1. These petitions are by the same assessee raising a common question relating to the assessment of turnover regarding purchases and sales of raw hides and skins, for which exemption was claimed during the three assessment years 1964-65, 1965-66 and 1966-67.
2. The assessee is a firm, M/s. Ravoof & Co., carrying on business at Srikakulam in raw hides and skins, bones and horns. The assessee-firm had also a tannery at Vizianagaram where the raw hides and skins are tanned and exported. In the returns of the firm for the three assessment years, on turnovers of Rs. 2,99,152.93 for the year 1964-65, Rs. 3,36,029.00 for the year 1965-66 and Rs. 7,45,313.12 for the year 1966-67, exemption was claimed on the ground that, they are not the last dealers in the State. Under entry 9 to Schedule 3 of the Andhra Pradesh Sales Tax Act (hereinafter referred to as the Act), hides and skins are taxable at the purchase point by the tanner and in all other cases at the point of purchase by the last dealer who buys them in the State. The Commercial Tax Officer, Srikakulam, who is the assessing officer held that the assessee-firm purchased the raw hides and skins for resale and had not used them for tanning and they were not liable to be taxed as the firm was not the last dealer. The Deputy Commissioner, Visakhapatnam, taking the assessment suo motu in revision, relying on the decision in State of Andhra Pradesh v. Lakshmi Oil Mills  20 S.T.C. 489, held that as they are purchases by a tanner, these turnovers are also liable for tax, withdrew the exemption granted by the Commercial Tax Officer, on those turnovers, and directed their inclusion in the taxable turnover of the assessee.
3. On appeal, the Sales Tax Appellate Tribunal also, relying on the decisions in State of Andhra Pradesh v. Lakshmi Oil Mills  20 S.T.C. 489 and Rafeeq Ahmed & Co. v. State of Andhra Pradesh  24 S.T.C. 430, confirmed the order of the Deputy Commissioner, Visakhapatnam.
4. Another contention raised before the Sales Tax Appellate Tribunal was that the assessee had closed his tannery from 21st September, 1965, onwards and, therefore, he should not have been treated as a tanner. This contention was also rejected by the Tribunal, and all the exempted turnovers were subjected to tax. Hence these petitions before this court.
5. A Division Bench of this High Court in Rafeeq Ahmed & Co. v. State of Andhra Pradesh and Anr.  24 S.T.C. 430, held that:
The moment the untanned hides and skins reach the hands of a tanner by way of purchase, the transaction becomes exigible to tax under the aforesaid entry, i.e., entry 9 of Schedule 3 of the Act. Therefore, no exemption could be claimed with regard to the purchases, even though they have been sold as untanned hides and skins.
6. This principle has been affirmed by the Supreme Court in Sri Venkateswara Rice, Ginning and Groundnut Oil Mill Contractors Company and Ors. v. The State of Andhra Pradesh and Ors. (Civil Appeals Nos. 1809 to 1812 of 1968)  28 S.T.C. 599 (S.C.), though the decision related to a turnover of groundnuts with regard to which there is a similar provision in the Act when purchased by a miller. The contention of the assessee, however, is that he was not carrying on business solely in the purchase of hides and skins for tanning, that he was also doing large-scale business in purchase and sale of raw hides and skins at a different place, i.e., at Srikakulam and not at Vizianagaram, where the tannery was situated, and as the two businesses were separately registered and he has also been keeping separate accounts for the businesses of purchase and sale of raw hides and skins and other commodities, all his purchases cannot be subjected to tax as purchases by a tanner. In the judgment of the Supreme Court cited above, it was pointed out that in none of the cases before it, it was shown that any of the assessees had purchased the groundnuts with a view to sell them and hence they need not go into the question as to what would be the position in law where a miller purchases some groundnut for milling and the rest for sale. This shows that in a case where a miller purchases a commodity for resale only, and some goods are purchased for subjecting them to the process of milling different considerations would arise and that, that question has been left open. In the present case, the assessee deals in raw hides and skins, bones and horns at Srikakulam and he has also a tannery at Vizianagaram, where he tans some of the hides and skins purchased by him and exports the tanned skins out of the country. His contention is that all the raw hides and skins purchased by him are not meant for tanning and a large quantity of them are meant for resale and he has been selling them also as such. Besides this he submitted that he was doing business in bones and horns. Nowhere in the Act is there any provision prohibiting independent transactions of that type. If there is, it will be in restraint of free trade guaranteed under Article 19 of the Constitution, and there is no other illegality attached to having independent dealings in purchase and sale of raw hides and skins. A firm can make purchases of raw hides and skins for the purpose of resale in several centres and have a tannery at another centre, where small quantities of the purchases are tanned for purpose of export. Therefore, it cannot be said that all the purchases of raw hides and skins by the firm were for tanning, however disproportionate the purchases may be in relation to the needs of the tannery. Therefore, it will not be correct to say that once a firm has a tannery, all the purchases made by it wherever they may be in the State, are deemed to have been made for the tannery and as such exigible to tax at the hands of the firm as a tanner. The assessment, therefore, depends on the circumstances of each case. What has to be seen is whether the purchases made were for the tannery as such or whether the assessee had also independent dealings in the purchases and sales of raw hides and skins. It is contended by the assessee that the purchases of raw hides and skins, for which exemption is claimed, were only for resale and not meant for tanning; that separate accounts have been maintained for that business separately, that while the firm at Srikakulam had been registered, the tannery at Vizianagaram had also been registered separately, that, therefore, these two should not be mixed though there may be a common assessment, that the turnover relating to the purchases and sales of raw hides and skins should be exempted as he was not the last dealer in the State exigible to tax under item 9 of Schedule 3 of the Act.
7. This aspect of the case should be examined with reference to the registration of the firm, the accounts and other circumstances available and if it is found that he had a separate and distinct business with regard to the purchases and sales of raw hides and skins he can only be considered as a dealer in so far as that turnover is concerned and not a tanner, and that turnover should be exempted from tax, if he is not the last dealer in the State.
8. The assessee had also contended that he had stopped his tanning-business on and from 21st September, 1965, and, therefore, all his purchases of raw hides and skins for the years 1965-66 and 1966-67 were not done by him as a tanner, but as a dealer and they were not exigible to tax. In support of this contention, he relied on his books of account showing that the tanning operations had ceased after 2nd May, 1965, and a certificate issued by the Regional Inspector of Factories showing that they had been intimated about the stoppage of the working of the factory. But from the fact that there were sales of hides and skins without opening stock in the years 1965-66 and 1966-67, the Tribunal held that unless there have been purchases and tanning during this period there could not have been sales of the tanned hides and skins and rejected the plea of the assessee. It is now contended that books have not been scrutinised. The sales of tanned hides and skins during this period may be from the old stock, and the sales alone will not show that the tannery was being worked during this period. There is need to investigate this question also further.
9. On these grounds, we set aside the orders of the Tribunal and the Deputy Commissioner subjecting the turnovers for the three years with regard to purchase and sale of raw hides and skins to tax and direct the Deputy Commissioner to dispose of the matter afresh after giving an opportunity to the assessee to prove the contentions put forward by him. No costs. Advocate's fee Rs. 100 in each.