Declared goods tax at a single ascertainable stage upheld, but refund rights on inter-State sale cannot be cut down by executive instructions.

Declared goods could be taxed by the State only at a single ascertainable stage, and the levy on untanned hides and skins was upheld because the entry, read with the rules, fixed that stage with sufficient certainty as the first purchase by a tanner or, in other cases, the last dealer. The classification between tanners, manufacturers and last dealers was held reasonable because untanned and tanned hides and skins were different commodities, so Article 14 was not offended. However, the statutory right to refund on inter-State sale of declared goods could not be curtailed by a Government order or rule 27-A, and the refund applications had to be considered on merits.

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Issues: (i) Whether entry 9(a) of the Third Schedule to the State Act, fixing the point of levy on untanned hides and skins at the purchase by a tanner or the last dealer, contravened section 15(a) of the Central Sales Tax Act, 1956. (ii) Whether the classification of dealers in hides and skins into tanners, manufacturers and last dealers was discriminatory and offended Article 14 of the Constitution of India. (iii) Whether the Government order and rule 27-A, which restricted refund of State tax on declared goods sold in the course of inter-State trade, were valid and could defeat the statutory right to refund under section 15(b) of the Central Sales Tax Act, 1956 and the proviso to section 6 of the State Act.

Issue (i): Whether entry 9(a) of the Third Schedule to the State Act, fixing the point of levy on untanned hides and skins at the purchase by a tanner or the last dealer, contravened section 15(a) of the Central Sales Tax Act, 1956.

Analysis: The declared-goods scheme permitted State taxation only at a single ascertainable stage. The entry, read with the rules requiring dealers to maintain accounts and issue certificates showing whether tax had already been paid, was held to indicate with sufficient precision that the taxable event was the first purchase by a tanner in the State, and in other cases the purchase by the last dealer. Raw and dressed hides and skins were treated as different commodities, so the State Legislature could fix different taxable points for the two categories. The entry therefore did not create uncertainty or multiple-stage taxation.

Conclusion: Entry 9(a) did not contravene section 15(a) of the Central Sales Tax Act, 1956 and was upheld.

Issue (ii): Whether the classification of dealers in hides and skins into tanners, manufacturers and last dealers was discriminatory and offended Article 14 of the Constitution of India.

Analysis: The classification rested on a real distinction between untanned and tanned hides and skins, which were different commodities in trade. The Legislature could validly treat them differently for taxation, and the differing tax burden flowed from differences in the goods and the transactions, not from hostile discrimination. The construction that the levy applied to the first purchase by a tanner removed any element of arbitrary selection by the assessing authority.

Conclusion: The classification was reasonable and did not violate Article 14.

Issue (iii): Whether the Government order and rule 27-A, which restricted refund of State tax on declared goods sold in the course of inter-State trade, were valid and could defeat the statutory right to refund under section 15(b) of the Central Sales Tax Act, 1956 and the proviso to section 6 of the State Act.

Analysis: The right to refund under section 15(b) arose once declared goods taxed under the State law were sold in inter-State trade or commerce. That statutory right could not be curtailed by the Government order or by conditions imposed through rule 27-A. The petitioners, being liable to State tax as tanners or last purchasers and having sold the goods in inter-State trade, were entitled to refund. The Government order was inapplicable to their case, and the assessing authorities were required to entertain and decide the refund applications on merits without reference to that order.

Conclusion: The petitioners were entitled to refund consideration under section 15(b) and the proviso to section 6, and the restrictive effect of the Government order could not be applied against them.

Final Conclusion: The challenge to the tax entry failed, but the petitioners succeeded on the refund issue, and the authorities were directed to consider their refund applications in accordance with law.

Ratio Decidendi: Declared goods may be subjected to State tax only at a single ascertainable stage, and where such goods are later sold in inter-State trade, the statutory right to refund under section 15(b) cannot be curtailed by executive instructions or subordinate rules.

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