Raghubar Dayal, J.
1. These are three petitions under art. 32 by the petitioners, which is apartnership firm, praying for a declaration that s. 2 of the Madras GeneralSales Tax (Special Provisions) Act, 1963 (Act No. 11 of 1963) hereinaftercalled the Act, is ultra vires the Constitution and of no effect and for a writof mandamus directing the State of Madras to refrain from enforcing any of theprovisions of that section. Each of the petitions relates to a particularassessment year.
2. The petitioners are dealers in skin, carrying on business at Shenbakkam,Vellore, North Arcot District, in the State of Madras. They purchase raw skinsfrom places both within and outside the State of Madras, tan the same and sellthem through their agents in Madras. They were assessed to a certain amount ofsales-tax, in accordance with the provisions of the Madras General Sales TaxAct 1939 (Madras Act IX of 1939) and r. 16(2)(ii) of the rules framedthereunder viz., the Madras General Sales Tax (Turnover and Assessment) Rules,on the turnover of hides and skins purchased in the untanned condition outsidethe State, but tanned within the State, with respect to each of the assessmentyears 1955-56, 1956-57 and 1957-58. The tax was assessed at 3 pies per rupee onthe price of tanned hides and skins for the years 1955-56 and 1956-57 and atthe rate of 2 per cent on the turnover for the year 1957-58.
3. The petitioners challenged earlier the validity of r. 16 on the groundthat it contravened Art. 304 of the Constitution. Their contentions werenegatived by the Sales Tax Authorities. The petitioners then filed writpetition No. 148 of 1959 in this Court against the assessment of tax for theyear 1957-58. This Court allowed it as it had held on November 22, 1962 in FirmMehtab Majid and Co. v. State of Madras (1963) Supp. 2 S.C.R. 435 that r.16(2) of the rules was invalid as it discriminated against the imported hidesand skins which had been purchased or tanned outside the State. Subsequently,the validity of r. 16(1) of the rules was challenged in this Court in writ petitionsNos. 43 and 44 of 1963 by M. J. Jamal Mohideen & Co. Those writs were filedon March 5, 1963 and it was contended that sub-rule (1) standing by itself wasultra-vires the Constitution as it had the effect of selecting fordiscriminatory taxation only raw hides and skins and leaving un-taxed sales oftanned hides and skins in Madras.
4. On June 10, 1963, the Governor of Madras promulgated Madras Ordinance No.3 of 1963. The explanatory statement attached to the Ordinance stated :
'The decision of the Supreme Court (in W.P. 147 of1959 - Firm ATB Mehtab Majid & Co. v. The State of Madras) will result inclaims for refund of tax being preferred by dealers in hides and skins alreadyassessed under the impugned rule thereby resulting in huge loss of revenue andwill also result in administrative complications. It is therefore considerednecessary to avoid these difficulties by removing the discrimination in thematter of levy of tax on hides and skins pointed out by the Supreme Court andto provide for the assessment or reassessment and collection of the tax fromthe dealers in hides and skins without any discrimination by levying the tax inall cases on the basis of the purchase price of the hides and skins in theuntanned condition.'
5. The relevant provisions of the Ordinance read :
'2. Special provisions inrespect of tax on sale of hides and skins in certain cases :-
(1) Notwithstanding anythingcontained in the Madras General Sales Tax Act, 1939 (Madras Act IX of 1939)(hereinafter referred to as the said Act), or in the rules made thereunder(hereinafter referred to as the said rules), the following provisions shallapply in respect of tax on sale of hides and skins during the period commencingon the 1st April 1955 and ending on the 31st March 1959.
(i) In the case of raw hidesand skins, the tax under the said Act shall be levied from the dealer who isthe last purchaser in the State and not exempt from taxation under sub-section(3) of s. 3 of the said Act at the rate of two percent of the amount for whichthey are bought by him.
(ii) In the case of dressedhides and skins (which were not subjected to tax under the said Act as rawhides and skins), the tax under the said Act shall be levied from the dealerwho in the State is the first seller in such hides and skins not exempt fromtaxation under sub-section (3) of section 3 of the said Act at the rate of twopercent of the amount for which such hides and skins were last purchased in theuntanned condition.
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Explanation II - For theremoval of doubts it is hereby declared that in respect of sales to whichsub-section (1) applies, nothing in rule 16 of the Madras General Sales Tax(Turnover and Assessment) Rules, 1939, shall apply or shall be deemed ever tohave applied.
(2) Any dealer in hides andskins who has been finally assessed under the provisions of the said Act andthe said rules, may within a period of ninety days from the date of thecommencement of this Ordinance apply to the authority or officer concerned forreassessment under the provisions of this Ordinance along with the correct andcomplete return;
* * * * * *
(3) Subject to the provisionsof sub-section (1), the provisions of the said Act and the said rules shall bedeemed to be in force for the purpose of assessment or re-assessment andrecovery of the tax on sale of hides and skins during the period mentioned insub-section (1) and, notwithstanding any provision regarding limitation in thesaid Act and the said rules, it shall be competent for the authority or officerconcerned to assess or reassess and recover the tax on sale of hides and skinsduring the period mentioned in sub-section (1) as if this Ordinance had been inforce at the relevant time.
(4) The amount of tax on saleof hides and skins during the period mentioned in sub-section (1) alreadycollected from any dealer shall be adjusted towards the tax due from him onsuch sale as a result of assessment or re-assessment in accordance with theprovisions of this Ordinance and if the tax on such assessment or reassessment-
(i) is in excess of the amountof tax on such sale of hides and skins already collected from such dealer, suchexcess shall be recovered from him; or
(ii) is less than the amount oftax on such sale of hides and skins already collected from such dealer, thedifference shall be refunded to him.
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6. On July 12, 1963, the Sales Tax Appellate Tribunal, Madras dealt with theappeals of the petitioners against the assessment for the year 1955-56 and1956-57, and in view of s. 2(3) of the Ordinance, set aside the orders ofassessment and remanded the matter for re-assessment in accordance with theprovisions of the aforesaid Ordinance.
7. On August 28, 1963, the Act received the assent of the Governor. Sub-s.(2) of s. 1 provided that the Act would be deemed to have come into force onJune 10, 1963. Sub-section (1) of s. 2 of the Act reads :
'(1) Notwithstandinganything contained in the Madras General Sales Tax Act, 1939 (Madras Act IX of1939) (hereinafter referred to as the said Act), or in the rules madethereunder (hereinafter referred to as the said rules), during the periodcommencing on the 1st April, 1955 and ending on the 31st March 1959, in respectof sale of dressed hides and skins (which were not subjected to tax under thesaid Act as raw hides and skins), the tax under the said Act shall be leviedfrom the dealer who in the State is the first seller in such hides and skinsnot exempt from taxation under sub-section (3) of section 3 of the said Act atthe rate of two per cent of the amount for which such hides and skins were lastpurchased in the untanned condition.
Explanation I. - The burden ofproving that a transaction is not liable to taxation under this sub-sectionshall be on the dealer.
Explanation II. - For the removalof doubts it is hereby declared that in respect of sales to which sub-section(1) applies, nothing in rule 16(2) of the Madras General Sales Tax (Turnover& Assessment) Rules, 1939, shall apply or shall be deemed ever to haveapplied.'
8. It is to be a noticed that s. 2(1) of the Act is in respect of tax onsale of dressed hides and skins and not in respect of tax on sale of raw hidesand skins with which clause (i) of s. 2(1) of the Ordinance dealt. Consequentlythe other provisions of the other sub-sections of s. 2, though practically thesame as those of the Ordinance, have been suitably modified. They are thereforenot set out.
9. It is the validity of s. 2 of the Act that is challenged in thesepetitions, on the ground that it violates the provisions of Arts. 14, 19(i)(f)and (g), 31,286(2), 301 and 304 of the Constitution for the following reasons:-
1. Persons who had purchased rawhides and skins in the State of Madras in the years 1955-56 and 1956-57 paidsales tax at 3 pies per rupee and paid no further tax when those hides, afterbeing tanned, were sold. The petitioners having purchased raw hides and skinsfrom outside the State, did not at the time pay tax at that rate on thepurchase price of the raw hides and skins but were now liable, under theimpugned provision, to pay tax at the rate of 2 per cent of the amount forwhich such hides and skins were last purchased in untanned condition. Thus thepetitioners would pay a higher tax than what was paid by the seller of dressedhides and skins purchased in the State in the raw condition and then tanned andsold and that therefore s. 2(1) discriminates against imported untanned hidesand skins.
2. In the case of sale of dressedhides and skins, s. 2(i) levies a tax at the rate of 2 per cent of the amountfor which hides and skins in the untanned condition were last purchased by adealer himself outside the State. S. 2(i) creates discrimination between thecase of a local merchant selling locally dressed hides and skins and the casewhere the dealer who is the first seller in the State and who purchased onlydressed hides and skins outside the State and then sold them in the State forin his case he had not purchased such hides and skins in the untanned conditionand has therefore not become liable to be assessed under s. 2(1)
3. Parliament had by TheEssential Goods (Declaration & Regulation of Tax on Sale or Purchase) Act52 of 1952 declared hides and skins essential for the life of the community.The Act provided for taxation on the sale of hides and skins during the periodsuch declaration was in force, i.e., between 1-4-1955 and 11-9-1956 andtherefore required the assent of the President, in view of Art. 286(3) of theConstitution as it stood prior to its repeal in September, 1965. As no suchassent had been received, the Act cannot affect the sales prior to September11, 1956 and so no tax can be levied in respect of those sales.
4. Rule 16(1) became invalid whenthis Court held r. 16(2) invalid. Rule 16(1) has not been revived by the newAct. It follows that no tax on sale of raw hides and skins during the period1955-57 is valid and that therefore the imposition of a tax under sub-section(1) of s. 2 of the impugned Act imposes a tax on the imported hides and skinswhen sold in the State in the tanned condition while no tax is to be levied onthe sale of the hides and skins purchased in the State in the raw condition,then tanned and sold.
10. These contentions are sought to be met for the respondent State on thefollowing grounds :
1. It is open to the legislatureto treat dressed hides and skins as a separate category from raw hides andskins. They are in fact commercially different commodities and that thereforedifferent rates of tax for the two different categories of goods can be legallylevied.
No discrimination is made betweenlocally tanned goods and outside-tanned goods as in both cases tax is levied onthe first sale of such goods within the State. It does not matter that thehides and skins tanned locally do not attract that liability on the first salein view of their having been taxed earlier at the untanned stage because of thespecial provision of exemption.
2. It is not correct that s. 2(1)will not apply to a dealer purchasing tanned hides and skins outside the Stateand selling them within the State. It is not necessary that the seller of thetanned hides and skins in the State be himself the last purchaser of theuntanned hides and skins for the purpose of his liability under s. 2(1).
3. Art. 286(3) as it stood priorto the amendment in 1956 imposed fetters only on post-Constitutional law andtherefore it could not operate on the Madras General Sales Tax Act, 1939, whichhad been enacted much earlier. S. 2(1) of the impugned Act simply lay down themachinery for the assessment and collection of tax imposed by s. 3 as modifiedby s. 5 of the 1939 Act which did not require Presidential assent.
4. The decision of this Court inFirm A. T. B. Mehtab's Case (1) does not affect the validity of r. 16(1).Sub-rule (1) and sub-rule (2) of r. 16 are severable.
We are of opinion that the first contention for thepetitioners is sound.
11. The effect of sub-section (1) of s. 2 of the Act is the same as was theeffect of sub-rule (2) of r. 16 of the Turnover and Assessment Rules, 1939, andwhich was held to be invalid by this Court in Mehtab's Case (1963) Supp. 2 S.C.R. 435. The impugned sub-section provides for the assessment of tax on thesale of dressed hides and skins which were not subjected to tax under the 1939Act as raw hides and skins and thus exempts from taxation, in accordance withthe provisions of sub-section (1) of s. 2 of the Act the sale of tanned hidesand skins with respect to which tax had been paid on their sale in the rawcondition. Such tanned hides and skins had been exempted from taxation undersub-clause (ii) of r. 2 of the Turnover and Assessment Rules. The same is theposition in the present case. The present rule therefore is discriminatory andinvalid for the same reasons which led this Court to hold sub-rule (2) of r. 16invalid in Mehtab's Case (1963) Supp. 2 S.C.R. 435.. There is no escape fromthis conclusion.
12. In the earlier case, discrimination was brought about on account of saleprice of tanned hides and skins to be higher than the sale price of untannedhides and skins, though the rate of tax was the same, while in the presentcase, the discrimination does not arise on account of difference of the priceon which the tax is levied as the tax on the tanned hides and skins is leviedon the amount for which those hides and skins were last purchased in theuntanned condition, but on account of the fact that the rate of tax on the saleof tanned hides and skins is higher than that on the sale of untanned hides andskins. The rate of tax on the sale of tanned hides and skins is 2 per cent onthe purchase price of those hides and skins in the untanned condition while therate of tax on the sale of raw hides and skins in the State during 1955 to 1957is 3 pies per rupee. The difference in tax works out to 7/1600th of a rupee,i.e. a little less than 1/2 nayepaise per rupee. Such a discrimination wouldaffect the taxation up to the 1st of August 1957 when the rate of tax on thesale of raw hides and skins was raised to 2 per cent of the sale price.
13. The second contention has no force. There is nothing in sub-section (1)of s. 2 of the Act to suggest that the seller of the tanned hides and skins inthe State, should himself be the purchaser of those hides and skins in the rawcondition from outside the State. An importer can import tanned hides and skinsas well as untanned hides and skins from outside the State. If he importstanned hides and skins, he need not necessarily be the last purchaser of thosehides and skins in the untanned condition. In that case, it may be difficult toassess the tax on the basis laid down in sub-section (1) of s. 2, as the importermay not be able to inform about the price at which those hides and skins werelast purchased. Such a price may then have to be determined by estimate. Incase the importer himself purchases the untanned hides and skins, and thenimports them either in the same condition or in the tanned condition, therewould be no such difficulty. The difficulty existing in the former case doesnot necessarily mean that the importer of tanned hides and skins when hehimself is not the last purchaser, cannot be taxed under sub-section (1) of s.2 of the Act.
14. The next question is whether sub-rule (1) of r. 16 became invalid whenthis Court declared sub-rule (2) invalid in Mehtab's Case (1963) Supp. 2 S.C.R. 435.. The contention for the petitioner is that it became invalidbecause hides and skins, whether tanned or untanned, constituted one commodityand that therefore tax cannot be levied on the sale of hides and skins in theraw condition when no tax is levied on the sale of hides and skins in thetanned condition. It is contended for the State that they are differentcommodities, and constitute two separate categories for purposes of taxation.We are inclined to the view that they form different categories.
15. Hides and skins in the untanned condition are undoubtedly different asarticles of merchandise than tanned hides and skins.
16. It is urged for the petitioners that tanning is only a preservativeprocess which makes no change in the nature of the article itself.
17. The question whether tanned skins and hides are different commoditiesfrom raw skins and hides has been considered by Courts a few times.
18. In Government of Andhra v. Nagendrappa 7 S.T.C. 568 is theobservation :
'The tanning of raw hides and skins is amanufacturing process as a result of which the product that emerges isdifferent from the raw material.'
19. In State of Andhra Pradesh v. M. A. Abdul Bari and Co. 9 S.T.C. 231 237. is also an observation to the same effect, it being :
'The stage of collection is also appropriate as,after the tanning, the hides and skins become differentcommodities..........'.
20. In Encyclopaedia Britannica, Vol. 13, p. 845, it is stated, inconnection with 'leather' :
'Leather is manufactured from the hides and skinsof various animals. ....The object of tanning (or the manufacture of leather)is the conversion of the putresible skin into a material which under ordinaryconditions of use does not putrefy, and which can be wetted and subsequentlydried without becoming hard or horny.'
21. Reference may also be made to State of Travancore Cochin v. ShanmughaVilas Cashew Nut Factory : 1SCR53 in which it was held that rawcashewnuts become a different commodity commercially after the application ofcertain processes as a result of which they are converted into edible kernels.
22. It is therefore not correct to say that the process of tanning bringsabout no change in the raw hides and skins and that therefore both types ofhides and skins form one commodity.
23. The petitioners rely on two cases in support of their contention thatthe tanned and untanned hides and skins do not form different commodities butconstitute one commodity.
24. In Abdul Subban and Co. v. State of Madras 11 S.T.C. 173 is theobservation :
'Section 14(3) of the Central Sales Tax Act, 1956(Act 74 of 1956) also treats hides and skins, whether dressed or raw, as asingle commodity..... Since skins tanned or untanned, constitute only one classof goods and the sale of that class of goods can be taxed only at a singlepoint, obviously there can be no tax on a sale of tanned goods, if tax hasalready been paid on an earlier transaction when those skins wereuntanned.'
25. No reason is given why the two kinds of hides and skins are treated as asingle commodity.
26. The other case relied on is Raghbir Chand Som Chand v. Excise andTaxation Officer 11 S.T.C. 149.. This case does not directly concern hidesand skins. It however held that ginned cotton and un-ginned cotton constituteone commodity, as the process of ginning just separates the seeds as thecharacter or identity of cotton is not altered thereby, and as ginning is not amanufacturing process. It was taken into consideration that the Constitution aswell as the statutes dealing with the matter treat ginned and un-ginned cottonunder the same head, indicating thereby that the legislature looked upon ginnedand un-ginned cotton as one and the same thing.
27. The fact that certain articles are mentioned under the same heading in astatute or the Constitution does not mean that they all constitute onecommodity. The inclusion of several articles under the same heading may be fora reason other than that the articles constitute one and the same thing.
28. In this connection we may refer to the Madras General Sales Tax Act,1959. Section 4 of this Act provides that the sales tax on the sale or purchaseof declared goods will be payable at the rate and only at the point specifiedagainst each article in the II Schedule.
29. The Second Schedule refers to raw hides and skins separately fromdressed hides and skins against serial No. 7. The rate of tax is different andso is the point at which the tax is to be levied. This will indicate that in1959 the legislature in Madras considered raw hides and skins a differentcommodity from dressed hides and skins. There is no good reason why thelegislature be not attributed the same intention when it enacted the 1939 Actespecially when there are other reasons also to point to the same conclusion.
30. We therefore hold that raw hides and skins and dressed hides and skinsconstitute different commodities of merchandise and they could therefore betreated as different goods for the purposes of the Act.
31. The provision of the Act at the relevant time for the levy of tax on thesale of hides and skins was s. 5, clause (vi) which reads :
'Subject to suchrestrictions and conditions as may be prescribed, including conditions as tolicences and licence fees.....
(vi) the sale of hides and skins,whether tanned or untanned shall be liable to tax under section 3, sub-section(1) only at such single point in the series of sales by successive dealers asmay be prescribed.'
32. In 1957 this provision was replaced by s. 5A(4) which read :
'The sale of hides and skins, whether in a raw ordressed state, shall be liable to tax only at such single point in the seriesof sales by successive dealers as may be prescribed but at the rate of twopercent on the turnover at that point.'
33. The series of sales referred to in this provision, to our mind, meantthe series of sales of each kind of hides and skins namely the series of salesof raw hides and skins and the series of sales of dressed hides and skins anddo not mean a single series of sales which includes successive sales in thefirst instance of raw hides and skins and after tanning successive sales oftanned hides and skins.
34. The real question is whether these provisions treat raw hides and skinsand dressed or tanned hides and skins as one class of goods for the purpose oftaxation or as two different classes of goods. If they treat them as one classof goods, the contention for the petitioner loses force as taxing of hides andskins at the time of their sale in a raw condition meets the requirements oflaw as hides and skins could be taxed only at a single point. If the dressed ortanned hides and skins are not taxed at the time of their sale that does notoffend against the statutory provisions. No question of discrimination arisesas a sale of raw hides and skins of whatever origin, i.e., whether produced inthe State or imported into the State would be equally liable to the levy oftax.
35. If the statute treats both these kinds of hides and skins as different commoditiesthe provision of sub-rule (1) of r. 16 providing for the levy of tax on rawhides and skins at a certain point even in the absence of any provision for thetaxation of dressed hides and skins cannot be said to be discriminatory andinvalid. The articles to be taxed were not the same and the legislature couldprovide differently about their taxation.
36. We therefore hold that sub-rule (1) of r. 16 did not become invalid onthis Court's declaring sub-rule (2) of that rule invalid in Mehtab's Case(1963) Supp. 2 S.C.R. 435..
37. The only question that now remains for consideration is whether theState legislature was competent to enact the provisions of sub-section (1) ofs. 2 of the Act. Hides and skins had been declared under Act LII of 1952 to beessential for the life of the community. Art. 286(3) of the Constitution as itstood before its amendment by the Constitution VI Amendment Act of 1956, onSeptember 11, 1956, read :
'No law made by the Legislature of a State imposingor authorising the imposition of, a tax on the sale or purchase of any suchgoods as have been declared by Parliament by law to be essential for the lifeof the community shall have effect unless it has been reserved for theconsideration of the President and has received his assent.'
38. This provision, however, did not apply to the 1939 Act which had beenenacted much earlier than the commencement of the Constitution. By August 28,1963, when the Act was enacted by the Madras Legislature, Art. 286(3) had beenamended and Act LII of 1952 had also been repealed. Consequently there was noConstitutional requirement for the Act being reserved for the assent of thePresident before it could be enforced. It is contended for the petitioner thatthe Act really enacted for a period, when if passed, it had to receive thePresident's assent for its enforcement and that therefore the State Legislaturecould not even in 1963 enact this provision affecting the taxation law inrespect of the sale or purchase of goods which were goods declared essentialfor the life of the community. We do not see why such a fetter be placed on thelegislative power of the State legislature. The State legislature is free toenact laws which would have retrospective operation. Its competence to make alaw for a certain past period, depends on its present legislative power and noton what it possessed at the period of time when its enactment is to haveoperation. We therefore do not agree with this contention.
39. The matter can be looked at in a different way. The 1939 Act required noassent of the President. The State Legislature was doing in 1963 what thelegislature enacting the 1939 Act was supposed to have enacted and thereforeits enactment was not governed by the Constitutional requirement for an Act tobe enacted during the period Act LII of 1952 was in force.
40. Lastly, it has been urged for the petitioner that hides and skins havebeen declared to be of special importance in inter-State trade or commerce bys. 14 of the Central Sales Tax Act of 1956. The tax imposed by sub-section (1)of s. 2 of the Act is a tax on the sale of hides and skins in the course ofinter-State trade or commerce and therefore fell within entry No. 92A of list Iof Seventh Schedule and that therefore the State legislature was not competentto impose it. It could impose by virtue of entry No. 54 in List II of SeventhSchedule tax on the sale or purchase of goods subject to the provisions ofentry No. 92A of List I. There is no force in this contention. The tax isimposed on the sale which took place within the State. The State legislature iscompetent to impose such a tax. The mere fact that the article sold in theState had been brought from outside the State does not make the sale of thatarticle a sale in the course of inter-State trade or commerce. It is only whenA, in State X, purchased through a commission agent in a State Y and receivesthe articles purchased through the commercial agency that the sale comes withinthe expression 'in the course of inter-State trade' : See State of TravancoreCochin v. Shanmugha Vilas Cashew Nut Factory : 1SCR53 . (supra at p.70).
41. It has been argued for the State that the Act is not affected by theprovisions of Arts. 301 to 304 of the Constitution as they affect the legislativepower with respect to Acts to operate in the future and not the power to enactActs which would operate in the past. We do not consider the contention sound.The Act makes provision for a period subsequent to the commencement of theConstitution and therefore is to be subject to the provisions of theConstitution.
42. We therefore hold that sub-section (1) of s. 2 of the Act discriminatesagainst imported hides and skins which were sold up to the 1st of August 1957upto which date the tax on sale of raw hides and skins was at the rate of 3pies per rupee or 19/16th percent. This however does not mean that thesub-section is valid with respect to the sales which took place subsequent toAugust 1, 1957. The sub-section being void in its provisions with respect to acertain initial period, we cannot change the provision with respect to theperiod as enacted to the period for which it could be valid as that would bere-writing the enactment. We have therefore to hold that sub-s. (1) of s. 2void accordingly hold so.
43. In view of the provisions of sub-section (1) of s. 2 being invalid theother provisions of that section become unenforceable.
44. We therefore allow the petitions with costs, one hearing fee, and holds. 2(1) of the Act invalid and order the issue of a writ of mandamus to theState of Madras and the Sales-tax Authorities under the Act to refrain fromenforcing any of the provisions of s. 2 of the Act.
45. Petitions allowed.