TaxTMI 
TaxTMI 
1997 (11) TMI 489
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....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 and they are regarded by the sald 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 skin had been dressed. 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 was not applicable. The decision of the assessing authority was challenged by some of the appellants by taking recourse to the provisions under the Act and after an adverse decision from the Tribunal, revision petitions....
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.... more than one stage; (b) Where a tax has been levied under that law in respect of the sale or purchase inside the State or 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 IInd Scheduled 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 "Item No.7 of the Second Schedule in so far as it related to the levy of sales tax on hides and skins, as it was originally enacted and in force upto 22.3.1987 read as hereunder: -------- Sl. No. Description of goods Point Of levy Rate of tax percent Effe....
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.... commodities, the difference being only in form. This being so, it was contended, hide 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. 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, insofar as it imposes or authorises the imposition of tax on the sale or purchase of declared goods, imposes two restrictions, namely, the tax payable of declared goods, imposes two restrictions, namely, the tax payable in respect of "such goods" cannot exceed 4% and; secondly it cannot be levied at more than one stage. The expression "such....
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....d 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 process in 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 picking 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 chemical changes in the leather substance and influence the physical characteristics of the leather, and different varieties of commercial leather are obtained by suitab....
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....lants, 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 the single commodity, appear to have been decided differently by a Constitution Bench of this Court in Hajee Abdul Shakoor and Company Vs. State of Madras [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 227 observed that "hides and skins in the untanned condition are undoubtedly different as articles of merchandise than tanned hides and skins." If then dealt with the contention that tanning was only a preservative process which makes no change in the nature of the article itself, a submission which has also been raised in th....
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....n 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 Abdul Shakoor's case. As already noted herein above, this Court specifically referred to those observations in Abdul Subban's case (supra) which had interpreted Section 14 (iii) of the Central Sales Tax Act to mean that hides and skins whether dressed or raw were single commodity and this observation was disapproved when at page 228 this Court observed in Abdul Shakoor's case that "no reason is given why the two kinds of hides and skins are treated as a single commodity". The Court was called upon to refer to the provisions of Section 5 Clause (vi) of the Madras General Sales Tax Act, 1959 which related to the levy of tax on the sale of hides and skins and which read as follows: "Subject to such restrictions and conditions as may be prescribed, including conditions as to licences and licence fees..... (vi) The sale of hides and skins, whether tanned or untanned shall be liable to tax under section 3, sub- section (1) only at such single point....
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....that the legislature looked upon ginned and un-ginned cotton as one and the same thing, it was held in Abdul Shakoor's case 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 other than that the articles constitute one and the same thing." This means that merely being put under one head would not make two different commodities a single item for purposes of taxation. When dressed hides and skins are different goods from raw hides and skins, we do not find anything in the language of Section 14 of the Central Sales Tax Act which can lead us to the conclusion that these two different commodities were to be regarded as constituting a single commodity for the purpose of taxation. Sections 14 and 15 of the Central Sales Tax Act have to be read together as they constitute a scheme relating to taxation of goods of special importance in inter-state trade or commerce. While Section 14 enumerates the items which are regarded as being goods of special importance in inter-state trade or commerce,....