Andhra HC (Pre-Telangana)
The State Of Andhra Pradesh vs Mohd. Basheer & Company on 5 July, 1988
Equivalent citations: [1989]72STC185(AP)
Author: B.P. Jeevan Reddy
Bench: B.P. Jeevan Reddy
JUDGMENT B.P. Jeevan Reddy, J.
1. These tax revision cases are preferred by the State against a common judgment of the Sales Tax Appellate Tribunal in a batch of appeals. The only question that arose for consideration before the Tribunal is, whether tanned hides and skins and untanned hides and skins are the same goods. Since the basic facts in all these cases are identical, it would be sufficient if we refer to the facts in T.R.C. No. 115 of 1987 arising from T.A. No. 718 of 1984.
2. The respondent-dealer purchased raw hides and skins of animals to comply with the orders entered into with the foreign buyers for supply of leather of various specifications, tanned them and exported them in pursuance of the orders already entered into with the foreign buyers. In the assessment proceedings under the Andhra Pradesh General Sales Tax Act, the dealer claimed that he is not liable to pay any tax on the purchase of untanned hides and skins inasmuch as the said purchase is a purchase in the course of export within the meaning of sub-section (3) of section 5 of the Central Sales Tax Act read with section 38 of the Andhra Pradesh General Sales Tax Act. This plea was accepted by the Commercial Tax Officer, but his order was set aside by the revisional authority under section 20 of the Andhra Pradesh General Sales Tax Act who was of the opinion that the respondent is not entitled to any exemption under section 5(3) of the Central Sales Tax Act for the reason that untanned hides and skins and tanned hides and skins ar different goods. The matter was then carried to the Tribunal. The Tribunal held that they are not different goods or commodities and, therefore, section 5(3) applies and the turnover in the said goods is exempt. The Tribunal's view is questioned in this revision.
3. Hides and skins are declared goods. Section 14(iii) of the Central Sales Tax Act declares "hides and skins, whether in a raw or dressed state" as goods which are of special importance in inter-State trade or commerce. Entry 9 in the Third Schedule to the Andhra Pradesh General Sales Tax Act levies tax on hides and skins at the purchase point. It would be appropriate to set out entry 9 :
------------------------------------------------------------------------
S. No. Description of goods Point of levy Rate of tax (1) (2) (3) (4)
------------------------------------------------------------------------
9. Hides and skins. (3009) When purchased 4 Paise in
(a) Untanned hides and by a tanner in the rupee.
skins. the State at the
point of purchase
by the tanner and
in all other cases
at the point of
purchase by the
last dealer who
buys them in the
State.
(b) Tanned hides and When purchased by 4 paise in
skins (which were not a manufacturer in the rupee.
subjected to tax as the State at the
untanned hides and point of purchase
skins). by the manufacturer
and in all other
cases at the point
of purchase by the
last dealer who buys
them in the State.
------------------------------------------------------------------------
4. A reading of entry 9 shows that untanned hides and skins and tanned hides and skins are not taxed simultaneously but only alternatively. In other words, if a tanner or the last dealer in the State, as the case may be, pays tax on the purchase of untanned hides and skins, no tax is leviable when the tanned hides and skins are purchased by the manufacturer in the State or the last dealer in the State as the case may be. This alternate tax was evidently provided in view of the restriction placed by section 15(a) of the Central Sales Tax Act. In so far as it is relevant, section 15(a) reads thus :
"15. 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."
5. The object of section 15(a) of the Central Act is to ensure that, in the case of declared goods, no State shall levy sales tax exceeding four per cent nor shall it levy the tax at more than one stage.
6. Coming to section 5 of the Central Sales Tax Act, the idea underlying this section is to exempt certain sales/purchases which take place in the course of import or export. Section 5(1) sets out when a sale or purchase of goods can be deemed to have taken place in the course of export of goods; while sub-section (2) of section 5 sets out when a sale or purchase of goods shall be deemed to have taken place in the course of import of the goods. Sub-section (3) of section 5 was inserted by the Central Amendment Act 103 of 1976 with retrospective effect from 1st April, 1976. The object behind sub-section (3) is to exempt - in addition to the sale or purchase which occasions the export of goods - the immediately preceding sale or purchase as well. In other words, even the sale or purchase antecedent to export sale is also treated as a purchase/sale in the course of export. Section 5 of the Central Sales Tax Act reads as follows :
"5. When is a sale or purchase of goods said to take place in the course of import or export. - (1) A sale or purchase of goods shall be deemed to take place in the course of the export of the goods out of the territory of India only if the sale or purchase either occasions such export or is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India.
(2) A sale or purchase of goods shall be deemed to take place in the course of the import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of document of title to the goods before the goods have crossed the customs frontiers of India.
(3) Notwithstanding anything contained in sub-section (1), the last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of the territory of India shall also be deemed to be in the course of such export, if such last sale or purchase took place after, and was for the purpose of complying with, the agreement or order for or in relation to such export."
7. Section 38 of the Andhra Pradesh General Sales Tax Act, it must be remembered, exempts, inter alia, a sale or purchase which takes place in the course of import or export. The explanation to section 38 imports section 5 of the Central Sales Tax Act for the purpose of determining when does a sale/purchase takes place in the course of import or export. This means that the provisions in section 5 of the Central Sales Tax Act must be read into section 38 of the Andhra Pradesh General Sales Tax Act. The question in short is : whether the purchase of untanned hides and skins is exempt by virtue of section 38 read with section 5(3), which involves the enquiry whether the untanned and tanned hides and skins are the same goods - for it is clear that the said exemption is available only where the same goods involved in the antecedent sale/purchase and the export sale are the same.
8. The contention of the respondent-dealer is that untanned hides and skins which were purchased by them and the tanned hides and skins which were exported by them are the same goods, and hence the purchase of raw hides and skins by them is exempt from sales tax as it is an antecedent purchase within the meaning of sub-section (3) of section 5. On the other hand, the case of the Revenue is that untanned hides and skins, i.e., raw hides and skins, are different goods and hence the benefit of sub-section (3) of section 5 is not attracted. It is equally the case of the Revenue that the restriction placed by section 15(a) of the Central Act is not applicable for the very same reason.
9. Before the Tribunal, a good number of decisions were cited for an against the view put forward by the dealer. The Tribunal first noticed the decision of the Supreme Court in Hajee Abdul Shukoor and Co. v. State of Madras [1964] 15 STC 719 wherein untanned hides and skins and tanned hides and skins were held to be different goods. The Tribunal was however of the opinion that the said decision was rendered before section 15 of the Central Sales Tax Act was brought into force, and that it has no application after the coming into force of the restriction contained in section 15(a). The Tribunal then referred to the several decisions of this Court and the Madras High Court holding that untanned hides and skins and tanned hides and skins are the same goods for the purpose of section 5(3) and section 15(a) of the Central Sales Tax Act, and accordingly held that the dealers are entitled to the benefit of section 5(3) of the Central Sales Tax Act.
10. The question whether untanned hides and skins and tanned hides and skins are the same goods or different goods, appears to have been first considered by a Bench of this Court in T.R.C. No. 11 of 1969 dated 10th February, 1971. Of course, it was not a case arising under section 5(3) of the Central Sales Tax Act. The question there was whether the dealer is entitled to reimbursement of sales tax paid on purchase of raw hides and skins when after tanning them he sold them in the course of inter-State trade a commerce. The question arose with reference to section 15(b) of the Central Sales Tax Act read with the proviso to section 6 of the Andhra Pradesh General Sales Tax Act and rule 27-A of the Andhra Pradesh General Sales Tax Rules, 1957. According to the said provisions, the dealer was entitled to reimbursement of the sales tax paid by him provided the goods sold by him in the course of inter-State trade and commerce are the same goods. The contention of the State was that, inasmuch as entry 9 of the Third Schedule to the Andhra Pradesh General Sales Tax Act has classified untanned hides and skins separately from tanned hides and skins, they are different goods. This contention was rejected by the Bench in the following words :
"We are unable to agree with the construction put upon by the Government Pleader for the reason that item (iii) of section 14 does not classify hides and skins into two classes, as both tanned and untanned hides and skins are included in this item. Section 15 which enjoins upon the State to refund does not make any such distinction between raw hides and tanned hides. All that is required is if hides and skins whether in raw condition or dressed state suffered tax under the State law and if such goods are sold in the course of inter-State trade or commerce, then the tax so levied on the goods shall be subject to refund in the manner provided subject to such conditions as may be imposed by the State. Though the State Act classifies hides and skins into two categories, raw and tanned, the Central Act does not make any such distinction as the goods, hides and skins, whether in raw or dressed state, are of special importance in inter-State trade and commerce. It is with a view to promote inter-State trade and commerce that this benefit is sought to be given to one who has paid tax under the State law in respect of hides and skins whether they were exported in raw state or exported after they were tanned or dressed ................."
11. The Bench added further, "If the State, as may be seen from item 9 of Schedule III, has classified hides and skins into two categories, (a) raw hides and skins and (b) tanned hides and skins, it is for the purpose of collection of tax under the State of law, and that classification has no relevancy when a dealer asks for relief invoking the provisions of section 14 and 15 of the Central Sales Tax Act read with the proviso to section 6 of the Andhra Pradesh General Sales Tax Act."
12. This decision was followed by another Bench of this Court in State of Andhra Pradesh v. Associated Tanners [1975] 36 STC 32. In this case, the dealer purchased raw hides and skins within the State, paid tax thereon, tanned them and sold them in the course of inter-State trade or commerce. The question was whether the inter-State sale is exempt from tax by virtue of sub-section (2A) of section 8 of the Central Sales Tax Act which provides that where a transaction of sale is exempt from tax under the State enactment or is taxed at a rate lower than 4 per cent, the Central sales tax shall also be either exempt or be levied at such lower rate, as the case may be. The contention of the dealer was that, inasmuch as tanned hides and skins were exempt from levy of sales tax under item 9(b) of the Third Schedule in case they had suffered tax at the raw stage, the tanned hides and skins are exempt from Central sales tax under section 8(2A) of the Central Sales Tax Act. This argument was rejected holding that though raw and tanned hides and skins formed two different classes of goods under the Andhra Pradesh General Sales Tax Act, they must be taken as one for the purpose of the Central Sales Tax Act and, therefore, it was held that the only remedy of the dealer was to pay Central sales tax at the appropriate rate and claim reimbursement under the State Act. In so holding, the Bench referred and followed the aforesaid Bench decision in T.R.C. No. 11 of 1969. (See at page 45 of the Report).
13. In State of Punjab v. Chandu Lal Kishori Lal [1970] 25 STC 52, the Supreme Court considered the question whether ginned cotton and unginned cotton are the same goods or different goods. Section 14(2) of the Central Sales Tax Act declares "cotton, that is to say, all kinds of cotton (indigenous or imported) in its manufactured state, whether ginned or unginned, baled, pressed or otherwise, but no including cotton waste "to be of special importance in inter-State trade or commerce. In this decision, the Supreme Court held that, while undoubtedly ginning process is a manufacturing process, the question for determination before the court was slightly different, namely, whether the respondent is entitled to exemption under section 5(2)(a)(vi) of the Punjab General Sales Tax Act in the context and setting of the language of sections 14 and 15 of the Central Sales Tax Act. The Supreme Court observed :
"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. It is evident that cotton ginned or unginned being treated as a single commodity and as a single species of declared goods cannot be subject under section 15(a) of the Central Sales Tax Act to a tax exceeding 2 per cent of the sale or purchase price thereof or at more than one stage."
14. It is evident that the emphasis was upon the wording of the entry in section 14(ii) of the Central Sales Tax Act.
15. We may now refer to the decision of the Supreme Court in Sterling Foods v. State of Karnataka [1986] 63 STC 239 which is a case arising under section 5(3) of the Central Sales Tax Act. The Supreme Court agree that for sub-section (3) of section 5 to be attracted, it is necessary that the goods which are purchased by an assessee for the purpose of complying with the agreement or order for or in relation to export must be the same goods which are exported out of the territory of India. But then it considered the question whether, by reason of any processing to which the goods may be subjected after purchase, they changed their identity so that, commercially speaking, they can no longer be regarded as the original goods inasmuch as they become a new and different kind of goods. What happened in that case was that a dealer was purchasing raw shrimps, prawns and lobsters and after subjecting them to the process of cutting heads and tails, peeling, de-veining, cleaning and freezing, was exporting the same. It was held that merely because they are processed or frozen, shrimps, prawns and lobsters do not become different goods but remain the same. The reasoning adopted by the Supreme Court in coming to the said conclusion is relevant for our purpose. Under the Karnataka Sales Tax Act as amended in 1982, shrimps, prawns and lobsters, other than frozen shrimps, prawns and lobsters, were liable to purchase tax at the last point of purchase within the State. The Karnataka High Court took the view that, inasmuch as the Karnataka Act made a distinction between raw shrimps, prawns and lobsters and processed or frozen shrimps, prawns and lobsters, it would not not be possible to hold that both of them constitute one commodity. It was observed by the High Court that, inasmuch as the State Legislature has itself made a distinction between these two categories by making purchases of one category amenable to sales tax while leaving lout the other category from the net of taxation, it cannot be said that they are not different goods. This reasoning, the Supreme Court held, was not well-founded and was based upon a misapprehension of the true object and intendment of the relevant entry in the Karnataka Act. The following observations are relevant :
"This argument, we are afraid, is not well-founded. It is based on a total misapprehension in regard to the true object and intendment of entry 13a and it erroneously seeks to project that entry in the interpretation and application of section 5, sub-section (3) of the Central Sales Tax Act. In fact entry 13a, as amended, supports the argument that even processed or frozen shrimps, prawns and lobsters are known commercially and in the trade as 'shrimps, prawns and lobsters'. It is because entry 13a, as it stood prior to its amendment, would have, on the plain natural meaning of the expression 'shrimps, prawns and lobsters' included processed and frozen shrimps, prawns and lobsters, that it became necessary for the State Legislature to amend entry 13a with retrospective effect so as to exclude from the scope and ambit of that entry processed or frozen shrimps, prawns and cocktails. Now when the State Legislature excluded processed or frozen shrimps, prawns and cocktails from the ambit and coverage of entry 13a, its object obviously was that the last purchases of processed or frozen shrimps, prawns and cocktails in the State should not be exigible to State sales tax under entry 13a. The State Legislature was not at all concerned with the question as to whether processed or frozen shrimps, prawns and lobsters are commercially the same commodity as raw shrimps, prawns and lobsters or are a different commodity and merely because the State Legislature made a distinction between the two for the purpose of determining exigibility to State sales tax, it cannot be said that in commercial parlance or according to popular sense, processed or frozen shrimps, prawns and lobsters are recognised as different commodity distinct from raw shrimps, prawns and lobsters. The question whether raw shrimps, prawns and lobsters after suffering processing retain their original character or identity or become a new commodity has to be determined not on the basis of a distinction made by the State Legislature for the purpose of exigibility to State sales tax because even where the commodity is the same in the eyes of the persons dealing in it the State Legislature may make a classification for determining liability to sales tax. This question, for the purpose of the Central Sales Tax Act, has to be determined on the basis of what is commonly known or recognised in commercial parlance. If in commercial parlance and according to what is understood in the trade by the dealer by the dealer and the consumer, processed or frozen shrimps, prawns and lobsters retain their original character and identity as shrimps, prawns and lobsters and do not become a new distinct commodity and are as much 'shrimps, prawns and lobsters', as raw shrimps, prawns and lobsters, sub-section (3) of section 5 of the Central Sales Tax Act would be attracted and if with a view to fulfilling the existing contracts for export, the assessee purchases raw shrimps, prawns and lobsters and processes and freezes them, such purchases of raw shrimps, prawns and lobsters would be deemed to be in the course of export so as to be exempt from liability to State sales tax."
16. The principle of this decision was affirmed in a subsequent decision of the Supreme Court in Deputy Commissioner of Sales Tax v. Shiphy International [1988] 69 STC 325, which is again a case arising under section 5(3) of the Central Sales Tax Act.
17. A review of the above decisions yields the following principles : (1) Merely because particular goods are treated as different commodities for the purposes of the State Act, it does not necessarily follow that for the purposes of the Central Act also they should be treated as different goods. (2) In determining whether the goods purchased and the goods exported are the same goods or not for the purposes of section 5(3) of the Central Sales Tax Act, the context and setting of the relevant description of the commodity in section 14 is relevant. For example, because section 14(ii) of the Central Sales Tax Act declares "cotton, ginned or unginned", as goods of special importance in the course of inter-State trade or commerce, they are treated as same goods. (3) The question whether the goods purchased and the goods exported are the same or not, has to be decided applying the test of commercial parlance. In other words, the said question has to be determined keeping in view whether in commercial parlance they are understood as different goods or as same goods. On this question, differentiation or distinction made, if any, for the state enactment for its own purposes of levy of tax is not relevant.
18. Applying the above principles, it should be held in this case that "hides and skins whether in raw or dressed state" occurring in section 14(iii) of the Central Sales Tax Act should be treated as same goods for the purpose of section 5(3) of the Central Sales Tax Act. In other words, hides and skins, whether they are in their raw state or in their dressed state, must be understood as same goods having regard to the text and wording of the entry in section 14(iii) of the Central Act. The wording of clause (iii) and the wording of clause (ii) of section 14, in so far as it is material, is identical. Once raw and tanned hides and skins are the same goods for the purpose of the Central Sales Tax Act, they would also be same goods for the purpose of the Andhra Pradesh General Sales Tax Act by virtue of the explanation to section 38. Even other wise, looking at the language of entry 9 of the Third Schedule to the Andhra Pradesh General Sales Tax Act, we are of the opinion that the same conclusion should follow. As noted hereinbefore, though raw hides and skins and tanned hides and skins are mentioned under two different sub-heads in entry 9 of the Third Schedule to the Andhra Pradesh General Sales Tax Act, they are not taxable simultaneously but only alternatively. If the hides and skins are taxed at the time of their sale in their raw (untanned) form, they are not again liable to tax when they are purchased in their tanned/dressed state. This circumstance, in our opinion, goes to reinforce the conclusion arrived at by us. It must be remembered that the process of tanning is a process of preservation. According to Encyclopaedia Britannica, Vol. 13, at page 845, "The object of tanning (or the manufacture of leather) is the conversion of the putrescible skin into a material which under ordinary conditions of use does not putrefy, and which can be wetted and subsequently dried without becoming hard or horny."
19. In other words, since the raw hides and skins cannot be exported because of their tendency to putrefy within a short period, they are subjected to tanning and then exported. Indeed, the whole tanning industry has come into existence only because the raw hides and skins cannot be preserved for long and the requirements of trade in that commodity demand that they should be tanned so that they do not putrefy and will be available for any length of time for the purpose of trade and manufacture. It is true that tanning is a manufacturing process, but so is the ginning of cotton a manufacturing process as held by the Supreme Court in State of Punjab v. Chandu Lal Kishori Lal [1970] 25 STC 52. Simply because a manufacturing process is gone through, it does not necessarily follow that different goods emerge.
20. We now come to the decision of the Supreme Court in Hajee Abdul Shukoor and Co. v. State of Madras [1964] 15 STC 719 upon which strong reliance is placed by the learned Government Pleader. Indeed, according to him, the said decision concludes the issue and no further argument or reference to any other decisions is called for. According to him, the observations in the said judgment are conclusive on the question whether tanned hides and skins are different from untanned/raw hides and skins. It is, therefore, necessary to examine the principle and ratio of the said decision to understand what precisely was decided in that case.
21. Rule 16 of the Madras Sales Tax Rules as it stood then provided for the levy of sales tax on the sale and purchase of hides and skins. It read thus :
"16. (1) In the case of untanned hides and/or skins the tax under section 3(1) shall be levied from the dealer who is the last purchaser in the State not exempt from taxation under section 3(3) on the amount for which they are bought by him.
(2) (i) In the case of hides or skins which have been tanned outside the State the tax under section 3(1) shall be levied from the dealer who in the State is the first dealer, in such hides or skins not exempt from taxation under section 3(3) on the amount for which they are sold by him.
(ii) In the case of tanned hides or skis which have been tanned within the State, the tax under section 3(1) shall be levied from a person who is the first dealer in such hides or skins not exempt from taxation under section 3(3) on the amount for which they are sold by him :
Provided that, if he proves that the tax has already been levied under sub-rule (1) on the untanned hides and skins out of which the tanned hides and skins had been produced, he shall not be so liable.
(3) The burden of proving that a transaction is not liable to taxation under this rule shall be on the dealer."
22. The validity of sub-rule (2) of rule 16 was challenged before the Supreme Court in Firm A. T. B. Mehtab Majid and Co. v. State of Madras . The said sub-rule was struck down on the ground of its being violative of article 304 of the Constitution of India. After the said judgment of the Supreme Court, the Governor of Madras issued an Ordinance, being Madras Ordinance 3 of 1963, purporting to remove the mischief in the sub-rule which led to its declaration of invalidity. The said Ordinance was subsequently enacted into the Madras General Sales Tax (Special Provisions) Act, 1963. Section 2(1) of the said Act was challenged again by the dealers on the ground that section 2(1) suffers from the very same vice as was pointed out in the case of sub-rule (2) of rule 16. The Supreme Court agreed with the said submission and held that sub-section (1) of section 2 of the said Madras Act is discriminatory and invalid for the same reasons for which sub-rule (2) of rule 16 was declared to be invalid if Firm A. T. B. Mehtab majid and Co. v. State of Madras . Having so upheld the first and second contentions of the dealers, the Supreme Court proceeded to consider the third and fourth contentions also. The fourth contention of the dealers which is relevant for purposes, urged by the dealers was : Sub-rule (1) of rule 16 became invalid when the Supreme Court declared sub-rule (2) of rule 16 as invalid. The Ordinance and the 1963 Act merely purported to re-enact the rule contained in sub-rule (2) of rule 16 but not the rule contained in sub-rule (1) of rule 16. It, therefore, follows that during the period 1955 to 1957 no tax can be levied on the sale of raw hides and skins. In other words, the contention of the dealers was that inasmuch as the hides and skins - Whether tanned or untanned - constituted one commodity and because no tax is levied on the sale of tanned hides and skins, no tax can be levied on untanned hides and skins. This contention was opposed by the State saying that tanned hides and skins and untanned hides and skins are different commodities and constitute two separate categories for the purpose of taxation. It is in the light of this controversy that the Supreme Court proceeded to consider whether the tanned and untanned hides and skins are different goods or same goods. They first referred to the decision of this Court in Government of Andhra v. N. Nagendrappa [1956] 7 STC 568, where it was held that tanning of raw hides and skins is a manufacturing process and the product that emerges is different from the raw material. They also referred to another decision of this Court in State of Andhra Pradesh v. M. A. Abdul Bari & co. [1958] 9 STC 231 [FB], where it was held that after tanning, the hides and skins become different commodities. They then referred to the procedure as set out in Encyclopaedia Britannica, Vol. 13, at page 845 and also to their earlier decision in State of Travancore-Cochin v. Shanmugha Vilas Cashew-nut Factory [1953] 4 STC 205 (SC), where it was held that raw cashew-nuts become different commodity after the application of certain process and as a result of it, they are converted into edible kernels. The dealers then brought to the notice of the court a decision of the Madras High court in P. Abdul Subhan & Co. v. State of Madras [1960] 11 STC 173 and another decision of the Punjab and Haryana High Court in Raghbir Chand Som Chand v. Excise and Taxation Officer, Bhatinda [1960] 11 STC 149, in support of their contention. In P. Abdul Subhan & Co. [1960] 11 STC 173, the Madras High Court held that by virtue of section 14(iii) of the Central Sales Tax Act, 1956, tanned and untanned hides and skins fall in the one class and can be taxed only at single point. With respect to this decision, the Supreme Court observed that no reasons were given as to why two kinds of hides and skins are treated as same commodity. So far as the Punjab and Haryana decision in Raghbir Chand Som Chand [1960] 11 STC 149 is concerned, it did not deal with hides and skins but with ginned cotton and unginned cotton, which was held to be one commodity. The Supreme Court distinguished the same on the ground that it deals with another commodity. It is evident from a perusal of the decision that the court laid great stress upon how the State Act treated the said goods, which is evident from the following extract :
"The real question is whether these provisions (the relevant provisions in the 1939 Act) treat raw hides and skins and dressed or tanned hides and skins as one class of goods for the purpose of taxation or as two different classes of goods. If they treat them as one class of goods, the contention for the petitioner loses force as taxing of hides and skins at the time of their sale in a raw condition meets the requirements of law as hides and skins could be taxed only at a single point. If the dressed or tanned hides and skins are not taxed at the time of their sale that does not offend against the statutory provisions. No question of discrimination arises as a sale of raw hides and skins of whatever origin, i.e., whether produced in the State or imported into the State would be equally liable to the levy of tax.
If the statute treats both these kinds of hides and skins as different commodities, the provision of sub-rule (1) of rule 16 providing for the levy of tax on raw hides and skins at a certain 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.
We therefore hold that sub-rule (1) of rule 16 did not become invalid on this court's declaring sub-rule (2) of that rule invalid in Mehtab's case ."
23. It is, therefore, evident that the entire discussion centred round the question whether sub-rule (1) of the rule 16 became invalid and unenforceable when sub-rule (2) of rule 16 was struck down in Firm A. T. B. Mehtab Majid and Co. v. State of Madras . For this purpose, the court examined whether untanned hides and skins dealt with in sub-rule (1) are the same goods as tanned/dressed hides and skins dealt with in sub-rule (2), because if they were the same goods, it would follow that sub-rule (1) would fall along with sub-rule (2). But if they were different goods, striking down sub-rule (2) would not affect the validity and enforceability of sub-rule (1). The court examined the said question from the point of view of the particular enactment, viz., whether the enactment treated the said goods as one or as different goods and on an examination of the relevant provisions, it came to the conclusion that the Madras Act deals with untanned hides and skins as different goods from tanned hides and skins and on that basis, held that sub-rule (1) did not become invalid or unenforceable when sub-rule (2) of rule 16 was struck down by the Supreme Court. We are, therefore, of the opinion that the decision of the Supreme Court in [1964] 15 STC 719 (Hajee Abdul Shukoor and Co. v. State of Madras) does not conclude the issue arising before us. The said decision must be understood in the context of the provisions of the Act considered therein and having regard to the contentions urged before and considered by the court.
24. The learned Government Pleader then relied upon a Bench decision of this Court in Rafeeq Ahmed and Co. v. State of Andhra Pradesh [1969] 24 STC 430. In this case, the validity of G.O. Ms. No. 1094, Revenue, dated 14th July, 1964 was questioned by the dealers on the ground that it is opposed to section 15(b) of the Central Sales Tax Act. The said G.O. provided that sales of all declared goods in the course of inter-State trade and commerce be exempted from the tax payable by any dealer under the Central Act where tax had been levied and collected in respect of sale or purchase of such declared goods under the State Act. This exemption, however, was subject to certain conditions, one of them being that the dealer should not claim refund under section 15(b) of the Central Act of the tax levied and collected under section 6 of the said Act. The court declined to go into the question of validity of the said G.O. on the ground that it was inapplicable to the petitioners, though they wrongly assumed that it applied to them. It was pointed out that it was open to the petitioners to claim refund of the State tax paid by them after paying the Central tax under the provisions of section 15(b) of the Central Act. It is in this context that the court considered the question whether the tanned hides and skins are different goods from untanned hides and skins and held, following the decision of the Supreme court in Hajee Abdul Shukoor and Co. v. State of Madras [1964] 15 STC 719, that they are different goods. In our opinion, the said decision is distinguishable inasmuch as it dealt with a situation bearing no analogy to the question at issue before us. For the above reasons, the said decision cannot be understood as militating against the view taken by us herein.
25. The Government Pleader next relied upon the decision of the Travancore-Cochin High Court in K. J. Mathew v. Sales Tax Officer, Alwaye [1954] 5 STC 58. We, however, find that the said decision is not one rendered with reference to or under section 5(3) but deals with a situation obtaining under the Travancore-Cochin General Sales Tax Act. The said decision too is, therefore, of no relevance herein.
26. For the aforesaid reasons, we hold that the dealers are not liable to pay the sales tax on the turnover relating to purchase of raw/untanned hides and skins inasmuch as they purchased the said goods after and for the purposes of complying with the agreement/order for export of the said goods within the meaning of section 5(3) of the Central sales Tax Act read with section 38 of the Andhra Pradesh General Sales Tax Act. The Tribunal has clearly found as a fact that the dealers have purchased hides and skins of animals to comply with the orders entered into with the foreign buyers for supply of leather of various specifications and after purchasing the raw hides and skins they tanned them and exported them in pursuance of the orders already entered into with the foreign buyer. It is true that the ground upon which the Tribunal has arrived at the said conclusion is different from the one adopted by us and it may also be that the ground upon which the Tribunal has distinguished the decision of the Supreme Court in Hajee Shukoor and Co. v. state of Madras [1964] 15 STC 719 is open to question. But since the conclusion arrived at by it accords with out conclusion, the T.R.Cs. are liable to fail. Accordingly, they are dismissed. In the circumstances, there shall be no order as to costs, Advocate's fee Rs. 1,000 (consolidated).
27. Petitions dismissed.