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TMI Blog2017 (12) TMI 621X X X X Extracts X X X X X X X X Extracts X X X X ..... ath, Special Government Pleader ORDER ( Order of the Court was made by S. Manikumar, J. ) Tax Case Revision is filed against the order, dated 06.12.2011, passed in S.T.A.No.129 of 2011, passed by the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Chennai, for the assessment year 2005-06. 2. Short facts leading to Tax Case Revision are that the respondent-assessee, Tvl.Habib Leather Manufacturing Co., Chennai, was assessed on a total and taxable turnover of Rs.l,63,54,414/- and Rs.l,28,662/- respectively, under the Tamil Nadu General Sales Tax Act, 1959 (In short, TNGST Act ), for the assessment year 2005-06. During the course of check of accounts, it was found that the dealers had effected purchase of chemicals and consumable, against Form XVII, to tune of ₹ 44,662/-, and used the same, in the process of conversion of wet blue into finished leather. The Assessing Officer was of the view that there was no manufacturing activity involved in conversion of wet blue hides into finished leather and hence, the dealers were not eligible to purchase chemical against Form XVII at concessional rate. Therefore, the Assessing Officer levied differential rate o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peruse the records and pass orders, on merits also. 9. The first appellate authority relying on the judgment of the Honourable High Court in W.P.No.3000 of 2008, dated 22.04.2010 that the activity done by the dealer/assessee amounts to manufacturing process. hence, they are eligible to purchase chemicals against Form XVII for the leather. Accordingly, allowed the appeal. In the instant case, there is no dispute that the respondent had used all the raw materials purchase by him against Form XVII declarations at the concessional rate of tax under section 3(3) of the Act in the conversion of wet blue hides and skins into finished leather. 10. To this effect the very same question of fact involved in the case of Golden Leathers, Tannery represented by its partner Mr. D.Muralidharan vs. The Secretary the Taminadu Sales Tax Appellate Tribunal, City Civil court Buildings, II Floor, Chennai-l04 and 3 others which was numbered as Writ petition of 3000/2008 has been disposed of by our Honourable Division Bench dated 22.04.2010. This judgment was relied on by the first appellate authority for allowing the appeal. In that judgment, our Honourable High Court has discussed this poin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the TNGST Act, by issue of Form XVII Declarations. Since, we have held that the assessee dealers are eligible for concessional rate of tax against Form XVII for the declared purpose viz. manufacture of finished leather from wet blue hides and skins, there is no question of misuse of Form XVII declarations attracting levy of penalty under section 23 of the Act for violation of Section 45(2)(e) of the TNGST Act, 1959. Hence, from the above mentioned facts, we hold that the Appellate Deputy Commissioner (CT) has rightly allowed the appeal. 4. Being aggrieved by the same, the present Tax Case (Revision) petition has been filed, on the following substantial questions of law, 1) Whether the Tribunal has committed a grave procedural error in having overlooked the judgements of Supreme Court in a case of A.Hajee Abdul Shukuoor and Compounding order v. State of Madras reported in 15 STC 719 and in the case of State of Tamil Nadu v. Mahi Traders Others reported in 73 STC 228, admittedly cited on behalf of the Revenue in para 6 of the impugned judgment ? 2) Whether the order of Tribunal is perverse in its factual finding that process involved in the conversion of wet blue le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed hides and skins which is also characteristically basically tanned leather. It is therefore respectfully submitted that there is no manufacturing process of wet blue leather into finished leather. (d) The Tribunal had simply followed the Division Bench judgment of this Court, without giving independent finding, as to whether how the wet blue leather was manufacturing out of raw hides and skins in the facts of this particular case. (e) The Tribunal ought to have considered that raw hides and skins procured from the slaughtered animals, are easily putrescible if it is not preserved before reaching the tanneries, which would always be away from the place of procurement. Therefore these raw skins are subjected to curing through several processes viz., salting, wet salting and drying. At the stage of drying, it is called picked It is the stage of temporary curing to prevent decay. After tanning is done, the leather becomes non putrescible and the leather attains its character, nature and use and therefore ready for use. In view of the above, it is submitted that hides and skins, after under going process including tanning become dressed hides and skins, which are also tann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... known in the industry with different name. One is called the full-fledged unit, by which, the raw hides and skins get transformed into finished leather; the other is called the wet unit; and the third is called the dry unit. It is after discussing these facts the Appellate Assistant Commissioner came to the conclusion that a manufacturing activity takes place. The Tribunal appears to have been persuaded by the fact that in item 7B of Schedule II to the Act, the two categories of leather that are mentioned in the entry are raw hides and skins and dressed hides and skins. The entries indicate taxability and the rate. That cannot decide the issue as to whether any manufacturing activity takes place or not. Both wet leather and finished leather may be described as dressed hides and skins that is opposed to raw hides and skins . But we must still examine whether, when the wet blue takes through the various stages, a manufacturing activity takes place. The change or series of changes take the wet blue to a point where it can no longer be regarded as wet blue but must be recognized as finisher leather. So there is a manufacture. This question must be decided on the facts and circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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