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1997(10) Supreme 458
SUPREME COURT OF INDIA
S.C. Sen, B.N. Kirpal and K.T. Thomas, JJ.
TVL K.A.K. Anwar & Co. etc. -Appellants
versus
State of Tamil Nadu -Respondent
Civil Appeal Nos. 8377-8378 of 1997
(Arising out of SLP (C) Nos. 5384-85 of 1984)
With
Civil Appeal Nos. 4747-48, 4749-50, 4751-52 of 1993, 6660 of 1995, 453 and 855 of 1994
All Decided on 27-11-1997
Counsel for the Parties :
For the Appearing Parties : K. Parasaran, H.N. Salve and S. Sivasubramaniam, Sr. Advocates, A.T.M. Sampath, V. Balaji, K.J. Chandran, Nikhil Sakhandand K.K. Mani, R. Ayyam Perumal, V.G. Pragasam, K. Swami, P.R. Tiwari, A. Raghunath, A. Mariarputham, V. Krishnamurthy, Advocates.
Held : 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. As has already been noticed hereinabove it is after undergoing a manufacturing process involving various stages that raw hides and skins becomes dressed hides and skins. As observed in the State of Tamil Nadu v. Pyare Lal Malhotra etc. (1976 (3) SCR 168) at page 173 that "sales tax law is intended to tax sales of different commercial commodities and not to tax the production or the manufacture of particular substances out of which these commodities may have been made. As soon as separate commercial commodities emerge or come into existence, they become separately taxable goods of entitles for purposes of sales tax. Where commercial goods, without change of their identity as such goods, are merely subjected to some processing or finishing or are merely jointed together, they may remain commercially the same goods which cannot be taxed again, in a series sales, so long as they retain their identity as goods of a particular type. In the present case dressed hides and skins in 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. Having come to the conclusion that raw hides and skins and dressed hides and skins are two types of commodities, it must flow therefrom that when the appellants purchased raw hides and skins on payment of tax they would be liable to pay sales tax in respect of dressed hides and skins and such levy will not fall foul of Section 15 as the two goods are different taxable commodities. In other words the same goods would not have been taxed more than once. In our opinion, therefore the High Court was right in coming to the conclusion which it did, namely, that the sales tax authorities could levy sales tax on the sale of dressed hides and skins and that the provisions of Section 3 of the Tamil Nadu General Sales Tax (3rd Amendment) Act, 1987 are not ultra vires. (Paras 15, 16)
(ii) Central Sales Tax Act-Sections 14 and 15-Taxation of goods of special importance in inter state trade or commerce-Sections 14 and 15 to be read together-Section 14, not a taxing provision-It merely classifies different commodities under same species under one entry-Merely because different goods or commodities are listed together in same sub- heading or sub item in Section 14-It cannot mean that they are regarded as one and same item-Whenever legislature wanted different goods placed in same entry to be regarded as a single commodity-It expressly provided for the same.
Held : Sections 14 and 15 of the Central Sales Tax Act have to be read together as they constitute a scheme relating to taxation of goods of special importance in inter-state trade or commerce. While Section 14 enumerates the items which are regarded as being goods of special importance in inter-state trade or commerce, it is Section 15 which imposes the restriction and conditions in regard to tax on sale or purchase of declared goods within a State. Section 14, in other words, is not a taxing provision but it merely classifies different commodities under the same species under on entry. Merely because different goods or commodities are listed together in the same sub-heading or sub-item in Section 14 cannot mean that they are regarded as one and the same item. Whenever the legislature wanted different goods placed in the same entry to be regarded as a single commodity it expressly provided for the same. By Act 103 of 1976 sub-sections (c) and (d) were inserted in Section 15 of the Central Sales Tax Act. With the introduction of Section 15(d) "each of the pulses referred to in Clause (vi-a) of Section 14, whether whole or separated and, whether with or without husk, were to be treated as a single commodity for the purposes of levy of tax under that law." If the intention of the legislature had been that the various commodities mentioned in the same clauses in Section 14 were to be regarded as a single commodity it would have specifically provided as such. The legislature, however, chose to single out different types of pulses only to be regarded as a single commodity. Notwithstanding the fact that the raw hides and skins had been held by this Court in Abdul Shakoor s case (supra) as being distinct 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. (Para 14)
JUDGMENT
Kirpal, J.-Leave granted in SLP (C) Nos. 5384-85 of 1984.
2. The common question which arises in these appeals in whether the turn-over in respect of hides and skins which has once been subjected to tax under the Tamil Nadu General Sales Tax Act, on its purchase at the raw stage, could be taxed again on inter-state sales as tanned or dressed hides and skins.
3. According to the appellants they purchase raw hides and skins and after dressing they are sold in the course of inter-state trade. The contention of the dealers before the assessing authority was that hides and skins, whether in a raw or dressed form, are declared goods under Section 14(iii) of the Central Sales Tax Act and they are regarded by the said Act as a single commodity. This being so Section 15 of the Central Sales Tax Act provides that the goods which have suffered tax once cannot be taxed again at the time of inter-state sale. As the tax had been levied at the time of purchase of raw hides and skins, therefore, there should be no levy of tax on their inter-state sale after the said raw hides and skin had been dressed.
4. The assessing authority, in all these cases, did not accept the said contention as the authorities were of the opinion that raw hides and skins were a commodity which were different from dressed hides and skins, and, therefore, the restrictions contemplated by Section 15 of the Central Sales Tax Act was not applicable.
5. The decision of the assessing authority was challenged by some of the appellants by taking recourse to the provisions under the Act and after an adverse decision from the Tribunal, revision petitions were filed before the High Court at Madras. Some of the other appellants chose to challenge the decision of the sales tax authority as well as the constitutional validity of Section 3 of the Tamil Nadu General Sales Tax (3rd Amendment) Act, 1987 substituting item No. 7 and the relevant entries thereto in the IInd schedule to the Tamil Nadu General Sales Tax Act, 1959, by filing writ petitions before the High Court of Madras. The High Court, by different decisions, came to the conclusion that raw hides and skins was a commodity which was commercially different from dressed hides and skins both under the State Act as well as the Central Act and that the State had the legislative competence to tax the inter-state sale of dressed hides and skins even though tax had been paid on the purchase of raw hides and skins. The further finding of the High Court was that there was no merit in the challenge to the legality of the entries which had been substituted in the IInd Schedule by the Amending Act of 1987.
6. The controversy in these appeals relates of three periods, namely, for the period prior to 23rd March, 1987; for the period 23rd March. 1987 to 4th September, 1991, when amendment was made to item No. 7 to the IInd Schedule pursuant to the aforesaid Amending Act and for the period subsequent to 4th September, 1991 when the said schedule was again amended, as a result of which the original entry got restored.
7. In order to appreciate the rival contentions it is necessary to refer to the statutory provisions. Sections 14 and 15 of the Central Sales Tax Act, in so far as they are relevant for the purpose of these cases, are as under :
"14. Certain goods to be of special importance in inter state trade or commerce :
It is hereby declared that the following goods are of special importance in inter state trade of commerce :
.........................
(iii) hides and skins, whether in a raw or dressed state."
15. Restrictions and conditions in regard to tax on sale or purchase of declared goods within a State :
Every sales tax law of a State shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods, be subjected to the following restrictions and conditions, namely :
(a) the tax payable under the law in respect of any sale or p
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