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TMI Blog1962 (11) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... tanned outside the State of Madras, as well as those tanned inside the State. The Deputy Commercial Tax Officer I, Moore Market Division, Madras, assessed the petitioner to sales tax for the year 1955-56 on a turnover of Rs. 29,89,624-15-11. Out of this a turnover of Rs. 28,10,625-2-0 represented sales of tanned hides and skins which had been obtained from outside the State of Madras. Sales tax was levied on hides and skins under the provisions of the Madras General Sales Tax Act, 1939, (Act IX of 1939), hereinafter called the Act. Section 3 is the charging section and its relevant portions read: - "3. (1) Subject to the provisions of this Act,- (a) every dealer shall pay for each year a tax on his total turnover for such year; and (b) the tax shall be calculated at the rate of three pies for every rupee in such turnover: Section 5 of the Act provides for exemptions and reductions of tax in certain cases. Clause (vi) thereof provides that the sale of hides and skins, whether tanned or untanned, shall be liable to tax under section 3, sub-section (1), only at such single point in the series of sales by successive dealers as may be prescribed. Section 19 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw hides or skins. Such a discriminatory taxation is said to offend the provisions of Article 304(a) of the Constitution. Similar are the contentions for the interveners in the case. The contentions for the respondents are: (1) Sales tax does not come within the purview of Article 304(a) as it is not a tax on the import of goods at the point of entry. (2) The impugned rule is not a law made by the State Legislature. (3) The impugned rule, by itself, does not impose the tax, but fixes the single point at which the tax imposed by sections 3 and 5 of the Act is to be levied. (4) The impugned rule was not made with an eye on the place of origin of the goods but as a matter of necessity, in view of the requirements of the statutory provisions to the effect that hides or skins, raw or tanned, came with- in one category and that the tax on them could be levied at a single point only. The impugned rule, therefore, fixed that single point with respect to the sale of raw hides or skins at the last purchase by the dealer in the State and with respect to the sale of tanned hides or skins at the first sale of such tanned hides or skins by the dealer in the State. In the former case, the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposing compensatory taxes for the use of trading facilities do not come within the purview of the restrictions contemplated by Article 301." Earlier in the judgment it was observed at page 1422: "Such regulatory measures as do not impede the freedom of trade, commerce and intercourse and compensatory taxes for the use of trading facilities are not hit by the freedom declared by Article 301. They are excluded from the purview of the provisions of Part XIII of the Constitution for the simple reason that they do not hamper trade, commerce and intercourse but rather facilitate them." Subba Rao, J, concurred in this view and said at page 1436: "(1) Article 301 declares a right of free movement of trade without any obstructions by way of barriers, inter-State, intra-State, or other impediments operating as such barriers. (2) The said freedom is not impeded, but, on the other hand, promoted by regulations creating conditions for the free movement of trade, such as, police regulations, provision for services, maintenance of roads, provision for aerodromes, wharfs etc., with or without compensation." It is therefore now well settled that taxing laws can be restrictions on trade, com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the tax, but fixes the single point at which the tax imposed by sections 3 and 5 is to be levied. What the rule provides is a step necessary for the imposition of the tax in view of sections 3 and 5 and therefore the impugned rule is a part of the enactment which imposes the tax. The fact that the impugned rule was made in order to prescribe the single point in the series of sales by successive dealers at which the tax on sale of hides or skins was to be levied, in view of sections 3 and 5 of the Act, does not justify the making of such a rule which discriminates between the tax imposed on goods imported from outside the State and the goods produced or manufactured in the State. Now, the only question that remains for consideration is whether this rule discriminates between hides or skins imported from outside the State and those manufactured or produced in the State. Sub-rule (1) of the rule deals with the sale of raw hides and skins. The tax is levied from the dealer who is the last purchaser in the State. Its vires is not challenged. Clause (i) of sub-rule (2) provides for the levying of tax on the sale of hides and skins which had been tanned outside the State. The tax is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though few, selling hides and skins which had been tanned within the State, will also have to pay similar tax if no tax had been paid previously, they having not purchased the raw hides and skins at all as they were from the carcasses of animals owned by them; but this does not affect the discriminatory nature of the tax as already indicated. It is urged for the respondent State that to consider discrimination between the imported goods and goods produced or manufactured in the State, circumstances and situations at the taxable point must be similar and that the circumstance of hides or skins tanned within the State and on which tax had been paid earlier at the time of their purchase in the raw condition is sufficient to consider such hides or skins to be different from the hides or skins which had been tanned outside the State. We do not consider that the mere circumstance of a tax having been paid on the sale of such hides or skins in their raw condition justifies their forming goods of a different kind from the tanned hides or skins which had been imported from outside. At the time of sale of those hides or skins in the tanned State, there was no difference between them as goo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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