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TMI Blog1989 (10) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... 77, framed assessments for the years 1973-74 and 1974-75. The Assistant Excise and Taxation Commissioner, Ludhiana, exercising the powers of Commissioner, initiated proceedings under section 21 of the Punjab General Sales Tax Act, 1948 (for short "the Act'), for revising the orders of the Assessing Authority. He came to the conclusion that the assessee had sold goods on the strength of a certificate of registration and paid tax at the concessional rate of 1 per cent whereas these sales were liable to bear tax at the rate of 6 per cent. He allowed the revisions, vide orders dated February 18, 1982 and created additional demands for both these years. For the year 1975-76, the Assessing Authority rejected the accounts of the dealer and created ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to question (1) be in the negative, the effect thereof on tax liability of the assessee. For the assessment years 1978-79 and 1979-80, the petitioner has filed Civil Writ Petitions Nos. 3439 and 3218 of 1985 raising these very questions. Entry (10) of the Notification No. S.O. 26/P.A. 46/48/S. 5/72 dated August 10, 1972, of the Punjab Government issued under section 5 reads as under: "(10) the rate of tax on hides and skins whether in raw or dressed state shall be (two paise) in a rupee." The dealer-assessee has placed on the file a memorandum explaining the manufacturing process of the leather sheets which are manufactured by it, which is as under: 1.. The waste leather cutting after removing visible non-leather materials are fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es which are not turned into powder are removed. The resins, grease and oil, etc., are also removed while washing with water and chemicals. This crushed leather powder is then impregnated with latex. The fine particles of leather dust are thus bound together by an artificial binding agent. The end-product is an entirely new commodity substantially different from the natural skins and hides. The final Court had an occasion to consider as to whether leather splits and coloured leather continue to be hides and skins in State of Tamil Nadu v. Mahi Traders [1989] 73 STC 228, AIR 1989 SC 1167. Their Lordships were referred to an opinion of the Leather Development Wing of the Ministry of Commerce and Industry regarding the meaning of the expressio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of tanned hides and skins by further suitable processing into leathers of different types which are ready for use". Similarly, a glossary of terms relating to hides, skins and leather published by the I.S.I. in 1960 defines leather as "the main skin or hide of animals prepared by tanning, which still retains its original fibrous structure more or less intact, from which hair or wool may or may not have been removed and which has been treated so as to be imputrescible even after treating with water." Dressed hides and dressed leather retain substantially the normal form and texture. They are tanned and cured to make them of the required tensile strength, flexibility and water resisting properties. The hair or wool is generally remove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of hides and skins. Similarly, coloured leather also continues to be hides and skins. However, these findings do not in any way advance the case of the petitioner. In Mahi Traders' case [1989] 73 STC 228 (SC); AIR 1989 SC 1167, the hides and skins were not subjected to any process which may result into total dislocation of their fibrous structure. Coloured leather has undergone only a process which may aptly be described as processing. It did not materially change the basic fibrous structure of the skins and hides which underwent this process. Mr. Patwalia also referred us to a Constitution Bench decision of the final Court in Tungabhadra Industries Ltd. v. Commercial Tax Officer [1960] 11 STC 827, wherein their Lordships have held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n other words, it should be determined as to how the commodity is understood in common parlance. There is no quarrel with this proposition. When any term or expression is not defined, the courts find out how the term or expression is understood in common parlance, i.e., by persons who deal in or with that commodity. However, in the present case, there is no evidence as to what is understood by the expression leather board or leather pieces manufactured by the petitioner. During the proceedings culminating in the orders impugned in C.W.P. No. 3218 of 1985, the petitioner had produced bill book No. 2 of 1978-79 showing the sale made to various dealers. In these bill books the goods sold were described as leather sheets. The affidavits of six ..... X X X X Extracts X X X X X X X X Extracts X X X X
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