1976 (12) TMI 173 - HC - VAT and Sales Tax

High Court dismisses tax exemption claim for tanned hides & skins in inter-State sales, citing non-local tax payment.

The Madras High Court dismissed three revision petitions concerning a claim for exemption from tax under the Central Sales Tax Act for the sale of tanned ... - Issues:- Claim of exemption under the Central Sales Tax Act for turnover in question.- Interpretation of statutory provisions regarding taxation on hides and skins.- Application of notification issued by the Governor of Tamil Nadu for inter-State sales.Analysis:The judgment by the Madras High Court involved three revision petitions concerning the petitioner's claim for exemption from tax under the Central Sales Tax Act for the turnover related to the sale of tanned hides and skins in three different assessment years. The Tribunal noted that the petitioner purchased raw hides and skins within the State, tanned them, and sold them inter-State. The petitioner argued that exemption should be granted for inter-State sales of tanned hides and skins since tax had been paid on the locally purchased raw hides and skins. However, the Tribunal rejected this claim.The Court delved into the statutory provisions to analyze the petitioner's claim. Section 14 of the Central Sales Tax Act lists hides and skins as goods of special importance in inter-State trade. Section 15 imposes restrictions on the taxation of declared goods, including hides and skins. The Tamil Nadu General Sales Tax Act, through section 4, specifies the tax payable on declared goods like hides and skins. The Governor of Tamil Nadu issued a notification exempting tax on inter-State sales of declared goods subject to certain conditions.The Court emphasized that the notification required the identity of goods for which tax was paid under the State Act to match those for which tax is payable under the Central Sales Tax Act. It highlighted the distinction between raw hides and skins and tanned hides and skins, categorizing them separately in the tax schedule. The Court concluded that purchasing raw hides and skins locally and paying tax on them did not automatically exempt the inter-State sales of tanned hides and skins from tax. Since the petitioner did not pay tax on tanned hides and skins under the State Act, they were not entitled to the exemption provided in the Governor's notification.Ultimately, the Court dismissed the petitions, upholding the Tribunal's decision and emphasizing that the goods subject to taxation under the State Act and the Central Act must be identical for exemption to apply. The petitioner's failure to pay tax on tanned hides and skins locally rendered them ineligible for the exemption, leading to the dismissal of the petitions with no costs awarded.