1991 (2) TMI 368 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Refund of State sales tax on declared goods subjected to Central sales tax.
2. Classification of hides and skins under State and Central Sales Tax Acts.
3. Applicability of Section 15(b) of the Central Sales Tax Act, 1956.
4. Interpretation of entries in the Seventh Schedule of the Constitution of India.
5. Relevance of judicial precedents from Andhra Pradesh and Madras High Courts.

Issue-Wise Detailed Analysis:

1. Refund of State Sales Tax on Declared Goods Subjected to Central Sales Tax:
The primary issue was whether the assessee was entitled to a refund of the State sales tax paid on raw hides and skins, which were later sold as tanned hides and skins in inter-State trade, thus attracting Central sales tax. The Tribunal allowed the refund, setting aside the Appellate Deputy Commissioner's order, which had upheld the Commercial Tax Officer's decision denying the refund.

2. Classification of Hides and Skins under State and Central Sales Tax Acts:
The State authorities argued that tanned hides and skins are a different commodity from raw hides and skins, thus ineligible for the refund. They relied on the Madras High Court decisions in Gordon Woodroffe & Company (Madras) P. Ltd. v. State of Tamil Nadu and K.A.K. Anwar and Company v. State of Tamil Nadu. However, the Tribunal and the High Court referred to the Andhra Pradesh High Court's decision in State of Andhra Pradesh v. Associated Tanners, which treated hides and skins as a single commodity under the Central Act.

3. Applicability of Section 15(b) of the Central Sales Tax Act, 1956:
Section 15(b) mandates that if declared goods are subjected to State sales tax and then sold in inter-State trade, the State tax must be reimbursed. The court highlighted that the Central Act's description of declared goods prevails over the State Act's classification. Consequently, the assessee was entitled to a refund as per Section 15(b).

4. Interpretation of Entries in the Seventh Schedule of the Constitution of India:
The court examined Entries 54 of the State List and 92A of the Union List in the Seventh Schedule, which govern the imposition of sales tax by States and the Central Government. It was emphasized that the Central Act's provisions take precedence over State laws in matters of inter-State trade.

5. Relevance of Judicial Precedents from Andhra Pradesh and Madras High Courts:
The court distinguished the Madras High Court decisions, which did not consider the implications of Section 15(b) of the Central Act. Instead, it relied on its own precedents, particularly the decisions in T.R.C. No. 11 of 1969 and State of Andhra Pradesh v. Associated Tanners, which supported the refund of State tax on declared goods subjected to Central tax.

Conclusion:
The High Court dismissed the State's revision petition, affirming the Tribunal's decision to allow the refund. The court reiterated that for the purpose of Central sales tax, hides and skins, whether raw or tanned, are treated as a single commodity. Therefore, the assessee was entitled to the refund as per Section 15(b) of the Central Sales Tax Act, 1956. The judgment emphasized the supremacy of the Central Act's provisions over State classifications in matters of inter-State trade.