies such as IOCL, BPCL and IBP in the State of Karnataka whose names also find place in Explanation-II.

7. On perusal of second proviso to Section 5(3)(a) of the Act along with Explanation-II, it is clear that the sale of petroleum products effected by MRPL to the petitioner-company is to be deemed as not being sale by the first or the earliest of successive dealers in the State because sale by MRPL to the petitioner is by one oil company to another oil company whose names are found in Explanation-II. Thus no tax can be levied against MRPL. So also as the petitioner on purchasing the petroleum products from MRPL, effects sales to other oil companies such as IOCL, BPCL and IBP in the State of Karnataka, again no tax can be levied against the petitioner since the sales are effected by the petitioner's oil company to another oil company.

Provided that no tax under this Sub-section shall be payable on that part of such turnover which relates to -

xxx xxx xxx

(x) the total amount paid or payable by the dealer as a consideration for the purchase of any of the goods in respect of which tax is leviable at the point of sale:

xxx xxx xxx If Section 6-B of the Act is read carefully and harmoniously along with its head note, it is clear that the taxes can be levied against petitioner only if the petitioner is the resaler of the goods. In other words, for levying "Resale Tax" under Section 6-B on the petitioner, the petitioner ought to be a second or subsequent seller of the goods in the State of Karnataka. It pre-supposes that the petitioner should have purchased the goods before it sells to others. Though the petitioner purchases petroleum products from MRPL, because of the deeming provision as contained in second proviso to Section 5(3)(a) of the Act, the sale made by the MRPL to the petitioner cannot be treated as a sale because it is a sale by one oil company to another oil company. Thus, in law, petitioner cannot be said to be a purchaser, so also if the petitioner Page 0529 sells petroleum products to other oil companies, the same also would not be the sale in the eye of law in view of the unambiguous wordings contained in second proviso to Section 5(3)(a) of the Act. By the operation of second proviso to Section 5(3)(a) of the Act, it is deemed that the sales of petroleum products effected by MRPL to the petitioner are not to be construed as sales by the first or the earliest of successive dealers in the State. Likewise and again, by the application of the said second proviso, the petitioner's sales of petroleum products to other oil companies such as IOCL, BPCL & IBP, are not to be construed as by the first or the earliest successive dealers in the State.

From the Speech presented by the Finance Minister, it can be seen that Section 6-B of the Act is enacted with an intention to make it applicable only to second and subsequent transactions of sale. Consequently, the transactions anterior to second and subsequent transactions are not to be affected by Section 6-B of the Act. Thus, it can be safely concluded that the sales effected by the MRPL to the petitioner are not to be construed as sales by the first dealer and similarly the sales made by the petitioner thereafter to other oil companies are also not be construed as sales by the first or second dealer. Then, by the same logic, it would mean that the consideration paid by the petitioner to MRPL and the consideration received by the petitioner from oil companies cannot be considered as purchase/sale price of the goods bought/sold. At this juncture, it is relevant to note the observations made by this Court in the case of Madhur Tranding Company v. State of Karnataka 90 STC 537, wherein this Court has examined the effect of the consequences flowing under the deeming provision. The relevant portion of the said judgment reads thus: