Differential sales tax on hides and skins upheld where the goods were treated as distinct commodities within the State.

State sales tax on raw hides and skins and dressed hides and skins was upheld as a valid levy on intra-State sales, since the constitutional and statutory restrictions on declared goods did not bar taxation within the State or amount to a restraint on inter-State trade. The text treats raw hides and skins and dressed hides and skins as distinct commodities for sales tax purposes, supporting different taxable points under the Schedule. It also states that differential points and rates did not, by themselves, violate equality principles because unequal treatment was not shown between similarly situated goods or dealers, though reassessment on individual facts remained possible.

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Issues: (i) whether item 7(b) in the Second Schedule to the Madras General Sales Tax Act, 1959, together with the bracketed proviso, was unconstitutional for violating Articles 286(3), 301 and 304 of the Constitution of India and the restrictions under the Central Sales Tax Act, 1956; (ii) whether raw hides and skins and dressed hides and skins were the same commodity for the purpose of single-point taxation; and (iii) whether the differential points and rates of tax under item 7(a) and item 7(b) were discriminatory and violative of Article 14.

Issue (i): whether item 7(b) in the Second Schedule to the Madras General Sales Tax Act, 1959, together with the bracketed proviso, was unconstitutional for violating Articles 286(3), 301 and 304 of the Constitution of India and the restrictions under the Central Sales Tax Act, 1956.

Analysis: The taxing power of the State under Article 246(3) read with Entry 54 of List II extends to sales of goods within the State. The constitutional and statutory restrictions governing declared goods do not, by themselves, bar a State from taxing goods that are within its territorial jurisdiction. The scheme under section 4 of the Madras General Sales Tax Act, 1959, as applied to item 7 of the Second Schedule, was held not to impede the free movement of goods or to impose a restriction on inter-State trade within the meaning of Articles 301 or 304. The levy was on sales of goods inside the State and not on movement across State borders.

Conclusion: The impugned schedule entry was not unconstitutional on the ground of violation of Articles 286(3), 301 or 304.

Issue (ii): whether raw hides and skins and dressed hides and skins were the same commodity for the purpose of single-point taxation.

Analysis: The scheme of the Central Sales Tax Act, 1956, and the Madras General Sales Tax Act, 1959, treated raw hides and skins separately from dressed hides and skins. The earlier Supreme Court pronouncements on the same commodity were read as recognising that the two forms were not identical in law for sales tax purposes. The legislative treatment in the Second Schedule, with different taxable points and different rates, reflected a considered legislative view that the two forms were distinct merchandise.

Conclusion: Raw hides and skins and dressed hides and skins are distinct commodities and could be subjected to different taxable points.

Issue (iii): whether the differential points and rates of tax under item 7(a) and item 7(b) were discriminatory and violative of Article 14.

Analysis: Discrimination in fiscal law depends on unequal treatment of similarly situated goods or dealers. Since the goods were held to be distinct, differential treatment did not, by itself, establish discrimination. The rate structure was supported by the material considered by the Legislature, including expert advice and trade representations, and the court found no factual basis to hold that the burden was unequal in a constitutionally impermissible sense. The possibility of reassessment on the actual facts of each dealer's transactions remained open, but that did not undermine the validity of the provision itself.

Conclusion: The differential tax structure was not shown to be discriminatory or violative of Article 14.

Final Conclusion: The writ petitions challenging the validity and application of the impugned tax scheme failed, and the levy under item 7 of the Second Schedule to the Madras General Sales Tax Act, 1959, was sustained, subject to the assessing authority applying the principles stated in the judgment in individual reassessment proceedings.

Ratio Decidendi: Where the legislature treats two forms of goods as distinct commodities and taxes them at different points within the State, such differential taxation is valid unless it can be shown that the levy restrains inter-State trade or creates unconstitutional discrimination among similarly situated persons or goods.

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