1991 (9) TMI 314 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the appellant is entitled to the benefit of exemption under section 5(3) of the Central Sales Tax Act.
2. Interpretation of the provisions of the Central Sales Tax Act regarding the treatment of raw hides and skins and dressed hides and skins.

Analysis:
1. The appellant, a dealer in hides and skins, appealed against the determination of turnover by the assessing authority for the assessment year 1978-79. The main issue was the purchase turnover of raw hides and skins for export purposes, claiming exemption under section 5(3) of the Central Sales Tax Act read with the proviso to section 9 of the Tamil Nadu General Sales Tax Act. The Appellate Assistant Commissioner remitted the matter for re-examination based on a previous judgment. However, the Joint Commissioner, through suo motu powers, set aside the Appellate Assistant Commissioner's order and restored that of the assessing authority. The central issue was whether the appellant qualifies for the section 5(3) exemption.

2. A previous judgment by the High Court in Azeezur Rahman & Co. v. State of Tamil Nadu was cited, where it was discussed that raw hides and skins and dressed hides and skins should be treated as one and the same for the purpose of determining entitlement to the benefit of section 5(3) of the Central Sales Tax Act. The Court emphasized that the legislative intent was to include all species or products emerging from hides and skins until the process of dressing or finishing is completed. The judgment clarified that even if raw hides undergo a preservation process, they remain hides and skins, and the distinction between raw and dressed hides is merely a stage of processing of the same commodity. The Tribunal's order denying the exemption under section 5(3) was set aside based on this interpretation.

3. The High Court found that the Joint Commissioner had denied the exemption without properly verifying if the essential prerequisites under section 5(3) of the Central Act were met by the turnover and transactions in question. The Court set aside the Joint Commissioner's order and reinstated that of the Appellate Assistant Commissioner, instructing the assessing authority to reconsider the case in light of the legal principles established in the Azeezur Rahman case. The appeal was allowed, with no costs imposed.

In conclusion, the judgment clarified the treatment of raw hides and skins and dressed hides and skins under the Central Sales Tax Act, emphasizing that they should be considered as one commodity for the purpose of claiming exemptions. The Court directed a re-examination of the appellant's case to ensure proper verification of eligibility for the exemption under section 5(3) of the Act.