Bawar Prime Tannery vs Joint Commissioner (Ct) II and others

The appellant is a dealer in hides and skins. According to the statutory authorities, the dealer used to buy hides and skins, tan them and sell the

dressed hides and skins mostly to exporters. Against the determination of turnover by the assessing authority for the assessment year 1978-79, the

appellant filed an appeal before the Appellate Assistant Commissioner where the principal objection raised related to the purchase turnover of raw

hides and skins which purchases had been made by the assessee for the purpose of complying with the agreement or order for or in relation to

such export. In short, the assessee had claimed exemption by virtue of section 5(3) of the Central Sales Tax Act, 1956, hereinafter referred to as

the Central Act"" read with the proviso to section 9 of the Tamil Nadu General Sales Tax Act, 1959, hereinafter called ""the State Act"". The

Appellate Assistant Commissioner, after hearing the parties, remitted the matter to the assessing authority to re-examine the appellant''s claim in the

light of the judgment of this Court in Mahi Traders v. State of Tamil Nadu [1980] 45 STC 327. While the matter was pending finalisation before

the assessing authority, the Joint Commissioner, in exercise of the suo motu powers of revision, proposed to revise the order of the Appellate

Assistant Commissioner and after issuing notice to the assessee and inviting objections as well as hearing the assessee, the order of the Appellate

Assistant Commissioner was set aside and that of the assessing authority was restored. The question in short, therefore, in this appeal is whether

the benefit of section 5(3) exemption under the Central Act can be granted to the appellant.

The precise issue came up for consideration by a Bench of this Court in Azeezur Rahman & Co. v. State of Tamil Nadu [1991] 82 STC 355

and after a detailed discussion and noticing that the judgment of this Court rendered in Mahi Traders v. State of Tamil Nadu [1980] 45 STC 327

had been affirmed by the Apex Court in State of Tamil Nadu v. Mahi Traders [1989] 73 STC 228, this Court opined thus :

For the purpose of determining the entitlement of an assessee to the benefit of section 5(3) of the Central Sales Tax Act as far as the declared

goods are concerned, the context and setting as well as the description of the commodity also becomes vitally relevant. Having regard to the

wording of section 14(iii) of the Central Act, raw hides and skins and dressed hides and skins are to be treated as one and the same. The fact that

raw hides and skins are subjected to certain process of preservation does not render them any the less hides and skins. In our view, the description

of the entry as contained in section 14(iii) of the Central Act has reference and relates to ''hides and skins'' and the specification of the goods as

''hides and skins'' constitutes the genus and the further description following the same, i.e., ''whether in a raw or dressed state'' not only is inclusive

in nature but is meant to be comprehensive enough to include all its species or products emerging from hides and skins until the process of dressing

or finishing is done. The entry as it is found in section 14(iii), in a sense, indicates the legislative intent and in our view constitutes legislative

recognition of the fact of the position that simply because manufacturing process of preservative nature is undergone by raw hides different goods

do not necessarily emerge. Such a construction will also be an inevitable consequence of the purpose and object of section 14(iii) and section 15

of the Central Act and consequently for purposes of determining a claim vis-a-vis section 5(3) of the Central Act, the fact that they are

commercially treated as distinct commodities or that entry 7 of the Second Schedule to the Tamil Nadu General Sales Tax Act, 1959, deals with

them as two different and distinct commodities becomes wholly irrelevant. Thus, raw hides and skins and dressed hides and skins are merely the

nomenclature used to identify and indicate the different condition or stages of processing of the one and the same commodity, namely, ''hides and

skins''. If even during or at either of these stages also the commodity continues to be ''hides and skins'' only, the criteria of ''those goods'' as found

in section 5(3) of the Central Act must be held to have been satisfied. We are, therefore, of the view that the order of the Tribunal cannot be

sustained and consequently the same is set aside in so far as the claim pertaining to exemption claimed u/s 5(3) of the Central Act is concerned.

The learned counsel for the parties are greed that the judgment applies to this case fully.

From a perusal of the orders of the Joint Commissioner we find that the benefit of the exemption u/s 5(3) of the Central Act was denied to the

appellant without going into the question as to whether and to what extent the essential prerequisites stipulated in section 5(3) of the Central Act

had been fulfilled by the turnover and the transactions in question. These are matters which require proper verification with reference to the relevant

record. While, therefore, setting aside the order of the Joint Commissioner and resorting that of the Appellate Assistant Commissioner, we clarify

that the assessing authority, to whom the matter stood remanded by the Appellate Assistant Commissioner shall consider the case of the appellant

in the light of the declaration of law made by this Court in Azeezur Rahman and Company v. State of Tamil Nadu [1991] 82 STC 355. The appeal

is allowed to the extent indicated above. There shall, however, be no order as to costs.