TMI Blog2008 (10) TMI 603X X X X Extracts X X X X X X X X Extracts X X X X ..... The order of the court was made by PRABHA SRIDEVAN J. The assessee purchases raw skins to fulfil export orders for finished leathers. They claimed that their turnover is eligible for exemption in view of the decision T. Azeezur Rahman and Company v. State of Tamil Nadu reported in [1991] 82 STC 355 (Mad). The assessing officer held that they had not filed correlating statement to prove that the raw skins were purchased in the course of export and therefore, disallowed the claim for exemption. Against that, an appeal was filed by the assessee. Referring to the correlation statement filed in respect of the purchase of raw skin against the export orders and following T. Azeezur Rahman and Company v. State of Tamil Nadu [1991] 82 STC 355 (Mad) the appellate authority held that the purchases of raw skin within the State against purchase orders for export are not liable to tax accepting the assessee's case that the purchase of raw skin was effected for fulfilment of export orders of finished leathers. The Revenue challenged this before the Sales Tax Tribunal and the Tribunal following K.A.K. Anwar Co. v. State of Tamil Nadu [1998] 108 STC 258 wherein the Supreme Court ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those goods which are declared goods and the inclusion of several goods in one entry would not mean that they are not different taxable goods, especially when the Supreme Court has held that they are different. The learned Special Government Pleader also submitted that the above circulars would at best bind the Revenue, and the categoric pronouncement of the Supreme Court cannot be ignored. The relevant sections and circulars are extracted hereunder: The Central Sales Tax Act, 1956: 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 documents of title to the goods before the goods have crossed the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the point of first sale in the State One per cent by Act 30 of 1992 from March 7, 1992 Two per cent with effect from July 17, 1996 by Act No. 37 of 1996 Four per cent with effect from August 18, 2001 by Act No. 23 of 2001 The relevant circulars are extracted: 1993 Circulars and clarifications Sl. No. Gist of clarification on rate of tax (Tamil Nadu) 36. K. Dis. Acts. Cell V/102966/91 dated June 19, 1992. 1. Exemption on raw hides and skins can be claimed under section 5(1) of the Central Sales Tax Act, 1956, if the resultant tanned hides and skins are exported out of India. 2. The inter-State sales of tanned hides and skins would attract liability to tax under Central Sales Tax Act, 1956, if the corresponding raw hides and skins had not suffered tax under the TNGST Act, 1959. . . . Office of the Special Commissioner and Commissioner of Commercial Taxes, Chepauk, Madras-5. D. Dis/Acts Cell III/129820/9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hile declaring certain goods as of special importance in inter-State trade and commerce adopted a specific and particular form or method of description of hides and skins so as to constitute it as one goods, it is not open to the State Legislature to adopt a different description by bifurcating the item of goods into more than one for purposes of levy under the State Act and thereby rob the object or the benefit arising out of the declaration by the Parliament; and that, the powers of the State Legislature to levy sales tax even on the intra-State sales is subject to the two-fold restrictions imposed in section 15 of the Central Act, viz., that the rate shall not exceed the one stipulated therein and such tax shall not be levied at more than one stage, and consequently, the impugned provisions violate the said mandate contained in the Constitution of India and the Central Act, and therefore, are liable to be struck down as ultra vires, unconstitutional and violative of sections 14 and 15 of the Central Act. The court, in fact referred to T. Azeezur Rahman and Company v. State of Tamil Nadu [1991] 82 STC 355 (Mad) and held that it had no relevance to the case on hand. The Division B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er in a raw or dressed state', is comprehensive enough to include the products emerging from hides and skins until the process of dressing or finishing is done. But in that case the goods in question were split leathers and coloured leathers and the Supreme Court affirmed the view of the High Court that these goods continue to be hides and skins eligible for special treatment under the CST Act. (v) In K.A.K. Anwar Co. v. State of Tamil Nadu [1998] 108 STC 258 (SC) the appellants, who purchased raw hides and skins, after dressing them, sold them in the course of inter-State trade. The three-Judge Bench held that the raw hides and skins and dressed hides and skins are different taxable commodities. In this, they have applied A Hajee Abdul Shukoor and Co.'s case [1964] 15 STC 719 (SC); [1964] 8 SCR 217 and referred to Mahi Trader's case [1989] 73 STC 228 (SC). (It is interesting to note that in some copies of K.A.K. Anwar Co. v. State of Tamil Nadu [1998] 108 STC 258 (SC), State of Tamil Nadu v. Mahi Traders [1989] 73 STC 228 (SC) is shown as overruled and in other copies the words used are considered ). However, Brown Leather Company v. State of Tamil Nadu [1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tinct from dressed hides and skins the Legislature did not think it appropriate to insert a clause similar to section 15(d) which may have had the effect of regarding raw hides and skins and dressed hides and skins as being treated as a single commodity for the purposes of levy of tax. The words 'hides and skins, whether in a raw or dressed state' in section 14(iii) of the Central Sales Tax Act clearly seem to indicate that the Legislature recognised that raw hides and skins was an item different from dressed hides and skins . . . In the present case dressed hides and skins is a separate commercial commodity which emerges after raw hides and skins has been subjected to manufacturing process and, therefore, section 14(iii) deals with two different types of goods which unlike the case of pulses referred to in section 15(d), is not regarded by the Act as one and the same commodity. Therefore, what we understand from the above is that the two goods, viz., raw hides and skins and dressed hides and skins are different taxable commodities. The appellant's submission that his case has to be dealt with under section 5(1) since the purchaser also is the exporter must be re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on a construction of the U.P. Krishi Utpadan Mandi Adhiniyam, 1964, that this decision was rendered and it can have no application to matters to which Tamil Nadu General Sales Tax Act applies, whereas in the Tamil Nadu Act, the two are dealt with differently. The Park Leather case [2001] 122 STC 82 (SC) can have no application and we are bound to follow K.A.K. Anwar's case [1998] 108 STC 258 (SC) which has been subsequently relied on and affirmed in Shafeeq Shameel's case [2003] 129 STC 1 (SC). (viii) In Srinivas Leather Private Limited v. State of Tamil Nadu [2000] 119 STC 369, the same question has been answered against the assessee by the then Tamil Nadu Taxation Special Tribunal. (ix) Johnson Lifts Ltd. (Now Johnson Lifts Pvt. Ltd.) v. Deputy Commissioner (CT) [2007] 7 VST 660 (AP) was referred to to support the Revenue's case that when there is a latest judgment of a Supreme Court on the issue then that would apply. (x) Finally, we come to Shafeeq Shameel and Company v. Asst. Commissioner, Commercial Taxes [2003] 129 STC 1 (SC) which is a very short order. It reads as follows: (at page 2 of 129 STC) In the instant case, the appellant purchases raw hides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the circular the following judgments were relied on: (i) In Commissioner of Customs v. Indian Oil Corporation Ltd. [2006] 144 STC 146, the Supreme Court held that it was not open to the Revenue to advance an argument or file an appeal contrary to the circulars and that as long as a circular remains in operation, the Revenue is bound by it and cannot be allowed to plead that it is not valid nor that it is contrary to the terms of the statute. (ii) In Collector of Central Excise, Vadodra v. Dhiren Chemical Industries [2002] 126 STC 122, the Supreme Court after placing its interpretation on a particular phrase in the circular and clarified that, regardless of the interpretation that we have placed on the said phrase, if there are circulars which have been issued by the Central Board of Excise and Customs which place a different interpretation upon the said phrase, that interpretation will be binding upon the Revenue. (iii) In Collector of Central Excise, Patna v. Usha Martin Industries [1998] 111 STC 254, the Supreme Court held that circulars are binding on the Department and that it is not open to the Department to turn contrary to the instructions of the circular. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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