Discriminatory sales tax on imported tanned hides and skins was held unconstitutional under Article 304(a).

Levy of sales tax on tanned hides and skins imported from outside the State was held discriminatory where the turnover and single-point assessment rules imposed a heavier burden than on comparable goods tanned within the State. The Court applied Article 304(a) and the settled constitutional bar on discriminatory taxation, noting that the impugned method taxed imported goods on sale value in the hands of the first dealer while similar local goods could avoid a further levy if tax had already been borne on the raw hides or skins. The assessment could not be sustained to the extent of that unequal burden and was liable to be set aside accordingly.

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Issues: Whether the levy of tax on the sale value of tanned hides and skins imported from outside the State, as applied under the turnover and assessment rules, was discriminatory and unconstitutional under Article 304(a) of the Constitution of India.

Analysis: The assessment turned on the manner in which hides and skins were taxed under the Madras sales tax scheme. Under the statutory framework, the tax incidence depended on the prescribed rules governing total turnover and the single-point levy for hides and skins. The impugned method resulted in tanned hides and skins brought from outside the State being taxed on their sale value in the hands of the first dealer, while comparable goods tanned within the State could escape a further levy where tax had already been borne on the raw hides or skins. The Court treated this as a difference in tax burden operating between similarly situated goods solely because the raw material had originated outside the State. Applying the constitutional prohibition against discriminatory taxation, and following the principle affirmed in the later Supreme Court decisions, the Court held that the relevant basis of levy could not be sustained to the extent it discriminated against imported hides and skins.

Conclusion: The levy was unconstitutional to the extent that it imposed a discriminatory burden on sales of imported hides and skins, and the assessment was liable to be set aside to that extent.

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