THE STATE OF TAMIL NADU vs MADURAI SOUTH INDIA CORPORATION (P) LTD.

The Supreme Court held that the sales of cotton yarn to the respondent in Tamil Nadu constituted a first sale under the Madras General Sales Tax Act, 1959, as the goods were in the state when the interstate sale contract was made. The Court ruled that once the first sale was taxed in Tamil Nadu, subsequent transfers of those goods from branches outside the state to local dealers did not constitute a second sale liable for tax. Thus, the appeal was dismissed, affirming the High Court's decision that the sales were exempt from further taxation.