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TMI Blog1964 (5) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... d sell them through their agents in Madras. They were assessed to a certain amount of sales tax, in accordance with the provisions of the Madras General Sales Tax Act, 1939 (Madras Act IX of 1939), and rule 16(2)(ii) of the Rules framed thereunder, viz., the Madras General Sales Tax (Turnover and Assessment) Rules, on the turnover of hides and skins purchased in the untanned condition out- side the State, but tanned within the State, with respect to each of the assessment years 1955-56, 1956-57 and 1957-58. The tax was assessed at 3 pies per rupee on the price of tanned hides and skins for the years 1955-56 and 1956-57 and at the rate of 2% on the turnover for the year 1957-58. The petitioners challenged earlier the validity of rule 16 on the ground that it contravened Article 304 of the Constitution. Their contentions were negatived by the Sales Tax Authorities. The peti- tioners then filed writ petition No. 148 of 1959 in this Court against the assessment of tax for the year 1957-58. This Court allowed it as it had held on November 22, 1962, in Firm Mehtab Majid and Co. v. State of Madras', that rule 16(2) of the Rules was invalid as it discriminated against the imported hides a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said Act shall be levied from the dealer who in the State is the first seller in such hides and skins not exempt from taxation under sub-section (3) of section 3 of the said Act at the rate of two per cent. of the amount for which such hides and skins were last purchased in the untanned condition. Explanation II.-For the removal of doubts it is hereby declared that in respect of sales to which sub-section (1) applies, nothing in rule 16 of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, shall apply or shall be deemed ever to have applied. (2) Any dealer in hides and skins who has been finally assessed under the provisions of the said Act and the said rules, may within a period of ninety days from the date of the commencement of this Ordinance apply to the authority or officer concerned for reassessment under the provisions of this Ordinance along with the correct and complete return: (3) Subject to the provisions of sub-section (1), the provisions of the said Act and the said rules shall be deemed to be in force for the purpose of assessment or reassessment and recovery of the tax on sale of hides and skins during the period mentioned in sub-section (1) and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all be on the dealer. Explanation II.-For the removal of doubts it is hereby declared that in respect of sales to which sub-section (1) applies, nothing in rule 16(2) of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, shall apply or shall be deemed ever to have applied." It is to be noticed that section 2(1) of the Act is in respect of tax on sale of dressed hides and skins and not in respect of tax on sale of raw hides and skins with which clause (i) of section 2(1) of the Ordinance dealt. Consequently the other provisions of the other sub-sections of section 2, though practically the same as those of the Ordinance, have been suitably modified. They are therefore not set out. It is the validity of section 2 of the Act that is challenged in these petitions, on the ground that it violates the provisions of Articles 14, 19(1)(f) and (g), 31, 286(2), 301 and 304 of the Constitution for the following reasons: 1.. Persons who had purchased raw hides and skins in the State of Madras in the years 1955-56 and 1956-57 paid sales tax at 3 pies per rupee and paid no further tax when those hides, after being tanned, were sold. The petitioners having purchased raw hides a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contentions are sought to be met for the respondent-State on the following grounds: 1.. It is open to the Legislature to treat dressed hides and skins as a separate category from raw hides and skins. They are in fact commercially different commodities and that therefore different rates of tax for the two different categories of goods can be legally levied. No discrimination is made between locally tanned goods and outside- tanned goods as in both cases tax is levied on the first sale of such goods within the State. It does not matter that the hides and skins tanned locally do not attract that liability on the first sale in view of their having been taxed earlier at the untanned stage because of the special provision of exemption. 2.. It is not correct that section 2(1) will not apply to a dealer purchasing tanned hides and skins outside the State and selling them within the State. It is not necessary that the seller of the tanned hides and skins in the State be himself the last purchaser of the untanned hides and skins for the purpose of his liability under section 2(1). 3.. Article 286(3) as it stood prior to the amendment in 1956 im- posed fetters only on post-Constitutional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and skins in the State during 1955 to 1957 is 3 pies per rupee. The difference in tax works out to 7/1600th of a rupee, i.e., a little less than ½ naya paisa per rupee. Such a dis- crimination would affect the taxation up to the 1st of August, 1957, when the rate of tax on the sale of raw hides and skins was raised to 2% of the sale price. The second contention has no force. There is nothing in sub-section (1) of section 2 of the Act to suggest that the seller of the tanned hides and skins in the State, should himself be the purchaser of those hides and skins in the raw condition from outside the State. An importer can import tanned hides and skins as well as untanned hides and skins from outside the State. If he imports tanned hides and skins, he need not necessarily be the last purchaser of those hides and skins in the untanned condition. In that case, it my be difficult to assess the tax on the basis laid down in sub-section (1) of section 2, as the importer may not be able to inform about the price at which those hides and skins were last purchased. Such a price may then have to be determined by estimate. In case the importer himself purchases the untanned hides and sk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ashew-nut Factory [1954] S.C.R. 53; 4 S.T.C. 205. in which it was held that raw cashew-nuts become a different commodity commercially after the application of certain process as a result of which they are converted into edible kernels. It is therefore not correct to say that the process of tanning brings about no change in the raw hides and skins and that therefore both types of hides and skins form one commodity. The petitioners rely on two cases in support of their contention that the tanned and untanned hides and skins do not form different commodities but constitute one commodity. In Abdul Subhan and Co. v. State of Madras [1960] 11 S.T.C. 173, 184. is the observation: "Section 14(3) of the Central Sales Tax Act, 1956 (Act 74 of 1956) also treats hides and skins, whether dressed or raw, as a single commodity..... Since skins, tanned or untanned, constitute only one class of goods, and the sale of that class of goods can be taxed only at a single point, obviously there can be no tax on a sale of tanned goods, if tax has already been paid on an earlier transaction when those skins were untanned." No reason is given why the two kinds of hides and skins are treated as a single ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... series of sales by successive dealers as may be prescribed." In 1957 this provision was replaced by section 5-A(4) which read: "The sale of hides and skins, whether in a raw or dressed state, shall be liable to tax only at such single point in the series of sales by successive dealers as may be prescribed but at the rate of two per cent. on the turnover at that point." The series of sales referred to in this provision, to our mind, meant the series of sales of each kind of hides and skins namely the series of sales of raw hides and skins and the series of sales of dressed hides and skins and do not mean a single series of sales which includes successive sales in the first instance of raw hides and skins and after tanning successive sales of tanned hides and skins. The real question is whether these provisions treat raw hides and and dressed or tanned hides and skins as one class of goods for purpose of taxation or as two different classes of goods. If they them as one class of goods, the contention for the petitioner loses taxing of hides and skins at the time of their sale in a raw meets the requirements of law as hides and skins could be taxed only at a single point. If the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of the sale or purchase of goods which were goods declared essential for the life of the community. We do not see why such a fetter be placed on the legislative power of the State Legislature. The State Legislature is free to enact laws which would have retropective operation. Its competence to make a law for a certain past period depends on its present legislative power and not on what it possessed at the period of time when its enactment is to have operation. We therefore do not agree with this contention. The matter can be looked at in a different way. The 1939 Act required no assent of the President. The State Legislature was doing in 1963 what the Legislature enacting the 1939 Act was supposed to have enacted and therefore its enactment was not governed by the Constitutional requirement for an Act to be enacted during the period Act LII of 1952 was in force. Lastly, it has been urged for the petitioner that hides and skins have been declared to be of special importance in inter-State trade or commerce by section 14 of the Central Sales Tax Act of 1956. The tax imposed by sub-section (1) of section 2 of the Act is a tax on the sale of hides and skins in the course ..... X X X X Extracts X X X X X X X X Extracts X X X X
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