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TMI Blog1961 (9) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee which ended in a confirmation of the assessment of the taxing authorities, subject to a slight modification in regard to the licence fee with which we are not now concerned. The assessee's opening stock of raw hides and skins at the commencement of the assessment year 1955.56, was of the value of Rs. 32,051. This stock of goods was purchased by the assessee during the year 1954-55 and having remained unsold or untanned was brought forward as the opening stock for the year 1955-56. The assessee contended before the Appellate Tribunal that the value of the opening stock should not be included in the sales turnover of the tanned stock which admittedly came out of the untanned opening stock. We shall advert to the details of this contention a little later. The Tribunal rejected this contention. It was further contended before the Tribunal on behalf of the petitioner that two items of transactions of sale put through Gordon Woodroffe and Co., Ltd., and Dharamsee Parpia of the turnover value of Rs. 74.282-0-9 and Rs. 4,268-10-6 respectively were exempt from taxation as they constituted export sales or sales in the course of export, hit by the provisions of Article 286 of the Constit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... modity of hides and skins has always been subject to a single point assessment under the Act. Rule 16 of the turnover and Assessment Rules, as it stood in the year 1954-55, was as follows: "1. In the case of hides and skins the tax payable under section 3(1) shall be levied in accordance with the provisions of this rule. 2.. No tax shall be levied on the sale of untanned hides or skins by a licensed dealer in hides or skins except at the stage at which such hides or skins are sold to a tanner in the State or are sold for export outside the State- (i) in the case of all untanned hides or skins sold to a tanner in the State, the tax shall be levied from the tanner on the amount for which the hides or skins are bought by him; (ii) in the case of all untanned hides or skins which are not sold to a tanner in the State, but are exported outside the State, the tax shall be levied from the dealer who was the last dealer not exempt from taxation under section 3(3) who buys them in the State on the amount for which they were bought by him. 3.. Sales by licensed dealers of hides or skins which have been tanned within the State shall be exempt from taxation provided that the hides or s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... G.O. No. 1433, dated 30th March, 1957, the rule was further amended and the amended rule is as follows: "1. In the case of raw hides and/or skins the tax under section 5-A (iv) shall be levied from the dealer who is the last purchaser in the State not exempt from taxation under section 3(3) on the amount for which they are bought by him. 2.. (i) In the case of hides and skins which have been dressed outside the State the tax under section 5-A(iv) shall be levied from the dealer who in the State is the first dealer in such hides or skins not exempt from taxation under section 3(3) on the amount for which they are sold by him. (ii) In the case of dressed hides or skins which have been dressed within the State, the tax under section 5-A(iv) shall be levied from a person who is the first dealer in such hides or skins not exempt from taxation under section 3(3) on the amount for which they are sold by him. Provided that, if he proves that the tax has already been levied under sub-rule (1) on the raw hides and skins out of which the dressed hides and skins had been produced, he shall not be so liable. 3.. The burden of proving that a transaction is not liable to taxation under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rule. It further held that in computing the purchase turnover of a licensed tanner only the sales to him from licensed dealers could be included. The question of law which was referred to the Full Bench was in these terms: "Whether a licensed tanner, who purchased untanned hides and skins from an unlicensed dealer is liable to be taxed on his turnover under rule 16(2) or under any other provision of the Madras General Sales Tax Act and the rules framed thereunder." The answer to the question was in these terms at page 367: "Our answer to the question referred to us therefore is that in computing the purchase turnover of a licensed tanner only the sales to him from licensed dealers could be included." At page 364 Rajagopala Ayyangar, J., delivering the judgment of the Full Bench recorded the conclusion of the Full Bench as follows: "The conclusion we have reached as a result of the above discussion is that (1) the charging provision, section 3, is subject, in the case of transactions in hides and skins, to the terms of section 5(vi) under which a single point of taxation in a series of sales has to be fixed by the rules; (2) rule 4(2) is not the fixation of a single point w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt for which the said goods were bought by him." Both the questions were answered in the negative. At page 245, Subba Rao, C.J., as he then was, has summarised the position thus: "Section 3 is the charging section. Section 5 exempts certain commodities from taxation under section 3(1) and gives some concession in regard to other commodities by providing single point taxation instead of multi-point taxation under section (31). One of such commodities is hides and skins. Under rule 5(e) of the Madras General Sales Tax Rules, the accrual of the concession is conditioned by the taking of a licence. If the licence is not taken or renewed, the concession is withdrawn. Rule 4(2) of the Madras General Sales Tax (Turnover and Assessment) Rules says nothing more than that, in the case of the said commodity, the amount for which the goods are bought by the dealer is the turnover on which tax is leviable. It does not either in express terms or by necessary implication localise the stage or the transaction in regard to which the tax becomes exigible. That is expressly done by rules 15 and 16, which provide for the levy and collection of taxes, They indicate beyond any reasonable doubt that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that the benefit of a single point assessment was available only to licensed dealers or tanners as prescribed by the rules, and that the unlicensed dealers and tanners came under the general charging section of the Act, inevitably, by reason of the non-obtaining of the licence, We are unable to see how this decision of the Supreme Court which does not of course expressly refer to the decision of the Full Bench in Shukoor's case[1955] 6 S.T.C. 352. can be said to have overruled it by necessary implication. We are clearly of opinion that the authority of the Full Bench of this Court in Shukoor's case[1955] 6 S.T.C. 352.is not in any way undermined or shaken by the decision of the Supreme Court in Noor Mohammed's case[1960] 11 S.T.C. 570. The petitioner's purchase turnover of raw hides and skins during the year 1954-55 in respect of the opening stock of the year 1955-56 was not within the ambit of rule 16 as it was in 1954-55. The petitioner could not have been assessed on such turnover and there was no omission on the part of the State to assess the firm in that year. The petitioner cannot claim the benefit of the proviso to rule 16(2) as it was neither in fact assessed to tax on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to multiple points of taxation was not ultra vires. The Act is quite explicit that subject to such restrictions and conditions as may be prescribed by the rules the sale of hides and skins shall be liable to tax only at such single point as may be prescribed. In the absence of fixation of a point in the series of sales by successive dealers, the assessee cannot contend that the charge should be only at the purchase point. The decision of the Supreme Court in Noor Mohammed's cases does not help the assessee to advance this contention. We wish to add that if an assessee comes within the ambit of the taxing enactment and the rules framed thereunder in any particular year, he cannot plead immunity from assessment on the basis of the prior taxing law which is no longer in operation, or on the hypothesis or supposition of tax liability that might have been imposed but was not in fact imposed. Having considered the contention of the learned counsel for the petitioner in all its aspects we have no hesitation in holding that there is no warrant for exemption of the purchase value of the opening stock of hides and skins in computing the sales turnover of the tanned hides and skins in 1955- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may or may not fall within Article 286(1)(b), sales and purchases which themselves occasion the export or the import of the goods, as the case may be, out of or into the territory of India come within the exemption and that is enough to dispose of these appeals." In State of Travancore-Cochin v. Shanmugha Vilas Cashew-nut Factory[1954] S.C.R. 53; 4 S.T.C. 205., known as the Second Travancore case, the Supreme Court had again occasion to consider Article 286 of the Constitution. The majority judgment of the Court points out that a purchase for export by a dealer in the State cannot be called a sale in the course of export. A purchase for the purpose of export by a dealer in the State from another dealer in the State is only a home transaction and it is only where the goods are sold to a buyer abroad, the sale occasions an export transaction. Their Lordships of the Supreme Court point out that it is entrance of the articles into the export stream that marks the start of the process of exportation and that the course of export or of the import into the territory of India does not commence or terminate until the goods cross the customs barrier. Section 5 of the Central Sales Tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner, of agent and principal, cannot be disputed. The sale to Dharamsee Parpia for an amount of Rs. 4,268-10-6 was really an export sale in favour of Sriven Brothers (Eastern) Ltd. Dharamsee Parpia merely acted as the agent of the London company. The contract which is in the official contract form No. IV is dated 16th March, 1956, and is between Kovai Tanned Leather Co. and Sriven Brothers (Eastern) Ltd. On 17th March, 1956, Dharamsee Parpia wrote to Kovai Tanned Leather Co. as follows: "We acknowledge receipt of your acceptance of date for the following goods sold to Messrs Sriven Brothers (Eastern) Ltd., London, S.E.I., which we confirm in all respects". Dharamsee Parpia styled Messrs Sriven Brothers (Eastern) Ltd. as their principals. There is no mistaking the fact that this is a clear instance of a direct export sale between the foreign buyer, Messrs Sriven Brothers (Eastern) Ltd. and the local dealer, the petitioner acting through its representative Kovai Tanned Leather Co. The Tribunal has refused to accept this transaction as an export sale on the ground that Kovai Tanned Leather Co. delivered the goods to the exporter and thereafter the exporter obtained the bills of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature which is to be noted is that the petitioner gets an advance of about 80 or 90 per cent, of the price of the goods sold at the time of the delivery of the goods in the godown of Gordon Woodroffe but obtains the balance only after presentation of the shipping documents. Before the Tribunal the manager of the hides and skins department of Gordon Woodroffe and Co. was examined as a witness. He deposed as follows: "Messrs Gordon Woodroffe arrange for the shipment of the goods, as the agents of Kovai Leather Manufacturing Co. We take the bills of lading, sometimes in our names, and sometimes in the name of Kovai Leather Manufacturing Co. But I am not sure what happened in 1955-56. When the goods are delivered in our godown, we advance about 80 or 90 per cent. of the price to Kovai Leather Trading Co. on the security of the goods." To a question put by the Tribunal the answer was as follows: "We (i.e., Gordon Woodroffe) become owners of the goods after the goods are shipped. After the bills of lading are received, we (i.e., Gordon Woodroffe) become owners of the goods...... We make entries in our purchase account only after shipment when we receive the bills of lading from the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in Commissioner of Income-tax, Madras v. Mysore Chromite Ltd.[1955] 27 I.T.R. 128." A proper interpretation of the terms of the contract in the present case leads us to the conclusion that the property in the goods forming the subject-matter of the contract between the petitioner acting through Kovai Tanned Leather Co., and Gordon Woodroffe and Co., passed only beyond the customs frontier and that the transaction is one in the course of export. The learned Government Pleader strongly relied upon the decision of this Court in Haji Abdul Gaffoor Sahib and Co. v. State of Madras [1958] 9 S.T.C. 208. In that case, it was held that where certain contracts for the sale of goods specifically provided that the property in the goods sold would pass to the vendees only after delivery of the shipping documents, property in the goods passed only after the goods crossed the customs barrier and got into the stream of export and such sales were therefore sales in the course of export within the meaning of Article 286(1)(b) of the Constitution and were exempt from taxation. One of the items of sale which formed the subject-matter of consideration in that case was a sale through Gordon Woo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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