GOLDEN LEATHERS TANNERY Vs. SECRETARY THE TAMILNADU SALES TAX APPELLATE TRIBUNAL CITY CIVIL COURT BUILDINGS

JUDGEMENT

(1.) In this writ petition, the question is whether process by which the wet blue leather is turned into finished leather amounts to 'manufacture'. This question assumes importance in the context of Section 3(3) of the Tamilnadu General Sales Tax Act (hereinafter referred to as the Act).

(2.) The petitioner is a manufacturer of finished leather. They purchased chemicals, dyes and pigments against Form XVII to convert wet blue leather into finished leather. The dealer is allowed concessional rate of tax under Section 3(3) of the Act, if a declaration in Form XVII is obtained from the purchasing dealer and produced before the Assessing Authority; after having bought the goods at the concessional rate of tax, he must use them for the manufacture of goods for sale. If he misuses them or disposes them off in any other manner, the concession will not be available to him. Thirdly, the buying dealer must maintain a separate stock for the goods purchased by availing the concession. According to them, to convert wet blue leather into finished leather, several processes and manufacturing activities take place, which include splitting, shaving, neutralizing, bleaching, dyeing, fat-liquoring, stuffing, setting out, samming, drying, staking and finishing and therefore, they fully complied with the provisions of Section 3(3) of the Act.

(3.) The Original Authority was not inclined to accept it. On appeal, the Appellate Authority found that the leather industry is of three types. One is the industry of tanning raw skins and manufacturing finished leather, which is called the full-fledged unit; the next kind is wet unit or wet skin unit by which, the raw skins are turned into semi tanned leather i.e wet blue; and the third unit, by which, the wet blue leather is converted into finished leather. The Appellate Authority, therefore, found that is a commercially distinct commodity and the wet unit or crust or wet blue leather is not the same as finished leather and that therefore, such processing will certainly amount to manufacture and allowed the appeal.