Back
1995 Supreme(Mad) 102
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE THANIKKACHALAM & THE HONOURABLE MR. JUSTICE JAYARAMA CHOUTA
State of Tamil Nadu - Appellant
Versus
S.E. Md. Sadakathullah and Company - Respondents
Tax Case Revision Nos. 1026 to 1028 of 1983
Decided On : 23 January 1995
The sale of dressed hides and skins is exempt from purchase tax under the provisions of section 9 of the Tamil Nadu General Sales Tax Act read with section 5(3) of the Central Sales Tax Act.
Headnote:
TAMIL NADU GENERAL SALES TAX ACT, 1959 - SECTIONS 7(A), 7(B), 9 - CENTRAL SALES TAX ACT, 1956 - SECTION 5(3) - PURCHASE TAX - LEVY ON RAW HIDES AND SKINS - DOUBLE TAXATION - AVOIDANCE - REASSESSMENT - GUIDELINES.
Fact of the Case:
The assessee, a dealer in hides and skins, purchased tanned items of hides and skins from local dealers and exported them. They also sold tanned hides and skins locally. The assessing officer levied purchase tax on the closing stock of raw hides and skins as well as closing tanned hides and skins, and on the turnover of tanned hides and skins sold locally. The assessee contended that the same goods were taxed twice, and that the provisions of section 9 of the Tamil Nadu General Sales Tax Act read with section 5(3) of the Central Sales Tax Act exempted the sale of dressed hides and skins from tax.
Finding of the Court:
The Tribunal held that the assessee was liable to pay purchase tax on the last purchase of raw hides, but that the same goods could not be taxed again as dressed hides under item 7(b) in the subsequent year. It set aside the assessment and remitted the matter back to the assessing officer to re-do the assessment in order to avoid double taxation.
Issues: Whether the assessee was liable to pay purchase tax on the closing stock of raw hides and skins, closing tanned hides and skins, and on the turnover of tanned hides and skins sold locally.
Ratio Decidendi: The provisions of section 9 of the Tamil Nadu General Sales Tax Act read with section 5(3) of the Central Sales Tax Act provide that when a dealer purchases raw hides and skins and proceeds or converts them into dressed hides and skins before export, it is not the same goods which were sold or exported. Therefore, the assessee was not liable to pay purchase tax on the sale of dressed hides and skins.
Final Decision: The court upheld the order of the Tribunal and directed the assessing officer to re-do the assessment in accordance with the provisions of section 9 of the Tamil Nadu General Sales Tax Act read with section 5(3) of the Central Sales Tax Act.
THANIKKACHALAM, J.
C. No 1027 of 1983:
The department is the petitioner herein. The assessee is a dealer in hides and skins. The assessing officer found in assessment year 1974-75 that 3, 995 pieces of raw hides and skins valued at Rs. 84, 962.35 were held as closing stock at the end of the year 1974-75. Out of them, 509 pieces of raw hides valued at Rs. 6, 057 were alone considered for assessment and the remaining 3, 486 pieces were found kept under various process of tanning. By following the decision of this Court in Sadak Thamby & Co.'s case 1969 (24) STC 468 the assessing officer held that this closing stock of raw hides and skins, i e., 3, 486 pieces valued at Rs. 78, 905.15 is liable to tax at 3 per cent as falling under item 7(a) of the Second Schedule to the Tamil Nadu General Sales Tax Act. Accordingly the assessing officer revised the assessment and levied the tax as stated above. The aggrieved assessee filed an appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner confirmed the assessment made by the assessing officer. Not satisfied with the order passed by the Appellate Assistant Commissioner the assessee filed a second appeal before the Appellate Tribunal. The Appellate Tribunal pointed out that the assessing officer is justified in taxing the last purchased raw hides and at the same time he cannot again tax the same as the sale of dressed hides under item 7(b) in the subsequent year. On facts the Tribunal found that though the assessing officer has revised the assessment for the assessment year 1974-75, but, correspondingly no revised assessment was made for the assessment year 1975-76. In order to avoid this defect the Tribunal set aside the assessment and remitted back the same to the assessing officer with a direction to avoid double taxation.
2. It is against that order the department is in revision before this Court.
3. We have heard learned Additional Government Pleader (Taxes), who submitted that the provisions of section9 of the Tamil Nadu General Sales Tax Act and section5(3) of the Central Sales Tax Act are not applicable to the facts of this case. Therefore, it was submitted that while remitting back the matter the Tribunal was not correct in directing the assessing officer to re-do the assessment by taking into consideration the provision contained in section9 of the Tamil Nadu General Sales Tax Act read with section5(3) of the Central Sales Tax Act.
4. On the other hand, none was present on behalf of the assessee. We have heard learned Additional Government Pleader (Taxes) and perused the records carefully. The fact remains that in the assessment year 1974-75 out of 3, 995 pieces of raw hides and skins only 509 pieces of raw hides alone were valued and considered for assessment. The remaining 3, 486 pieces were kept under various process of tanning. The assessing officer following the decision of this Court in 1969 (24) STC 468 (L.M.S. Sadak Thamby & Co. v. Appellate Assistant Commissioner of Commercial Taxes) revised the assessment and in the revised assessment the sale value of 3, 486 pieces were also taxed at 3 per cent. This was confirmed by the Appellate Assistant Commissioner on appeal. On further appeal the Tribunal pointed out that the assessing officer was justified in taxing the last purchase of raw hides. It also pointed out that at the same time the assessing officer cannot again tax the same as the sale of the dressed hides under item 7(b) in the subsequent year. It was found on facts that in the subsequent assessment year 1975-76 the tax was levied on the sale of dressed hides under item 7(b) of the Act. But, the assessing officer revised the assessment only in the year 1974-75 but, no corresponding reassessment was made in the assessment year 1975-76 so as to avoid tax on sale of dressed hides. In order to avoid double taxation, the Tribunal set aside the order passed by the Appellate Assistant Commissioner, while remitting back the matter wit
