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TMI Blog1989 (2) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... ts in C.A. Nos. 1700 and 1701 of 1984 and C.A. Nos. 2610 and 2611 of 1988. A.K. Sen, Senior Advocate (A.T.M. Sampath, N. Inbarajan, and P.N. Ramalingam, Advocates, with him), for the respondents in C.A. Nos. 2673 to 2675 of 1981. A.V.V. Nair, Advocate, for the respondents in some matters. S. Padmanabhan, Senior Advocate (R. Mohan and R.A. Perumal) T.A. Ramachandran, Senior Advocate (Mrs. Janaki Ramachandran, Advocate, with him), for the respondents in C.A. Nos. 2665 to 2672 of 1981. [Judgment per : Ranganathan, J.]. - All these civil appeals and special leave petitions raise a common question as to the interpretation of an expression used in the Central Sales Tax Act. Some of these matters arise out of judgments of the High Court in Tax Revision cases and some out of judgments in writ petitions but the point involved is the same. In view of the pendency of the appeals, we grant leave in the special leave petitions after condoning the delay in filing some of them and proceed to dispose of all the appeals by a common order. 2. The respondents are all dealers in hides and skins carrying on business in the State of Tamil Nadu. As is well known, raw hides and skins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r obtained in the process of getting leather of uniform thickness from dressed skins. Such splits cannot be treated as dressed hides and declared goods. The expression raw or dressed skin in Section 14 of the Central Sales Tax Act has a distinct connotation and it cannot be extended to leather bits obtained in a process. These splits are of much lesser value and cannot be equated to dressed skins. In 27 S.T.C page 385 the Orissa High Court has held that if steel plates are cut to sizes, they cease to be the original product. What should be considered is whether those leather splits are commercially understood as dressed hides and skins. If they are understood only as just skins as claimed, there is no need to call them as splits in commercial parlance. The Courts have repeatedly ruled that the entries in the Act should be treated only as understood by the Trade. These splits were produced before the Board at the time of hearing. They were found to be thin pieces which can be utilised only for miscellaneous purposes. The contention that these leather splits continue to be dressed skins and are declared goods of interstate importance, is untenable. The assessing officer was therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er even as soon as tanning is done but the entry in the statute goes much beyond this stage. It takes in all categories of hides and skins right from their raw condition, through various stages of their tanning and other processing, right upto the stage when they receive the final finishing touches. 5. We have heard learned counsel on both sides at length and come to the conclusion that the assessees are entitled to the benefit of Sections 14 and 15 of the CST Act in respect of the two items in question. As far as the first item is concerned, it is common ground that leather splits are nothing but cut pieces of hides and skins. We fail to see how they cease to be hides and skins. It is no doubt true that they are cheaper and have a separate name but the name only indicates that they are cut pieces. It is not because they have ceased to be hides and skins and constitute a different commercial commodity that they are called scraps . Some of the dealers purchase and sell such splits and such turnover is considerable. There is no material to suggest that they are useless or worthless articles. A loose description of them as scrap cannot deprive them of the benefit of S. 14 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed hides and skins but thought that leather splits should be brought to multipoint tax. The Assistant Commissioner, on the contrary, took the view that splits would continue to be hides and skins. It was the Board of Revenue that decided that both items would fall outside the purview of Item (iii) in Section 14 (1). 7. It has been pointed out by this court in Desh Bandhu Gupta and Others v. Delhi Stock Exchange, 1979 - 4 SCC 565, and Vorghese v. ITO, (1981) 131 ITR 597 that a contemporaneous exposition by the administrative authorities is a very useful and relevant guide to the interpretation of the expressions used in a statute. Considering that the above clarification was sought for at the earliest point of time when a doubt arose as to the scope of the expression used by the statute and given after considering the technicalities of the processes employed in the manufacture of finished leather by the department fully conversant with this branch of trade and in the context of the provisions of this very statute, the terms of the statute can well be construed by reference to such exposition, in the absence of anything in the statute to indicate the contrary. Indeed, such interpr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , when tanned, tawed or otherwise dressed for use. 9. The above definitions show that hides and skins acquire the name of leather , even if the hair or wool has not been removed therefrom, as soon as they receive some treatment which prevents them from putrefacation after treatment with water. Dressing is a stage much later than tanning. Indeed, from the definitions quoted above, it will be seen that it is practically the same as giving finishing touches to the leather and making it suitable for the manufacture of particular types of goods. 10. Sri Sen invited our attention, apart from the contemporaneous exposition by the Department, to the findings of the Tribunal in this regard in an earlier case which had not been appealed against by the Department. The Tribunal had said : We have carefully considered the records as well as the arguments. We have seen the specimens of the articles sold. Bits of the same are also on record. We have carefully scrutinised the same. We are unable to say that what the appellants had sold is not leather or in other words dressed hides and skins. The fact that the appellant has done some more finishing would not take away the resultant product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be deduced from its original meaning and that it is thus used not only of the putting on of the clothing but of the preparing and finishing of leather ...... Vol. 17, under the head leather details the various processes applied in the treatment of hides and skins at all stages, pre-tanning, tanning and post-tanning. Dyeing or colouring is a process which follows tanning but precedes finishing (i.e. dressing) in order to make it suitable for the purpose for which it is required in commercial usage. Part V of the Wealth of India , a publication of the Council of Scientific and Industrial Research (1966), dealing with leather under Industrial Products explains that hides and skins are liable to putrefaction and loss unless suitably treated and converted into leather. Structurally, hides and skins have a thick middle layer called corium, which is converted to leather by tanning. The operations involved in leather manufacture however fall into three groups. Pre-tanning operations include soaking, liming, deliming, bating and pickling, and post tanning operations are splitting and shaving, neutralising, bleaching, dyeing, fat-liquoring and stuffing, setting out, samming, dryi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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