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TMI Blog1997 (11) TMI 489X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-52 of 1993, 6660 of 1995, 1453 and 855 of 1994 - - - Dated:- 27-11-1997 - Mr. Justice S.C.Sen, Mr.Justice B.N.Kirpal and Mr. Justice K.T.Thomas, JJ. K. Parasaran, H.N. Salve and S. Sivasubramaniam, Sr.Advs., A.T.M.Sampath, V.Balaji, K.J. Chandran, Nikhil Sakhandand, K.K. Mani, R. Ayyam Perumal, V.G. Pragasam, K. Swami, P.R. Tiwari, A. Raghunath, A. Mariarputham, V. Krishnamurthy, Advs. with them for the appearing parties. JUDGMENT:- The following Judgment of the Court was delivered: KIRPAL, J. Leave granted in SLP (c) Nos. 5384-85 of 1984. The common question which arises in these appeals is whether the turn-over in respect of hides and skins which has once been subjected to tax under the Tamil Nadu General Sales Tax Act, on its purchase at the raw stage, could be taxed again on inter-state sales as tanned or dressed hides and skins. According to the appellants they purchase raw hides and skins and after dressing they are sold in the course of inter-state trade. The contention of the dealers before the assessing authority was that hides and skins, whether in a raw or dressed form, are declared goods under Section 14 (iii) of the Central Sales Tax Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions. Sections 14 and 15 of the Central Sales Tax Act, in so far as they are relevant for the purpose of these cases, are as under: "14. Certain goods to be of special importance in Inter state trade or commerce:- It is hereby declared that the following goods are of special importance in inter state trade or commerce:- ........ (iii) hides and skins, whether in a raw or dressed state." 15. Restrictions and conditions in regard to tax on sale or purchase of declared goods within a State:- 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 the law in respect of any sale or purchase of such goods inside the State shall not exceed four 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 levied under that law in respect of the sale or purchase inside the State or any declared goods and such goods are sold in the course of inter state trade or commerce, and tax has been paid under this Act in respect of the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r this Act as raw hides and skins). (b) At the point of first sale The main thrust of the arguments of the learned counsel for the appellants was two fold. It was explained that with a view to preserve the raw hides and skins they are first `cured' by either wet salting, dry salting or drying. In the `cured state' the raw materials can be preserved for a temporary period. In the next stage the hides and skins are `picked' and thereafter they are tanned in which state they can be preserved almost indefinitely. These tanned hides and skins are processed further to yield dressed hides and skins which are then ready for use. It was submitted that raw hides and skins and dressed hides and skins, irrespective of their state, are the same commodities. After `raw hides and skins' are purchased they are then dressed which has the effect of preserving them. They do not undergo any change and, therefore, `raw hides and skins' and `dressed hides and skins' cannot be considered as commercially separate commodities, the difference being only in form. This being so, it was contended, hide and skins can be taxed at only one stage in the State with the result that if they have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase turnover but the same was not allowed on the ground that the goods sold, namely cotton seed, were not the goods in respect of which purchase tax had been levied inasmuch as unginned cotton underwent a manufacturing process and the goods produced were different from those purchased. Allowing the appeal of the State of Punjab, a three Judges Bench of this Court observed at page 853 that "declared goods" in Section 14 of the Central Sales Tax Act, 1956 are individually specified under separate items. "Cotton ginned or unginned" is treated as a single commodity under one item of declared goods'. Reliance was placed on this observation and it was contended that because the entry in Section 14(III) reads as hides and skins, raw or dressed, it would mean that raw hides and skins and dressed hides and skins are treated as a single commodity. In the case of Mahi Traders (supra), the question which arose was whether leather splits and coloured leather were hides and skins which fall in the category of "declared goods" as set out in Section 14 of the Central Sales Tax Act and, therefore, entitled to the concession available under Section 15 of the Act, namely, the benefits of single poi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Tamil Nadu Vs Pyare Lal Malhotra Etc., [(1976) 3 SCR 168] and Rajasthan Roller Flour Mills Association and Anr. Vs. State of Rajasthan and Ors., (1994 Supp (1) SCC 413), this Court held that as both the rods and wires form part of one sub item viz., (iv) (xv), they could not be taken as separate taxable commodity and if wire rod which had been purchased by the dealers had already been subjected to sales tax, then wires which are drawn from the said rods could not be taxed again. In arriving at this conclusion, it was observed that when the sub-item spoke of wires "rolled, drawn, galvanized, aluminized, tinned or coated...." it showed that even if they were separate commercial commodities, the Legislature nevertheless did not want wires to be taken as a commodity different from rods for the purpose of permitting imposition of sales tax once again on wires, despite rods having been subjected to sales tax. Even though the aforesaid decisions seem to support the contentions urged on behalf of the appellants, we find that the two questions involved in these cases, namely, whether dressed hides and skins and raw hides and tanned skins are different commodities and, secondly, whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 228 that "no reason is given why the two kinds of hides and skins are treated as a single commodity." Again at page 229 the finding of the Court was that "we, therefore, hold that raw hides and skins dressed hides and skins constitute different commodities of merchandise and they could therefore be treated as different goods for the purposes of the Act." From the aforesaid observations it clearly follows that the Constitution Bench had, in no uncertain terms, come to the conclusion that raw hides and skins and dressed hides and skins were not one and the same commodity. Therefore, the first contention raised in the present case by the learned counsel for the appellant cannot be accepted notwithstanding the reliance by them on the aforesaid decision in the case of Telanganna Steel Industries case. It may here be noted that in none of these decisions was the attention of the Learned Judges drawn to the aforesaid observations of the Constitution Bench in Abdul Shakoor's case. The other submission that Section 14(iii) of the Central Sales Tax Act, in any case, treats raw hides and skins and dressed hides and skins as one and the same commodity, because it is included in the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point even in the absence of any provision for the taxation of dressed hides and skins cannot be said to be discriminatory and invalid. The articles to be taxed were not the same and the legislature could provide differently about their taxation. (emphasis added) The language of Section 14 (iii) of the Central Sales Tax Act is similarly worded as the language of aforesaid Sections 5 (vi) and 5A of the Madras General Sales Tax Act. It is while interpreting this that it was held that raw and dressed hides and skins were different articles and that is why the legislature could provide differently about their taxation. The fact that both the articles are mentioned under the same heading is also of no material consequence. After referring to Raghbir Chand Som Chand Vs. Excise and Taxation Officer (11 STC 149) wherein it was held that ginned and unginned cotton constituted one commodity inter alia for the reason that ginned and un-ginned cotton were under the same head and thereby indicating that the legislature looked upon ginned and un-ginned cotton as one and the same thing, it was held in Abdul Shakoor's case at page 229 that "The fact that certain articles are mentioned under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being distinct from dressed hides and skins the legislature did not think it appropriate to insert a clause similar to Section 15 (d) which may have had the effect of regarding raw hides and skins and dressed hides and skins as being treated as a single commodity for the purposes of levy of tax. The words "hides and skins, whether in a raw or dressed state" in Section 14(iii) of the Central Sales Tax Act clearly seem to indicate that the legislature recognised that raw hides and skins was an item different from dressed hides and skins. As has already been noticed hereinabove it is after undergoing a manufacturing process involving various stages that raw hides and skins becomes dressed hides and skins. As observed in the State of Tamil Nadu Vs. Pyare Lal Malhotra Etc. (1976 (3) SCR 168) at page 173 that "sales tax law is intended to tax sales of different commercial commodities and not to tax the production of the manufacture of particular substances out of which these commodities may have been made. As soon as separate commercial commodities emerge or come into existence, they become separately goods, without change of their identity as such goods, are merely subjected to some p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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