1. This batch of petitions raises the validity of item 7(a) and (b) in the Second Schedule to the Madras General Sales Tax Act, 1959. In Writ Petition No. 734 of 1970 the petitioner is a dealer in hides and skins, whose turnover for the assessment year 1968-69 was determined which consisted of purchases of raw hides and skins, as well as of tanned hides and skins, goat and sheep hair sales and purchase of tanning materials. A smaller amount of the turnover related to kasar sales. But we are concerned only with the first two types of turnover. The first transaction of purchase of raw hides and skins included both local purchases, as well as inter-State purchases. The second comprised of local and export sales of tanned hides and skins. The local purchases of raw hides and skins amounted to the value of Rs. 68,20,377.15 and inter-State purchases of similar goods were valued at Rs. 41,11,618.33. Local sales of hides and skins accounted for a turnover of Rs. 75,047. . No question arises as to export sales of similar goods. The locally purchased raw goods had gone into the tanned hides and skins exported. There was no means of finding out from the accounts of the assessees as to how much of the raw hides purchased locally had gone into tanned hides and skins which were exported. The assessing authority, therefore, estimated the proportionate value of the raw goods used in tanned goods exported.
2. It is not contended that the local purchases of raw hides and skins are not liable to tax under item 7(a) of the Second Schedule at the prescribed rate of tax. But it is said that (1) Sections 4, 6 and 9 of the Act in so far as they charge inter-State sales are invalid, and (2) that item 7(b) being violative of Article 304(a) of the Constitution, it is invalid, and if that be so, Clause (a) of item 7 is not severable and should, therefore, fall with Clause (b). We find no substance in the first of the grounds. Only we have got to read the language of the three sections to reject the contention. None of those sections charges inter-State sales. It was pointed out that an inter-State sale was equated to an inside sale and on that basis, it should be taken that these sections charged also inter-State sales. We do not think that any case has laid down that proposition that an inter-State sale is also an inside sale. But what has been held by this Court is that for the purpose of giving a locus to an inter-State sale, with reference to the components of sale, the concept of inside sale has been adverted to, but not to equate inter-State sale to a local or intra-State sale.
3. The other ground as urged by the counsel for the petitioners derives much of its support from Firm A. T. B. Mehtab Majid & Co. v. State of Madras  14 S.T.C. 355. In the scheme of single point taxation of declared goods as envisaged in the Act and item 7(a) and (b) in the Schedule thereto raw hides and skins are charged at the point of last purchase in the State at the rate of 3 per cent, and dressed hides and skins which have not been subjected to tax under the Act as raw hides and skins are charged at the point of first sale in the State at the rate of 1 per cent. That would imply, particularly in the context of Sections 14 and 15 of the Central Sales Tax Act, that hides and skins, whether at the raw or dressed state, should be subjected only to a single tax. Therefore, if raw hides and skins locally purchased have suffered tax, necessarily it would mean that dressed hides and skins made out of such raw hides and skins will not be liable to tax. Freedom from tax of sales of dressed hides and skins would depend on the corresponding raw hides and skins having suffered tax at the purchase stage in the State. When out of imported raw hides and skins, tanned hides and skins are made, which are sold locally, such sales at the point of the first sale are liable to charge. In such circumstances, the contention for the petitioners is that, whereas dressed hides and skins sold locally, but which have been made out of imported raw hides, are subjected to tax, similar sales of dressed hides and skins made out of raw hides and skins which have suffered tax at the purchase stage are not subject to tax and this is discriminatory and is inhibited by Article 304(a).
4. In our opinion, the petitioners cannot succeed on this contention. Article 304 forges certain restrictions on trade, commerce and intercourse among States. While the State Legislature has power to impose tax on local goods as it thinks fit, a restriction is placed upon the Legislature not to levy discriminatory taxes on goods imported from other States. It says that the Legislature of a State can make a law imposing on goods imported from other States or Union Territories any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced. The discrimination that the State Legislature is forbidden to make is one between goods imported and similar goods manufactured or produced in the State. But in the scheme of things in single point taxation of declared goods, tax can be levied only at a single point in a series of transactions. Section 14 of the Central Act declares the goods specified as declared goods which include 'hides and skins, whether in a raw or dressed state'. Section 15 in its present form enjoins that every sales tax law of a State shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods, be subject to the following restrictions and conditions, namely, '(a) the tax payable under that law in respect of any sale or purchase of such goods inside the State shall not exceed three per cent, of the sale or purchase price thereof, and such tax shall not be levied at more than one stage.' The restriction is on taxing an inside sale and is twofold, one as to the ceiling in the rate of tax permitted and the other that the tax shall not be levied at more than one stage. As a result of the import of this restriction on the State Legislature, where it provides for levy of tax at the point of the last purchase of raw hides and skins, it is not competent to impose a further tax on the first sale of dressed hides and skins made out of raw hides and skins which had suffered tax earlier. But for this restriction, the single point levy on declared goods could not be effectuated. We are of opinion, therefore, that, while the State would perhaps very much wish to levy tax on the dressed hides and skins as well, it was unable to do so because of the restriction forged upon it by the terms of Section 15(a) of the Central Act. If this resulted in a discrimination, as has been contended for the petitioners, it is not one which is made by the State Legislature, and it is not one which the State Legislature can help. It is the indirect result of the impact of Section 15 read with Section 14 of the Central Act on the State's power to tax sale or purchase of declared goods.
5. We are also not satisfied that actually there was any discrimination resulting from the scheme of item 7(a) and (b) of the Second Schedule to the local Act read with Sections 14 and 15 of the Central Act. Hajee Abdul Shukoor & Co. v. State of Madras  15 S.T.C. 719 took the view that raw hides and skins and dressed hides and skins are different commodities commercially and this view has been followed by this Court in more than one case. But even so, from the standpoint of declared goods, hides and skins, whether in a raw or dressed state, can suffer tax at only one stage. While, therefore, the two commodities are distinct and different, viewed as declared goods and because of the restriction on the local Legislature forged by Section 15 of the Central Act, it cannot be said that there is any discrimination such as inhibited by Article 304(a). In Firm A. T. B. Mektab Majid & Co. v. State of Madras  14 S.T.C. 355, which the petitioners had used as the sheet-anchor for their argument of discrimination, there is this observation :
We do not consider that the mere circumstance of a tax having been paid on the sale of such hides or skins in their raw condition justifies their forming goods of a different kind from the tanned hides or skins which had been imported from outside.
6. As we mentioned in Hajee Abdul Shukoor & Co. v. State of Madras  15 S.T.C. 719, raw hides and dressed hides were treated as different commodities. But in Firm A.T.B. Mehtab Majid & Co. v. State of Madras  14 S.T.C. 355 it does not appear that the impact of Sections 14 and 15 of the Central Act on the scheme of local taxation of declared goods was brought to the notice of the Supreme Court. With due respect, we are inclined to think, in that case, the Supreme Court was looking at the matter from an entirely different angle and not from the standpoint of the two sections we mentioned in the Central Act. The contention that Clause (b) of item 7 of the Second Schedule to the local Act is violative of Article 304(a) fails. That being the case, the question of severability or otherwise of Clause (a) of that item does not arise. While the writ petitions would seem to have been admitted and rules nisi issued mainly on the question we have dealt with, some other points also are sought to be raised. But we consider that the relative assessees should urge them before the appellate authority in the appeals open to them and they cannot be permitted to by-pass the statutory remedy and seek their remedies directly under Article 226 of the Constitution.
7. These points include also the contention of one of the petitioners that the assessing authority has used a kind of formula not justified by the provisions of the local Act to estimate the turnover of raw hides, which have been used in the tanned hides and skins sold either locally or exported. Although the assessee has maintained accounts as required by Rule 26, still, it is for the assessee to establish the particular raw hides which have gone into the manufacture of tanned hides and skins. But if he fails to do so, and has mixed up on the ground that it is impossible to keep separate accounts, the assessing authority is left with no alternative but to use its best judgment and estimate the relative turnover to be brought to charge.
8. The petitions are dismissed with costs in each. Counsel's fee Rs. 250 in each.