Satyanarayana Rao, J.-

The question raised in this revision petition turns upon the interpretation of Rule 16(2) and Rule 4 of the Madras General Sales Tax Turnover and Assessment Rules, 1939. The assessment with which we are now concerned relates to the assessment year 1949-50. The turnover in dispute is Rs.24,239-7-0,. which represents the purchase value of hides and skins, which the appellants exported to Marseilles, outside Indian Union, after 26th January, 1950. The purchases were, however, made before that date. The Tribunal upheld the claim of the assessee on the ground, that the amount is exempt from tax under Article 286(1)(b) of the Constitution. The correctness of this is canvassed by the learned Government Pleader in this revision petition.

In the case of hides and skins, which are not tanned section 5(vi) of the General Sales Tax Act provides:-

Subject to such restrictions and conditions as may be prescribed, including conditions as to licences and licence fees...........

(vi) the sale of hides and skins, whether tanned or untanned, shall be liable to tax under section 3(1) only at such single point in the series of sale by successive dealers, as may be prescribed".

They can be taxed, therefore, only at a single point in the series of sales by successive dealers. The power to determine the single point in the series of sales by successive dealers is left to the rule-making power to provide by rule the stage at which the tax should be levied. Rule 16, which was promulgated by the Government under its rule-making power contained in section 19 of the Act states:

"R. 16(1).-In the case of hides and skins the tax payable under section 3(1) shall be levied in accordance with the provisions of this rule.

(2) No tax shall be levied on the sale of untanned hides or skins by a licensed dealer in hides, or skins except at the stage at which such hides or skins are sold to a tanner in the State or are sold for export outside the State."

In the case of a tanner of untanned hides or skins sold to him, it is provided by Rule 16(2)(1) that it shall be levied from the tanner on the amount for which the hides or skins are bought by him. In cases where the untanned hides and skins are sold for export outside the State, the tax is to be levied from the dealer, who was the last dealer not exempt from taxation under section 3(3), who buys them in the State, but the tax is on the amount for which they were bought by him. The mode of computing the turnover in the case of hides and skins exported outside the State by a licensed dealer in hides and skins is provided by Rule 4 and it states:-

“(1) Save as provided in sub-rule (2) the gross turnover of a dealer for the purposes of these rules shall be the amount for which goods are sold by the dealer.

(2) In the case of the under-mentioned goods the gross turnover of a dealer for the purposes of these rules shall be the amount for which the goods are bought by the dealer.

(d) untanned hides and skins exported outside the State by a licensed dealer in hides or skins”.

Reading these relevant provisions bearing upon the question it would be seen that in the case of transactions in untanned hides and skins by a licensed dealer in hides or skins, there are only two taxable events at which the tax could be levied. The general rule enunciated in Rule 16(2) is that no tax shall be levied on the sale of untanned hides or skins by a licensed dealer in hides or skins. The two exceptions are (1) in the case of a licensed dealer who sells untanned hides or skins to a tanner In the State and the tax is levied at the stage at which such hides and skins are sold to the tanner, and (2) in the case of untanned hides and skins sold by a licensed dealer for export outside the State, the stage and the event which attracts the tax is, when the goods are sold for export outside the State. The turnover, however, is to be calculated on the amount for which the goods were purchased by him i.e., the licensed dealer. The taxable e

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