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TMI Blog1979 (11) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... e trade or commerce and specify the restrictions and conditions to which State laws imposing taxes on the sale or purchase of such goods of special importance shall be subject. Section 15 of this Act provided: "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 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 of 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 of such goods in the course of inter-State trade or commerce, the tax levied under such law shall be reimbursed to the person making such sale in the course of inter-State trade or commerce in such manner and subject to such conditions as may be provided in any law in force in that State." S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be the amount for which the goods are bought by the dealer............ (b) raw hides and skins..........." Thus, it will be seen that a combined effect of section 4, entry 7 to the Second Schedule and rule 5(1) and (2) of the Rules will lead to the inference that raw hides and skins purchased in the State will bear tax at 3 per cent on the purchase turnover and the sale of dressed hides and skins in this State will bear 1 1/2 per cent on the sales turnover. In the cases with which we are concerned, the dealers have purchased raw hides and skins within the State, had tanned the same and sold them as dressed hides and skins within the State. The question for consideration is with reference to such transactions of the dealers what is the manner or method of assessment. To put it in other words, are they liable to be taxed on the purchase turnover of the raw hides and skins and again on the sales turnover of the dressed hides and skins with the qualification that when the dressed hides and skins sold by the assessee had suffered tax in its raw state under entry 7(a), they shall not be again taxed at the point of sale or it is only the sales turnover of the dressed hides and sk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject to the limitation that no purchase tax was paid in the State on raw hides and skins over sales of such goods after conversion into dressed goods." It is on this passage reliance has been placed before the Tribunal as well as before us by the assessees. The passage itself, though supports the contention of the assessees, is not clear in one respect. In one portion of the abovesaid observation it is stated: "........then the officer has no option except to tax the dressed skins on the sale point. " In another portion of the same passage it is stated: "If the dealer is able to prove the above fact with reference to his account books, then the assessing officer is obliged to revise the assessment and bring to tax such of those raw hides and skins as are still in stock as such with the dealer under item 7(a) and treat the rest of the stock converted into dressed skins and sold during the year under item 7(b)." The revision that is referred to is the revision of the provisional assessment made on the basis of the monthly returns. The subsequent passage which we have extracted will give an indication that the officer will have to find out at the end of the year what is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the High Court repelled the attack on the validity of those items and dismissed the writ petitions, and it was that matter which was taken up to the Supreme Court. The Supreme Court while dealing with the controversy raised before it referred to two earlier decisions of its own, namely, Firm A.T.B. Mehtab Majid Co. v. State of Madras[1963] 14 S.T.C. 355 (S.C.). and Hajee Abdul Shukoor Co. v. State of Madras[1964] 15 S.T.C. 719 (S.C.). and distinguished the basis on which those decisions were rendered and ultimately held as follows: "Article 304(a) does not prevent levy of tax on goods: what it prohibits is such levy of tax on goods as would result in discrimination between goods imported from other States and similar goods manufactured or produced within the State. The object is to prevent discrimination against imported goods by imposing tax on such goods at a rate higher than that borne by local goods since the difference between the two rates would constitute a tariff wall or fiscal barrier and thus impede the free flow of inter-State trade and commerce. The question as to when the levy of tax would constitute discrimination would depend upon a variety of factors inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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