TaxTMI 
TaxTMI 
TaxTMI 
1991 (2) TMI 389
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....r purchase of declared goods, are subjected to certain restrictions; (a) tax payable in respect of the sale or purchase of such goods inside the State shall not exceed 4 per cent; (b) if such goods are again sold in the course of inter-State trade or commerce and tax is paid under the Central Act on the said transactions, the tax paid under the State law shall be reimbursed to the person who sold the goods in the course of inter-State sale or purchase. The Central Act is occasioned by the provisions of article 286 of the Constitution. Article 286, inter alia, governs the levy of a tax on sale or purchase of goods, in the course of import of the goods into or export of the goods out of the territory of India, as well as, the levy of a tax on an interState sale or purchase transaction. Section 3 of the Central Act states as to when a sale or purchase of goods is said to take place in the course of inter-State trade or commerce. Section 4 of the same Act states as to when a sale or purchase of goods is said to take place outside a State. Section 5 of this Act, declares as to when a sale or purchase of goods is said to take place in the course of import or export. It reads: "5. W....
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.... hides and skins" are referred, just like item (iv) of section 14 which enumerates different goods made of "iron and steel" under the same entry. While the petitioners rely on the decision of the Supreme Court in State of Tamil Nadu v. Mahi Traders [1989] 73 STC 228; AIR 1989 SC 1167 (for convenience sake, referred to as Mahi Traders' case), the learned Government Advocate strongly relied on an earlier decision of the Supreme Court in Hajee Abdul Shukoor and Co. v. State of Madras [1964] 15 STC 719; AIR 1964 SC 1729 (for short, referred to hereinafter as Hajee's case). Mr. Dattu, the learned Government Advocate, pointed out that the decision in Hajee's case [1964] 15 STC 719 (SC); AIR 1964 SC 1729, is by a larger Bench and precedently binding, in preference to the decision in Mahi Traders' case [1989] 73 STC 228 (SC); AIR 1989 SC 1167, by a Bench of two learned Judges. To appreciate the ratio of Hajee's case [1964] 15 STC 719 (SC); AIR 1964 SC 1729, its peculiar facts are to be noted. The petitioners challenged the constitutional validity of section 2 of the Madras General Sales Tax (Special Provisions) Act, 1963, as violative of article 14 of the Constitution. The impugned prov....
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....of section 14 of the Central Act. Two types of articles were involved therein; (i) "splits" and (ii) coloured leather. Petitioners contended that they were all hides and skins; while the State contended that "splits" are scraps, i.e., cut pieces. Regarding coloured leather, the contention of the State was that it is a totally new and sophisticated product known as leather and can no longer be described as hides and skins. State's contentions were negatived by the Madras High Court and the Supreme Court affirmed the decision of the High Court. While considering the case of coloured leather, the Supreme Court referred to the processes undergone by raw hides and skins before becoming dressed hides and skins, which are ready for use. While raw hides and skins cannot be preserved for long, the "dressed or finished" material could be preserved almost indefinitely. At page 234 of STC; (1171 of AIR) it is stated: "The statutory expression refers to 'hides and skins in a dressed state'. The guidelines issued for identification of 'finished' leather for exports by the Indian Standards Institution (ISI) refer to as many as 19 operations or processes undergone during manufacture of 'finished ....
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....sidered the various processes culminating in the dressing up of the hides and skins, did not change its essential quality as hides and skins. The processes applied are only to preserve the commodity called hides and skins, even if any one process results in a different commercial commodity. Dressing results in the article being ready for utilisation further. The concluding part of Tribunal's order extracted above, which was approved by the Supreme Court, is also indicative of the same result. The decision of the Madras High Court (from which above appeal arose in Supreme Court) is reported in Mahi Traders v. State of Tamil Nadu [1980] 45 STC 327. At page 331, the High Court observed: "For the purpose of the application of section 14(iii), it is not necessary to find out whether the resultant product is commercially different or not, and the only thing necessary to find out is whether it comes within the expression 'hides and skins, whether in a raw or dressed state' or not. The expression used in section 14(iii) namely, 'hides and skins, whether in a raw or dressed state', is of wide connotation and the latter part of the expression is not restrictive in anyway of the goods menti....