DECCAN LEATHERS LIMITED Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) The short question that arises in this tax revision case is : What is the rate of tax payable on the turnover of tanned hides and skins under the Central Sales Tax Act ?

(2.) The relevant provision which deals with the rates of tax under the Central Sales Tax Act, 1956, is section 8. It inter alia provides that a dealer who in the course of inter-State trade or commerce sells to a registered dealer other than the Government, goods of the description referred to in sub-section (3) shall be liable to pay tax under the Central Act at the rate of 4 per cent of his turnover. Sub-section (5) of that section empowers the State Government to reduce or exempt tax on such turnover if it is satisfied that it is necessary so to do in the public interest. That has to be notified by the State Government in the official gazette. In exercise of the powers conferred by sub-section (5) of section 8 of the Central Sales Tax Act, the State Government issued G.O.Ms. No. 890 Revenue(S) dated 31/07/1976. By the said Government Order, the rate of tax on the turnover of a dealer in the State of Andhra Pradesh in respect of sale of tanned hides and skins was prescribed as 2 per cent of the turnover. There is, however, one condition in the Government Order that the turnover should be subject to tax under the Andhra Pradesh General Sales Tax Act. There is another provision under the Andhra Pradesh General Sales Tax Act which is relevant for this purpose and that is sub-section (1) of section 9. It provides that the State Government may by notification in the Andhra Pradesh Gazette make an exemption or reduction in the rate in respect of any tax or interest payable under the State Act, inter alia, on the sale and purchase of the specified goods. In exercise of this power conferred under sub-section (1) of section 9, the Governor of Andhra Pradesh issued G.O.Ms. No. 537 dated 24/03/1984 exempting with effect from 1/04/1984 from the tax payable by any dealer under section 6 read with items 4, 5, 6, 7, 8 and 9 of the Third Schedule to the State Act which are liable to tax at the point of last purchase in the State. Item 9 reads as follows :

(3.) A combined reading of the abovesaid G.O.Ms. No. 890 dated 31/07/1976 and G.O.Ms. No. 537 dated 24/03/1984 leads to the conclusion that under the Central Sales Tax Act the turnover on the sale of untanned hides and skins and tanned hides and skins is liable to tax at the rate of 2 per cent provided the sales were effected in respect of inter-State trade or commerce.