Taxation of hides and skins: raw purchases are taxed once, and dressed goods are not taxed again on the same turnover.

The statutory scheme under the Central Sales Tax Act, the Tamil Nadu General Sales Tax Act, the Second Schedule and rule 5 was read together to determine the tax treatment of raw hides and skins later tanned and sold as dressed hides and skins. The governing principle, drawn from the later Supreme Court construction of entries 7(a) and 7(b), is that locally purchased raw hides and skins are taxed at the purchase stage, and the same goods are not again taxable under the dressed-hide entry when sold after tanning within the State. The earlier contrary view was treated as no longer good law.

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Issues: Whether raw hides and skins purchased within the State and later tanned and sold as dressed hides and skins were liable to tax both on the purchase turnover of the raw hides and skins and again on the sale turnover of the dressed hides and skins, or whether the scheme of the Act required taxation only in the manner applied by the revenue.

Analysis: The scheme of the Central Sales Tax Act, 1956, the Tamil Nadu General Sales Tax Act, 1959, the Second Schedule and rule 5 of the Tamil Nadu General Sales Tax Rules, 1959, was examined together. The Court noted that the earlier view taken in the State decision was not consistent with the later construction placed by the Supreme Court on entries 7(a) and 7(b) of the Second Schedule. The later decision was treated as laying down the governing principle for the combined operation of the provisions, namely that locally purchased raw hides and skins attract tax at the purchase stage, and when those very goods are thereafter tanned and sold as dressed hides and skins within the State, the same turnover is not again taxable under the dressed-hide entry. The earlier contrary view was therefore treated as no longer good law.

Conclusion: The revenue's method of assessment was upheld, and the revision petitions were dismissed.

Ratio Decidendi: Where the statutory scheme taxes locally purchased raw hides and skins at the purchase stage, the same goods, after tanning and sale as dressed hides and skins within the State, cannot be subjected again to tax under the dressed-hide entry if they have already borne tax in their raw form.

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