Judgment

RAGHUBAR DAYAL, J. : This petition under Art. 32 of the Constitution raises the question of the validity of R. 16 of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, hereinafter called the rules. The impugned rule was published on September 7, 1955, and was substituted in the place of old R. 16. The new rule was to be effective from April 1, 1955.

2. The petitioner is a dealer in hides and skins. He sells hides and skins 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.

3. 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:

X X X X"

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 S. 3, sub-s. (1), only at such single point in the series of sales by successive dealers as may be prescribed.

4. Section 19 empowers the State Government to make rules to carry out the purposes of the Act.

5. The new rule 16, whose validity is challenged for the petitioner, reads:

"16. (1) In the case of untanned hides and/or skins the tax under Section 3(1) shall be levied from the dealer who is the last purchaser in the State not exempt from taxation under Section 3 (3) on the amount for which they are bought by him.

(2) (i) In the case of hides or skins which have been tanned outside the State the tax under Section 3(1) shall be levied from the dealer who in the State is the first dealer, in such hides or skins not exempt from taxation under Section 3(3) on the amount for which they are sold by trim.

(ii) In the case of tanned hides or skins which have been tanned within the State, the tax under Section 3(1) shall be levied from a person who is the first dealer in such hides or skins not exempt from taxation under Section 3(3) on the amount for which they are sold by him:

Provided that, if he proves that the tax has already been levied under sub-rule (1) on the untanned hides and skins out of which the tanned hides and skins had been produced, he shall not be so liable.

(3) The burden of proving that a transaction is not liable to taxation under this rule shall be on the dealer."

6. It is contended for the petitioner that the effect of this rule is that tanned hides or skins imported from outside the State and sold within the State are subject to a higher rate of tax than the tax imposed on hides or skins tanned and sold within the state, inasmuch as sales tax on the imported hides or skins tanned outside the State is on their sale price while the tax on hides or skins tanned within the State, though ostensibly on their sale price, is, in view of the proviso to cl. (ii) of sub-r. (2) of R. 16, really on the sale price of these hides or skins when they are purchased in the raw condition and which is substantially less than the sale price of tanned hides or skins. Further for similar reason, hides or skins imported from outside the State after purchase in their raw condition and then tanned inside the State are also subject to higher taxation than hides or skins purchased in the raw condition in the State and tanned within the State, as the tax on the former is on the sale vice of the tanned hides or skins and on the latter is on the sale price of the raw hides or ski