1964 (1) TMI 41 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the sale is an inter-State sale, and thus exempt from Andhra Pradesh sales tax.
2. Whether raw skin is an article fit for consumption, and thus taxable.
3. Whether the tax can be levied at the point of purchase in Andhra Pradesh or if it should be levied in Madras State.

Issue-wise Detailed Analysis:

Issue 1: Inter-State Sale
The petitioner, M.A. Khader, contended that the sales in question were inter-State sales, thereby exempting them from Andhra Pradesh sales tax under Section 3 of the Central Sales Tax Act. The petitioner argued that the sales occasioned the movement of goods from Andhra Pradesh to Madras, fitting the criteria of Section 3(a).

The court, however, found that the transactions were completed within Andhra Pradesh. The purchase took place in Hyderabad, and the subsequent movement of goods to Madras was by the purchasing branch or agent. This was supported by the precedent in Sriram Venkata Subbarao v. State of Andhra Pradesh, which held that a sale completed within the state does not constitute an inter-State sale merely because the goods were later moved out of the state. Therefore, the sale did not occasion the movement of goods from one state to another, and the contention was dismissed.

Issue 2: Article Fit for Consumption
The petitioner argued that raw hides and skins are not fit for consumption and thus should not be taxed. The court referenced Anwarkhan Mehboob Co. v. State of Bombay, which discussed the stages of consumption in the production process. It was noted that raw hides and skins are consumed in the tanning process, producing tanned leather, which is the finished product. Therefore, raw hides and skins are considered articles fit for consumption in the context of tanning. This contention was found untenable.

Issue 3: Point of Purchase
The petitioner argued that the tax should be levied at the point of purchase in Madras, not Andhra Pradesh. The court examined Section 6 of the Andhra Pradesh General Sales Tax Act and Item 6 in Schedule IV, which specify that tax is payable at the point of purchase by the tanner or the last dealer who buys them in the state.

The court found that the purchases were made in Hyderabad, Andhra Pradesh, and thus, the tax was correctly levied there. The court also referenced the decision in State of Madras v. Gannon Dunkerley & Co. and Khimji Vishram and Co. v. State of Andhra Pradesh, which supported the view that the transaction of sale and purchase was completed within Andhra Pradesh. Therefore, the tax was lawfully levied in Andhra Pradesh.

Conclusion:
The court found all the contentions raised by the petitioners to be untenable. The sales were not inter-State sales, raw hides and skins were articles fit for consumption, and the tax was correctly levied at the point of purchase in Andhra Pradesh. Consequently, each of the writ petitions was dismissed with costs.