TaxTMI 
TaxTMI 
TaxTMI 
1997 (11) TMI 458
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....hides and skins. According to the appellants they purchase raw hides and skins and after dressing they are sold in the course of inter-State trade. The contention of the dealers before the assessing authority was that hides and skins, whether in a raw or dressed form, are declared goods under section 14(iii) of the Central Sales Tax Act, 1956 and they are regarded by the said Act as a single commodity. This being so section 15 of the Central Sales Tax Act provides that the goods which have suffered tax once cannot be taxed again at the time of inter-State sale. As the tax had been levied at the time of purchase of raw hides and skins, therefore, there should be no levy of tax on their inter-State sale after the said raw hides and skins had been dressed. 3.. The assessing authority, in all these cases, did not accept the said contention as the authorities were of the opinion that raw hides and skins were a commodity which were different from dressed hides and skins and, therefore, the restrictions contemplated by section 15 of the Central Sales Tax Act were not applicable. 4.. The decision of the assessing authority was challenged by some of the appellants by taking recourse to t....
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....f any sale or purchase of such goods inside the State shall not exceed four per cent of the sale or purchase price thereof, and such tax shall not be levied at more than one stage; (b) where a tax has been levied under that law in respect of the sale or purchase inside the State of any declared goods and such goods are sold in the course of inter-State trade or commerce, and tax has been paid under this Act in respect of the sale of such goods in the course of inter-State trade or commerce, the tax levied under such law shall be reimbursed to the person making such sale in the course of inter-State trade or commerce in such manner and subject to such conditions as may be provided in any law in force in that State......" (Provision extracted is the one which was in force in 1987) After the promulgation of the Central Sales Tax Act the State Legislature introduced the Second Schedule to the State Act providing for the rates as well as the points of levy in respect of declared goods. This was done in view of the provisions of sections 14 and 15 of the Central Act. Item No. 7 of the Second Schedule in so far as it related to the levy of sales tax on hides and skins, as it wa....
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.... do not undergo any change and, therefore, "raw hides and skins" and "dressed hides and skins" cannot be considered as commercially separate commodities, the difference being only in form. This being so, it was contended, hides and skins can be taxed at only one stage in the State with the result that if they have been subjected to tax at the raw state under the local Act, then section 15 of the Central Sales Tax Act would have the effect of preventing tax being levied on dressed hides and skins. 8. In the alternative, it was contended that even assuming that "raw hides and skins" and "dressed hides and skins" could be considered to be commercially distinct commodities under section 14(iii), even then section 14(iii) of the Central Sales Tax Act regards hides and skins as a single commodity and they cannot be taxed twice over in any one State. Elaborating this contention, it was submitted that section 15 of the Central Sales Tax Act provides that every sales tax law of a State shall, in so far as it imposes or authorises the imposition of tax on the sale or purchase of declared goods, imposes two restrictions, namely, the tax payable in respect of "such goods" cannot exceed 4 per ....
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.... STC 228 (SC); [1989] 1 SCR 445, the question which arose was whether leather splits and coloured leather were hides and skins which fall in the category of "declared goods" as set out in section 14 of the Central Sales Tax Act and, therefore, entitled to the concession available under section 15 of the Act, namely, the benefits of single point taxation and of a smaller rate of tax. This Court held that leather splits were nothing but cut pieces of hides and skins and would, therefore, fall within section 14(iii) of the Central Sales Tax Act. Dealing with the question relating to coloured leather, the court dealt with the processes which the raw hides and skins undergo till they are tanned and observed as follows: "Structurally, hides and skins have a thick middle layer called corium, which is converted to leather by tanning. The operations involved in leather manufacture however fall into three groups. Pre-tanning operations include soaking, liming, deliming, bating and pickling and post-tanning operations are splitting and shaving, neutralising, bleaching, dyeing, fat-liquoring and stuffing, setting out, samming, drying, staking and finishing. These operations bring about chemic....
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....ition of sales tax once again on wires, despite the rods having been subjected to sales tax. 12.. Even though the aforesaid decisions seem to support the contentions urged on behalf of the appellants, we find that the two questions involved in these cases, namely, whether dressed hides and skins and raw hides and tanned skins are different commodities and, secondly, whether section 14(iii) of the Central Sales Tax Act regards them as a single commodity, appear to have been decided differently by a Constitution Bench of this Court in Hajee Abdul Shukoor and Company v. State of Madras [1964] 15 STC 719; [1964] 8 SCR 217. The appellant therein had contended that tanned and untanned hides and skins did not form different commodities and, therefore, tax could not be levied on the sales of hides and skins in the raw condition when no tax is levied on the sale of hides and skins in the tanned condition. On the other hand, the State had contended that they were two different commodities and constituted two separate commodities for the purpose of taxation. The court at page 727 of STC (page 227 of SCR) observed that "hides and skins in the untanned condition are undoubtedly different as ar....
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....d the same commodity. Therefore, the first contention raised in the present case by the learned counsel for the appellant cannot be accepted notwithstanding the reliance placed by them on the aforesaid decision in the case of Telanganna Steel Industries case [1994] 93 STC 187 (SC); (1994) Supp 2 SCC 259. It may here be noted that in none of these decisions was the attention of the learned Judges drawn to the aforesaid observations of the Constitution Bench in Hajee Abdul Shukoor's case [1964] 15 STC 719 (SC); [1964] 8 SCR 217. 14.. The other submission that section 14(iii) of the Central Sales Tax Act, in any case, treats raw hides and skins and dressed hides and skins as one and the same commodity, because it is included in the same sub-heading in section 14 also stands concluded by Hajee Abdul Shukoor's case [1964] 15 STC 719 (SC); [1964] 8 SCR 217. As already noted hereinabove, this Court specifically referred to those observations in Abdul Subhan's case [1960] 11 STC 173 (Mad.) which had interpreted section 14(iii) of the Central Sales Tax Act to mean that hides and skins whether dressed or raw were a single commodity and this observation was disapproved when at page 728 of ST....
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....asis added) 15.. The language of section 14(iii) of the Central Sales Tax Act is similarly worded as the language of aforesaid sections 5(vi) and 5A of the Madras General Sales Tax Act. It is while interpreting this that it was held that raw and dressed hides and skins were different articles and that is why the Legislature could provide differently about their taxation. The fact that both the articles are mentioned under the same heading is also of no material consequence. After referring to Raghbir Chand Som Chand v. Excise and Taxation Officer [1960] 11 STC 149 (Punj) wherein it was held that ginned and unginned cotton constituted one commodity, inter alia, for the reason that ginned and unginned cotton were under the same head and thereby indicating that the Legislature looked upon ginned and unginned cotton as one and the same thing, it was held in Hajee Abdul Shukoor's case [1964] 15 STC 719 (SC) at page 728; [1964] 8 SCR 217 at page 229 that "the fact that certain articles are mentioned under the same heading in a statute or the Constitution does not mean that they all constitute one commodity. The inclusion of several articles under the same heading may be for a reason oth....
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....ve had the effect of regarding raw hides and skins and dressed hides and skins as being treated as a single commodity for the purposes of levy of tax. 17.. The words "hides and skins, whether in a raw or dressed state" in section 14(iii) of the Central Sales Tax Act clearly seem to indicate that the Legislature recognised that raw hides and skins was an item different from dressed hides and skins. As has already been noticed hereinabove it is after undergoing a manufacturing process involving various stages that raw hides and skins become dressed hides and skins. As observed in the State of Tamil Nadu v. Pyare Lal Malhotra [1976] 37 STC 319 (SC) at page 325; [1976] 3 SCR 168 at page 173 "sales tax law is intended to tax sales of different commercial commodities and not to tax the production or the manufacture of particular substances out of which these commodities may have been made. As soon as separate commercial commodities emerge or come into existence, they become separately taxable goods or entities for purposes of sales tax. Where commercial goods, without change of their identity as such goods, are merely subjected to some processing or finishing or are merely joined togeth....