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K.A.K. Anwar and Company Vs. the State of Tamil Nadu - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case NumberT.C. Nos. 351 and 352 of 1983 (Revision Nos. 122 and 123 of 1983 respectively)
Judge
Reported in[1984]56STC58(Mad)
ActsCentral Sales Tax Act, 1956 - Sections 14 and 15; Tamil Nadu General Sales Tax Act, 1959 - Sections 4, 4A and 15
AppellantK.A.K. Anwar and Company
RespondentThe State of Tamil Nadu
Advocates:C. Natarajan, Adv.
Cases ReferredGordon Woodroffe & Co. (Madras) P. Ltd. v. State of Tamil Nadu
Excerpt:
sales tax - inter-state sale - sections 14 and 15 of central sales tax act, 1956 and sections 4, 4a and 15 of tamil nadu general sales tax act, 1959 - revision tax case against order of tribunal that turnover represented not local sales but inter-state sales - assessee contended that goods have suffered tax on its purchase at raw material stage and same cannot be taxed again on inter-state sales - raw hides and skins are commercially different from tanned hides and skins - both commodities put in one item under section 14 does not mean that legislature intended to treat them as single article - tax case dismissed. - - they filed appeals before the sales tax appellate tribunal after their appeals before the appellate assistant commissioner failed. 3602, revenue, dated 28th december,..........1977-78 a turnover of rs. 16,17,155.23 represented local sales, of tanned hides and skins and not inter-state sales. likewise for the year 1978-79, they contended that a sum of rs. 7,84,897.40 represented local sales. they also contended that, in any event, even if the sales turnovers are taken to represent inter-state sales of tanned hides and skins, they are exempt by g.o. ms. no. 3602, revenue, dated 28th december, 1963. the tribunal, after going through the relevant records and documents, held that the said two items of turnovers did not represent local sales, but actually represented inter-state sales. the tribunal then went into the question as to whether the said inter-state sales were exempt by g.o. ms. no. 3602, revenue, dated 28th december, 1963, as claimed by the assessees......
Judgment:

Ramanujam, J.

1. The assessees are the same in both the cases. For the assessment years 1977-78 and 1978-79, they were assessed by the Commercial Tax Officer, Purasawakkam, on a taxable turnover of Rs. 20,36,799.97 and Rs. 22,71,424.96 respectively. They filed appeals before the Sales Tax Appellate Tribunal after their appeals before the Appellate Assistant Commissioner failed. Before the Tribunal, the assessees objected to the levy of tax on the ground that for the year 1977-78 a turnover of Rs. 16,17,155.23 represented local sales, of tanned hides and skins and not inter-State sales. Likewise for the year 1978-79, they contended that a sum of Rs. 7,84,897.40 represented local sales. They also contended that, in any event, even if the sales turnovers are taken to represent inter-State sales of tanned hides and skins, they are exempt by G.O. Ms. No. 3602, Revenue, dated 28th December, 1963. The Tribunal, after going through the relevant records and documents, held that the said two items of turnovers did not represent local sales, but actually represented inter-State sales. The Tribunal then went into the question as to whether the said inter-State sales were exempt by G.O. Ms. No. 3602, Revenue, dated 28th December, 1963, as claimed by the assessees. The Tribunal following the judgment of this Court in Gordon Woodroffe & Co. (Madras) P. Ltd. v. State of Tamil Nadu [1977] 40 STC 130 held that tanned hides and skins being different commercial products, the inter-State sales of tanned hides and skins cannot be exempted on the basis of G.O. Ms. No. 3602, Revenue, dated 28th December, 1963. In that view, the Tribunal dismissed the appeal filed by the assessees. Aggrieved by the decision of the Tribunal, the present tax cases have been filed by the assessees.

2. So far as the factual finding given by the Tribunal is concerned, namely, that the disputed turnover in these two year represented not local sales, but inter-State sales, the same has not been questioned before us. The learned counsel for the assessees has only raised a legal contention that, though the court have uniformly held that raw hides and skins and tanned hides and skins are different commercial products, in view of section 14 of the Central Sales Tax Act which treats hides and skins both at the raw stage and an the tanned stage as a single commodity and specifies it as goods of special importance for the purpose of the Central Sales Tax Act, hides and skins in whatever form should be treated as a single commodity, and that as the goods in this case have suffered tax under the Tamil Nadu General Sales Tax Act on its purchase at the raw stage, the same cannot be taxed again on inter-State sales.

3. This point is covered against the assessees by the decision of this Court in Gordon Woodroffe & Co. (Madras) P. Ltd. v. State of Tamil Nadu [1977] 40 STC 130. The identical question arose before the Bench in that case. In that case, the assessee purchased raw hides and skins within the State, tanned them and sold them in the course of inter-State trade or commerce. Based on the provisions of section 15(b) of the Central Sales Tax Act, 1956, sections 4 and 4A of the Tamil Nadu General Sales Tax Act, 1959, and G.O. Ms. Nos. 3602, Revenue, dated 28th December, 1963, the assessee claimed that it was not liable to pay tax under the Central Act in respect of inter-State sales of tanned hides and skins because it had paid tax under section 4 of the Tamil Nadu Act in respect of the raw hides and skins purchased by it locally. The Tribunal rejected the assessee's claim and the same was upheld by this Court. This Court held that Notification in G.O. Ms. No. 3602, Revenue, dated 28th December, 1963, contemplated the identity of the goods with reference to which tax had been levied under the Tamil Nadu Act and tax payable under the Central Act, that though raw hides and skins and tanned hides and skins had been grouped together as item (iii) of section 14 of the Central Act, they had been put in two separate entries 7(a) and 7(b) in the Second Schedule to the Tamil Nadu Act and the rate of tax as well as the point at which the tax was leviable had been shown separately, and therefore simply because the assessee purchased raw hides and skins locally and paid tax under item 7(a) of the Second Schedule to the Tamil Nadu Act with reference to such purchase and subsequently tanned them, it did not follow that the tanned hides and skins which the assessee sold in the course of inter-State trade were commercially the same commodity with reference to which tax had already been paid and as tanned hides and skins alone were the subject-matter of inter-State sales and they were not subjected to any tax under item 7(b) of the Second Schedule to the Tamil Nadu Act, the assessee was not entitled to the exemption under the notification.

4. The learned counsel for the assessees submits that the said decision in Gordon Woodroffe & Co. (Madras) P. Ltd. v. State of Tamil Nadu [1977] 40 STC 130 requires reconsideration in view of certain observations made by this Court in certain subsequent decisions. The learned counsel refers to certain comment made in Mahi Traders v. State of Tamil Nadu [1980] 45 STC 327 as throwing a doubt about the correctness of the decision rendered in Gordon Woodroffe & Co. (Madras) P. Ltd. v. State of Tamil Nadu [1977] 40 STC 130. But on a perusal of the decision in Mahi Traders v. State of Tamil Nadu [1980] 45 STC 327, we cannot agree with the learned counsel that the correctness of the decision in Gordon Woodroffe's case [1977] 40 STC 130 has in any way been doubted in latter case. In Mahi Traders v. State of Tamil Nadu [1980] 45 STC 327 the question arose whether leather splits and coloured skins will come within the scope of the expression 'hides and skins, whether in a raw or dressed state' occurring in section 14(iii) of the Central Act. The court took the view that the leather splits and coloured skins will come within the expression of 'hides and skins' and therefore it is liable only to a single point levy as provided in section 15 of the Act and not to multi-point levy. As a matter of fact, in that case, there is no reference to the decision in Gordon Woodroffe & Co. (Madras) P. Ltd. v. State of Tamil Nadu [1977] 40 STC 130. It cannot therefore be said that Mahi Traders v. State of Tamil Nadu [1980] 45 STC 327 has thrown any doubt as to the correctness of the decision rendered in Gordon Woodroffe & Co. (Madras) P. Ltd. v. State of Tamil Nadu [1977] 40 STC 130.

5. Learned counsel then refers to the decision of the Andhra Pradesh High Court in State of Andhra Pradesh v. Associated Tanners [1975] 36 STC 32 wherein, after construing the expression 'hides and skins' whether in a raw or dressed state occurring in item (iii) of section 14, has taken the view that as hides and skins, whether tanned or untanned, has been shown as a single entry, the legislature should be taken to have treated both tanned and untanned skins as a single commodity and therefore the hides and skins, whatever the form, is liable one to a single point tax, being a commodity of special importance. But the identical expression has been construed by this Court in a different manner and this Court as already stated, has taken the view that raw hides and skins are commercially different from tanned hides and skins, and merely because hides and skins either in the raw stage or in the tanned stage had been put as item (iii) of section 14 of the Central Act together, it does not mean that the legislature has intended to treat them as commercially a single article. We are in entire agreement with the view taken by the learned Judges of this Court in Gordon Woodroffe & Co. (Madras) P. Ltd. v. State of Tamil Nadu [1977] 40 STC 130.

6. Apart from the reason given in the said decision, there is another reason as to why the grouping of raw hides and skins and tanned hides and skins as one item in section 14(iii) cannot be taken to show the intention of the legislature to treat both the commodities as commercially one commodity. Section 15 of the Central Sales Tax Act imposes certain restrictions and conditions in regard to tax on sale or purchase of declared goods within a State. Clause (b) of section 15 says that where a tax has been levied under the local law in respect of the sale or purchase inside the State of any declared goods and such goods are sold in the course of inter-State trade or commerce and tax has been paid under the Central Act in respect of the sale of goods of tax levied under the local law shall be reimbursed to the person making such sale in the course of inter-State trade or commerce in such manner and subject to such conditions as may be provided in any law in force in that State. In this case, the local law, that is the Tamil Nadu General Sales Tax Act makes a clear-cut distinction between raw hides and skins and dressed hides and skins, and raw hides and skins are treated commercially as a different commodity from tanned hides and skins. Item 7(a) of the Second Schedule provides that raw hides and skins are taxable at the point of last purchase in the State at three per cent. Under item 7(b) of the Second Schedule, dressed hides and skins which were not subjected to tax under this Act as raw hides and skins are taxable at the point of first sale in the State at two per cent. Thus, under the local law, the point at which and the rate at which the tax is to be levied are entirely different for raw hides and skins and for dressed hides and skins. A close reading of section 15(b) would indicate that the relief under the provision can be claimed only when there is complete identity between the goods which were sold locally and the goods sold inter-State. Therefore, merely because both raw hides and skins and tanned hides and skins had been grouped as one item in section 14(iii) of the Central Act, it is not possible to say that for the purpose of the Central Sales Tax Act, they should be taken to be commercially the same commodity. In this view also, we have to hold that the decision of the Tribunal is correct and it is upheld. The tax cases are accordingly dismissed. No costs.

7. The learned counsel for the assessees makes an oral request for leave to appeal to the Supreme Court against the judgment just now rendered by us. However, we feel that this is not a fit and proper case for the grant of leave to appeal to the Supreme Court. Hence the oral request rejected.


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