TaxTMI 
TaxTMI 
2008 (7) TMI 873
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....gistered dealers were liable to tax. Aggrieved thereby, the petitioner herein preferred an appeal and the TAT, by its order dated December 12, 1994 following the judgment of this court in P. Subba Raju & Company v. State of A.P. [1989] 72 STC 317; [1988] 7 APSTJ 116, rejected the appeal holding that bone meal and bone sinews were independent commodities, that crushed bones, horns and hooves stood on the same footing as bone meal and bone sinews and as such were all liable to tax under section 6A of the APGST Act. Sri S.R. Ashok, the learned Senior Counsel appearing for the revision petitioner would submit that the judgment of this court in P. Subba Raju Company [1989] 72 STC 317; [1988] 7 APSTJ 116 is no longer good law since the Supreme Court in A.A. Sulaiman v. Deputy Commissioner of Sales Tax 1997] 105 STC 324, in a matter arising under section 5A of the Kerala General Sales Tax Act, 1963 had noted with approval that the appeal preferred by the Revenue against the judgment of the Madras High Court, in State of Tamil Nadu v. Subbaraj and Co. [1981] 47 STC 30 had been dismissed by the Supreme Court in S.L.P. (C) Nos. 10810-11 of 1981 and 3481-83 of 1982 on July 30, 1984 and, ther....
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.... in the course of inter-State trade or commerce, shall pay tax on the turnover relating to the purchase as aforesaid at the rate mentioned in section 3 or 4, as the case may be. (ii) Purchases any goods (the sale or purchase of which is liable to tax under this Act) from a person other than a registered dealer, and (a) consumes such goods in the manufacture of other goods for sale or consumes them otherwise, or; (b) disposes of such goods in any manner other than by way of sale in the State, or (c) despatches them to a place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce, shall pay tax on the turnover relating to purchase aforesaid at the same rate at which, but for the existence of the aforementioned circumstances, the tax would have been leviable on such goods under section 5 or section 6. In the order under revision, the Tribunal observed that the petitioner had purchased raw bones from unregistered dealers and had subjected them to the required process thereby obtaining bone meal, bone sinews, crushed bones and horns and hooves, that on the sale of these commodities he had paid sales tax and that the Deputy Commi....
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....ing from the consumed raw bones have higher utility than the raw bones which were consumed and they must be held as commercially different commodities from raw bones. As is evident from the table extracted hereinabove, section 5A of the Kerala General Sales Tax Act, section 7A of the Tamil Nadu General Sales Tax Act and section 6A of the APGST Act relate to the levy of purchase tax on goods purchased where such goods are consumed in the manufacture of other goods. In Subbaraj and Co. [1981] 47 STC 30, the Madras High Court held that the use of the word "consumes" contemplated that the goods purchased should have been devoured or exhausted in the process of manufacture with the result that the identity of the goods had been completely lost and, as long as the identity of the goods remained, the goods purchased and used in the manufacture of some other goods could not be said to have been consumed in the process of manufacture of other goods. The Madras High Court further observed that the raw bones purchased by the dealers could not be said to have been consumed in the process of bringing into existence crushed bones, bone grist, bone meal, fluff or horn hooves apart from the dist....
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....special leave petition filed against the order of the High Court would not attract the doctrine of merger. (K.S Krishnaswamy v. Union of India [2006] 13 SCC 215). The judgment of the Division Bench of the Madras High Court, in Subbaraj and Co. [1981] 47 STC 30, therefore, cannot be said to have been affirmed by the Supreme Court merely because the special leave petition filed thereagainst was dismissed by the Supreme Court for it is well-settled that dismissal of the special leave petition filed against the judgment of a High Court does not mean that the said judgment is affirmed by such dismissal. (Ramnik Vallabhdas Madhvani v. Taraben Pravinlal Madhvani [2004] 1 SCC 497). The fact, however, remains that the judgment of the Supreme Court, in A.A. Sulaiman [1997] 105 STC 324, (judgment in C. A. Nos. 561 to 564 of 1987 dated March 20, 1997), is evidently after special leave was granted. It must be borne in mind that once special leave has been granted, the door for the exercise of appellate jurisdiction of the Supreme Court is let open. Any order passed thereafter would be an appellate order and would attract the doctrine of merger. It would not make any difference if the order is a....
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....g followed for it is well settled that the law declared by the Supreme Court binds all courts in India (Rajeswar Prasad Misra v. State of W. B. AIR 1965 SC 1887). It is well to remember that, on the law having been declared by the Supreme Court, it is the duty of the High Court, whatever be its view, to act in accordance with article 141 of the Constitution of India and to apply the law laid down by the Supreme Court. Judicial discipline to abide by the declaration of law of the Supreme Court, cannot be forsaken by any court, be it even the highest court in a State, oblivious of article 141 of the Constitution of India. (Chandra Prakash v. State of U. P. [2002] 4 SCC 234 and State of Orissa v. Dhaniram Luhar [2004] 5 SCC 568). In Director of Settlements, A.P. v. M.R. Apparao [2002] 4 SCC 638 the Supreme Court observed: ". . . . Article 141 of the Constitution unequivocally indicates that the law declared by the Supreme Court shall be binding on all courts within the territory of India. The aforesaid article empowers the Supreme Court to declare the law. It is, therefore, an essential function of the court to interpret a legislation. The statements of the court on matters other th....
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....e process of bringing into existence crushed bones, bone meal, fluff, horns and hooves and consequently, with regards purchase of raw bones and the end-products which are sold locally, section 7A(1)(a) of the Tamil Nadu General Sales Tax Act (similar to section 6A of the APGST Act), was not attracted as there had been no consumption of the goods purchased in the process of manufacture of other goods. In the order under revision, levy of tax under section 6A of the APGST Act on the purchase of raw bones, which were converted into crushed bones, bone meal, bone sinews, horns and hooves was in issue. As such, on the application the doctrine of merger, the judgment of the Supreme Court in A.A. Sulaiman [1997] 105 STC 324, approving the reasoning of the Madras High Court, in Subbaraj and Co. [1981] 47 STC 30, would bind this court and it must be held that raw bones are neither consumed nor is any process of manufacture involved in conversion of raw bones into crushed bones, bone meal, bone sinews, horns and hooves. Consequently purchase tax, under section 6A of the APGST Act, cannot be levied on the purchase of raw bones by the assessee. The only other question which remains to be exam....