1959 (9) TMI 42 - HC - VAT and Sales Tax

Summary

Issues:
Assessment of sales tax on turnover of untanned hides and skins tanned outside the State post-1st October, 1953. Liability of a licensed tanner for sales tax on goods tanned outside the State. Interpretation of rules 16(2) and 16(4) under the Turnover and Assessment Rules. Single point levy of tax under section 5(vi) of the Act in the series of sales by successive dealers.

Detailed Analysis:
The petitioner, a licensed tanner, was assessed to sales tax on a turnover that included the value of untanned hides and skins purchased in the State but tanned outside post-1st October, 1953. The dispute centered on whether the tanned goods were liable to tax under rule 16(2) or rule 16(4) of the Turnover and Assessment Rules. The Appellate Tribunal rejected the petitioner's contention that rule 16(4) should apply to goods tanned outside the State to avoid double taxation. The Tribunal held that rule 16(2) applied to all cases of purchase of untanned hides and skins by a tanner, regardless of tanning location, and assessed the petitioner under rule 16(2) based on the turnover. The Tribunal also found the petitioner liable as a tanner, even though the goods were tanned in tanneries not owned by the petitioner.

The petitioner argued that rule 16(4) should apply to cases where raw hides and skins purchased in the State were tanned outside to prevent double taxation. However, the Court held that rule 16(2) covered all cases of purchase by a tanner, and rule 16(4) was intended for cases not covered by rule 16(2). The Court interpreted rule 16(2) as the earlier stage of assessment, applying to all purchases of raw hides and skins by a tanner, while rule 16(4) was specific to goods tanned outside the State. Therefore, the Court upheld the assessment under rule 16(2) and dismissed the revision petition.

In another case (T.R.C. No. 70 of 1957), the Court reaffirmed the liability of a tanner for sales tax on untanned hides and skins purchased but not tanned in the tanner's own factory, based on a previous decision. The Court dismissed the revision petition, upholding the assessment. Similarly, in T.R.C. No. 71 of 1957, which involved assessment for a different year, the Court applied the decision from T.R.C. No. 226 of 1956 and dismissed the revision petition, maintaining consistency in the interpretation of the rules.