TMI Blog1969 (11) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... essed or undressed, tanned and sold, the provisions were discriminatory as offending article 304 of the Constitution. The revenue has come up in appeals. When the appeals came up before another Division Bench, to which one of us was a party, it was felt that Hajee Abdul Wahab Sons v. Government of Madras[1966] 17 S.T.C. 284. required reconsideration, and, as a result, the appeals have been placed before us. In order to appreciate the point at issue it is first necessary to notice the relative statutory provisions and the rules made thereunder relevant to charge of transactions in hides and skins during the assessment year 1953-54. Section 3 of the Madras General Sales Tax Act, 1939, was the charging section. The scheme envisaged by sub-section (1) of that section was multi-point tax. Every dealer should pay for each year a tax on his total turnover for the year and the tax should be calculated at the flat rate of three pies for every rupee in the turnover. The proviso to the sub-section was added in 1949 with which we are not concerned at the moment. The scheme of multi-point tax was of course subject to the other provisions of the Act. Sub-section (2) before its amendment by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the amount for which the sales of hides or skins were made. It may be seen from what we have said of section 5 and rule 16(1) to (4), a scheme of single point taxation had been introduced, but, confined to dealings between licensed dealers in which tax was levied in the case of untanned hides or skins at the stage of their first purchase and on the purchase value, and in the case of sales of tanned hides or skins at the stage of their sale and on the sale value, provided the goods involved in such sales had not suffered tax at their raw stage earlier. Sub-rule (5) of rule 16 was to the effect that sales of hides or skins by dealers other than licensed dealers in hides or skins, should, subject to the provisions of section 3, be liable to tax on each occasion of sale. That meant that the consequence of not taking out a licence by a dealer in hides and skins was that he would not be entitled to the benefit of the single point scheme of taxation. This sub-rule was but stating the true legal position of failure to take out a licence, and, the position would have been the same even without sub-rule (5). This is especially so because of the specific provisions of section 6-A. Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The reasoning for the decision is to be found in the following observation: "The grievance arises on account of the amount of tax levied being different on account of the existence of substantial disparity in the price of the raw hides or skins and of those hides or skins after they had been tanned, though the rate is the same under section 3(1)(b) of the Act. If the dealer has purchased the raw hide or skin in the State, he does not pay on the sale price of the tanned hides or skins; he pays on the purchase price only. If the dealer purchases raw hides or skins from outside the State and tans them within the State, he will be liable to pay sales tax on the sale price of the tanned hides or skins. He too will have to pay more for tax even though the hides and skins are tanned within the State, merely on account of his having imported the hides and skins from outside, and having not therefore paid any tax under sub-rule (1)." The discrimination thus found flowed from the nature of the single point scheme of taxation relating to hides and skins and on the differential quantum of turnover to which the same rate was applied, the difference arising by the accident of tanned hides and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the article is concerned with imported and similar local goods but also the incidence of taxation which would have to be ascertained with reference to the relative statutory provisions. Firm A.T.B. Mehtab Majid Co. v. State of Madras[1963] 14 S.T.C. 355 (S.C.). and Hajee Abdul Shukoor and Co. v. State of Madras[1963] 14 S.T.C. 355 (S.C.). were decided in the context of Turnover Rule 16 and of the single point scheme of taxation applicable to transactions in hides and skins, dressed or undressed, imported or local. It is only in that scheme of taxation would there be any occasion for a classification between tax on purchase value and exemption at the sale point relatable to the same goods, first in the raw stage and in the second stage of sale of dressed hides and skins. It is this aspect engendered by the structure of Turnover Rule 16 that gave rise to a differential in the turnover of purchase of untanned hides and skins and sale of dressed hides and skins made out of them, vis-a-vis the turnover of imported hides and skins that were sold, and, on an equalisation, after Firm A.T.B. Mehtab Majid Co. v. State of Madras[1963] 14 S.T.C. 355 (S.C.). of the turnovers and removal o ..... 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