Export sales and single-point hides tax turn on contract terms, customs-frontier passage, and the governing taxable point.

Single-point taxation under the Madras General Sales Tax scheme meant that the taxable point for tanned hides and skins depended on the governing rule in force, so the earlier purchase of raw hides from unlicensed dealers could not be treated as already taxable and the opening stock value was not excluded on that basis. For export protection under Article 286, the decisive test was the true character of the contract and whether property passed only after the goods crossed the customs frontier. Sales routed through intermediaries were treated as export sales where the contract and evidence showed export as the governing substance, so they fell outside State taxing power.

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Issues: (i) Whether the value of the opening stock of raw hides and skins, purchased in the earlier year and converted into tanned goods in the assessment year, could be included in the turnover of the tanned hides and skins for tax purposes; (ii) Whether the sales routed through Gordon Woodroffe and Co. and Dharamsee Parpia were sales in the course of export and therefore outside the taxing power of the State under Article 286 of the Constitution.

Issue (i): Whether the value of the opening stock of raw hides and skins, purchased in the earlier year and converted into tanned goods in the assessment year, could be included in the turnover of the tanned hides and skins for tax purposes.

Analysis: The liability to tax on hides and skins was governed by the statutory scheme of single point taxation under section 5(vi) of the Madras General Sales Tax Act and rule 16 of the Turnover and Assessment Rules. The relevant rule in force for the material year fixed the taxable point for tanned hides and skins within the State, but the earlier purchase of the opening stock from unlicensed dealers was not itself within the charging reach of the then applicable rule. The prior decisions on the pre-amendment rule were held not to assist the revenue, because the assessee could not be treated as having been liable to tax on the earlier purchase turnover and the later amended rule could not be used to fasten tax on a turnover which was not taxable in the earlier year.

Conclusion: The opening stock value could not be excluded from the assessee's claim for relief on the footing that tax ought to have been levied earlier, and the contention for exemption from inclusion failed.

Issue (ii): Whether the sales routed through Gordon Woodroffe and Co. and Dharamsee Parpia were sales in the course of export and therefore outside the taxing power of the State under Article 286 of the Constitution.

Analysis: A sale is protected if it occasions export or if, on the terms of the contract, property passes only after the goods cross the customs frontier. On the facts, the transaction through Dharamsee Parpia was treated as a direct export sale to the foreign buyer acting through the intermediary, and the transaction through Gordon Woodroffe and Co. was construed from the contract terms and surrounding evidence as one where the property in the goods passed only beyond the customs barrier. The advance received before shipment was treated as a loan secured on the goods, and the delivery within the State did not alter the export character of the bargain. The State taxing power was therefore excluded by Article 286.

Conclusion: Both transactions were held to be sales in the course of export and were not liable to sales tax.

Final Conclusion: The revision succeeded in part: the export sales were exempt, while the assessee did not obtain complete relief on the turnover dispute concerning the opening stock.

Ratio Decidendi: For export protection under Article 286, the decisive test is the true character of the contract and the point at which property passes or export is occasioned, and in hides-and-skins taxation the levy depends on the statutory fixation of the single taxable point under the governing rules.

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