STATE OF ANDHRA PRADESH Vs. ASSOCIATED TANNERS VIZIANAGARAM

JUDGEMENT

(1.) These two are connected matters and are concerned with recovery of Central Sales Tax on tanned hides and skins. The respondent in the Tax Revision Case is the petitioner in the Writ Petition. The principal question that arises in both the matters is whether dressed hides and skins, which have been tanned out of hides and skins which had suffered tax under the State Sales Tax law are generally exempt from further tax so as to attract the nil rate envisaged by section 8 (2-A) of the Central Sales Tax Act, 1956. While the assessment, which is in question in the tax revision case is for the year 1968-69, the writ petition is about the assessment of the year 1972-73.

(2.) The dealer in this case is M/s. The Associated Tanners, Vizianagaram. They deal in hides and skins besides being tanners. They registered themselves as dealers both under the Andhra Pradesh General Sales Tax Act, 1957, as well as the Central Sales Tax Act, 1956. For the year 1968-69, it reported a total turnover of Rs. 17,59, 122.06 and claimed exemption on the entire turnover. The assessing authority, however, found the total turnover to be Rs.28,30,300 and levied assessment on net turnover of Rs. 17,59,122 after allowing deduction on the balance of the turnover. They purchase raw hides and skins not only from within the State of Andhra Pradesh but also from places outside the State and after tanning them, sell the dressed hides and skins within the State as well as in the course of inter-State trade. They have not, however, maintained separate accounts to identify the dressed hides and skins obtained from raw hides and skins purchased by them within the State, purchased from outside the State, and from out of the opening stock at the commencement of the year. They paid tax under the State law on their turnover of raw hides and skins purchased within the State, but in respect of those imported from outside, they have not paid tax. The assessing authority allowed exemption on the turnover relating to purchases of raw hides and skins made outside the State.

(3.) The dispute mainly revolves round the turnover of Rs. 17,59, 122-06 which represents the entire turnover relating to inter-State sales of dressed hides and skins. The dealers argued before the assessing authority that the sales of dressed hides and skins, which have already suffered tax as raw hides and skins are exempt from tax generally and consequently the tax payable under the Central law is nil by reason of the provisions of section 8 (2-A) of the Central Act. This contention appears to have been raised for the first time before the first appellate authority before whom the dealers carried the asses. sing authority" decision in appeal. The Assistant Comissioner overruled the objection. S there was a further appeal to the Sales Tax Appellate Tribunal. A majority jf the tribunal held that under the Andhra Pradesh Sales Tax law, sales or purchases of dressed hides and skins that had already suffiered tax in the untanned condition are generally exempt from tax and not merely in specified circumstances or subject to specified conditions, and therefore, the tax payable in respect of inter-State sales of those goods shall be nil under the provisions of sub-section (2-A) of section 8 of the Central Act. After expressing this view of the legal position, the majority remanded the matter to the assessing authority to determine the value and quantity of dressed hides and skins that had suffered tax under the State law from out of the goods involved in the disputed turnover which would be entitled to the benefit of section 8 (2-A) of the Central Act. The departmental member disagreed with this view and held that the sales of such goods in the course of inter-State trade are not exempt from the Central Tax and dismissed the appeal. The revenue filed the revision case against this majority view, which prevails as the decision of the Tribunal.