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TMI Blog1969 (1) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... inter-State trade or commerce. They are being assessed to tax as last purchasers in the State under the State Act and also as sellers under the Central Act. But under rule 27-A of the Rules framed under the State Act, they are entitled to claim a refund of the tax levied under the State Act subject to certain conditions. On 14th July, 1964, the State Government in exercise of the powers conferred by sub-section (5) of section 8 of the Central Act, issued G.O. Ms. No. 1094, Revenue, which provides that the sales of all "declared goods" in the course of inter-State trade or commerce, be exempted from the tax payable by any dealer under the Central Act where tax has been levied and collected in respect of the sale or purchase of such declared goods under the State Act subject to certain conditions. The sales tax authorities were assessing the petitioners under the State Act without any liability to refund and waiving taxation under the Central Act. The petitioners were suffering assessments under the State Act and duly paying the tax so assessed without objection thereto as they were under the bona fide impression that such a procedure was legal. Such assessments were made and the ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... writ petitions, as none of the cases of the petitioners herein falls under entry 9(b). Lastly, he submits that rule 27-A of the said Rules and the G.O. Ms. No. 1094 dated 14th July, 1964, issued by the State Government do not in any manner contravene the provisions of section 15(b) of the Central Act. Before adverting to the several contentions raised by the learned counsel, it is useful to refer to the statutory provisions which are relevant for the purpose of this case. Section 14 of the Central Act deals with the goods which are of special importance in inter-State trade or commerce and item (iii) of the said section is "hides and skins, whether in a raw or dressed state". Section 15 of the said Act is as follows: "Every sales tax law of a State shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods, be subject to the following restrictions and conditions, namely:- (a) the tax payable under that law in respect of any sale or purchase of such goods inside the State shall not exceed two per cent. of the sale or purchase price thereof, and such tax shall not be levied at more than one stage; (b) where a tax has been lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is aspect of the case is that under item (iii) of section 14 of the Central Act, the "hides and skins, whether in a raw or dressed state" are treated as one category of declared goods and that in so far as entry 9(a) and (b) of the State Act splits up the said goods into two categories as tanned hides and skins and untanned hides and skins, it contravenes the provisions of section 14 of the Central Act. According to the learned counsel, hides and skins from the raw stage to the dressed stage are treated as one category under the Central Act and the splitting up into two categories according to different stages which the raw hides and skins have to pass before reaching the dressed stage, should not be made the basis for differentiating them as belonging to different categories. We are unable to uphold this submission. The mere fact that the two articles, viz., raw hides and skins and dressed hides and skins are mentioned in a single head, does not lead to the inference that they constitute a single commodity. Even the language of the said entry does not warrant drawing of such an inference. The entry should be read as comprising two types of commodities, viz., hides and skins in raw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to say, all kinds of cotton (indigenous or imported) in its unmanufactured state, whether ginned or unginned, baled, pressed or otherwise, but not including cotton waste." Their Lordships observed at page 328: "that it is here that there is considerable difficulty caused by the absence of any provision, either in the Act or in the rules or the forms, indicating the stage at which the tax is to be levied. In the case of commodities, like cotton, which come under the category of 'declared goods', tax can be levied only at a single point, as is made clear by section 15(a) of the Central Act, and, in our opinion, there can be no legal liability for payment of tax accruing, until and unless the Act or the rules framed thereunder, prescribe a single point for taxation." Further, the language of the entry in Schedule 'C' of the Punjab Act is not in pari materia with entry 9(a) and (b) of the State Act with which we are concerned in these petitions. In fact it has to be seen from the observations at page 325 of the said report that the entries in the several Sales Tax Acts in force in several States, including the State of Andhra Pradesh, were referred to in support of the argument ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods suffered tax earlier, and if so, at what stage, is without force inasmuch as the rules made under the State Act prescribe a definite procedure which enables the purchaser to find out whether the goods had suffered tax earlier or not. Rule 45 requires every dealer to maintain a true and correct account of the value of the goods produced, manufactured or bought by him, the names and addresses of each of the persons from whom goods were purchased, supported by a bill or delivery note issued by the seller duly signed and dated and other particulars. Rule 45(2) of the Rules framed under the Andhra Pradesh General Sales Tax Act enjoins upon a dealer to issue a bill or cash memorandum in respect of every sale and rule 45(3)(b) of the said Rules in particular requires, that the bills or cash memoranda issued in the case of sales of goods liable to a single point tax shall contain the following certificate in the form prescribed which is as follows: "Certified that in respect of the turnover of the goods mentioned in item (a) of this bill the tax has been paid or/is payable by me or/is payable by Shri/M/s.............being the dealer who has purchased them from me." The provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturers and dealers, is not rational and that it brings about an uneven burden of taxation. The tanned goods nearly cost 30 to 70 per cent. more than the untanned goods and consequently the dealers and manufacturers who deal in tanned goods have to pay a much higher tax than the dealers and tanners who deal in untanned goods, and such a classification is not contemplated or permitted by the provisions of section 14(iii) of the Central Act. There is no force in this contention. We have already held in dealing with the first point that the untanned hides and skins lose their identity when they are tanned and that tanned goods and untanned goods are different commodities. Such a classification is permissible and it does not offend sections 14 and 15 of the Central Act. Apart from the two commodities covered by subitems (a) and (b) of entry 9 being different, it is also to be noticed that the transactions in the said goods will be by different types of dealers and that the values of the said goods also vary widely. The transactions in untanned hides and skins are mainly carried on by tanners while manufacturers mainly deal in tanned goods. The Legislature was fully aware of the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de or commerce and transport them across State boundaries; and (ii) those who transport them across State boundaries and then sell; and that the first of the categories of purchasers mentioned above, need not pay any tax under the State Act or under the Central Act. At any rate they are entitled to a refund of the tax so paid and that they need not also pay any tax under the Central Act in view of the decision of the Supreme Court in State of Mysore v. Lakshminarasimhiah Setty and Sons[1965] 16 S.T.C. 231., while the second category of purchasers are liable to pay tax under the State Act, and that this constitutes an unjust discrimination between the persons similarly situated. This contention in our view is again devoid of any force inasmuch as under entry 9(a) of the Third Schedule, the point of levy is fixed for the purpose of levy of sales tax under the State Act and this entry, standing by itself, does not create any discrimination between the last purchasers of untanned hides and skins. It is only the subsequent dealings with the said goods and the operation of the provisions of the Central Act that entitle the dealers to claim refund or exemption from tax under the State A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... violates Article 304 of the Constitution. But it is unnecessary for us to express any opinion on the said contention inasmuch as it has not been shown to us that any of the petitioners is sought to be taxed under entry 9(b) of the Third Schedule. All the petitioners are admittedly purchasers of untanned hides and skins who export them outside the State; but they do not import any tanned goods into the State. Even otherwise under entry 9(b) only a manufacturer is taxed at the point of purchase of tanned hides and skins. Admittedly the petitioners are not manufacturers and are not being subjected to any tax under the aforesaid entry. It is, therefore, unnecessary for us to deal with the contention raised on Article 304 of the Constitution. We shall now notice the last of the submissions made by the learned counsel for the petitioners, that G.O. Ms. No. 1094, Revenue Department, dated 14th July, 1964, issued by the State Government is ultra vires the powers of the State Government and conflicts with the provisions of section 15(b) of the Central Act and is null and void. He also contends that the provision in rule 27-A of the Rules made under the State Act prescribing a time-limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d subject to such conditions as may be prescribed." In order to give effect to the provisions of this section, the State Government has framed rule 27-A which is in the following terms: "27-A. (1) Where any tax has been levied and collected under section 6 in respect of the sale or purchase inside the State of any declared goods and such goods are subsequently sold in the course of inter-State trade or commerce, the tax so levied and collected shall be refunded to the person in the manner and subject to the conditions specified in sub-rules (2) to (4). (2) The refund of tax referred to in sub-rule (1) shall be made to the dealer who effected the first sale in the course of inter-State trade or commerce. (3) Every application for refund under this rule shall be filed by the dealer claiming refund before the assessing authority having jurisdiction over his place of business within a period of three months from the end of the month in which he sold the goods: Provided that the assessing authority may condone for reasons to be recorded in writing, any delay in the filing of such application. (4) The burden of proving that a dealer is entitled to a refund under this rule sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o refund arises the moment the goods purchased by a tanner or last purchaser are sold in the course of inter-State trade. The language of the section does not warrant the imposition of any further condition for getting a refund of the tax levied under the State Act. But the impugned G.O. takes away the said right and instead makes the said dealers of the declared goods subject to levy of tax under the State law at the purchase point. The impugned G.O. is intended to obviate the necessity of taxing a dealer in declared goods both under the State Act and the Central Act and then refund the State levy on application by the said dealer. The G.O. obviously therefore applies only to cases of dealers whose turnover in declared goods attracts the liability to tax both under the State Act and the Central Act. Only such a dealer gets an exemption from the Central levy and suffers tax under the State Act without claiming any refund under section 15(b) of the Central Act or the proviso to section 6 of the State Act. But the said G.O. cannot apply to a case where the transactions in declared goods of the same dealer do not become exigible to tax under both the Acts. By reason of the decision in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that would not clothe the taxing authority with any power to tax. We, therefore, hold that the petitioners are not estopped or precluded from claiming refund of tax under the State Act in accordance with the provisions of section 15(b) of the Central Act and the proviso to section 6 of the State Act. Sri Anantha Babu further contended that rule 27-A of the Rules framed under the State Act is ultra vires the powers of the rule-making authority inasmuch as it offends the provisions of section 15(b) of the Central Act which did not prescribe any such time-limit and that fixing three months time from the end of the month in which the dealer sold the goods for making an application for refund is unreasonable. But in the instant case, it is clear that the petitioners were bona fide under a wrong impression that by virtue of the operation of the G.O. Ms. No. 1094, Revenue, dated 14th July, 1964, and the undertakings given pursuant thereto, they could not apply for refund. Proviso to subrule (3) of rule 27-A of the said Rules confers ample power on the assessing authority to condone the delay and entertain the application. We are satisfied that in the case of the petitioners, there are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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