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2000 DIGILAW 133 (KER)

K. K. S. KHADER MOHIDEEN v. STATE OF KERALA

2000-02-28

ARIJIT PASAYAT, K.S.RADHAKRISHNAN

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JUDGMENT ARIJIT PASAYAT, C.J. – These two revision applications filed under section 41 of the Kerala General Sales Tax Act, 1963 (in short "the Act") relate to the assessment years 1992-93 and 1993-94. Originally assessments were completed allowing exemptions claimed in terms of section 5(3) of the Central Sales Tax Act, 1956 (in short "the Central Act"). Subsequently the Deputy Commissioner suo motu proceeded under section 35 of the Act, set aside the original orders and directed the assessing officer to complete the assessment afresh taking into account the decision of the apex Court in K.A.K. Anwar & Co. v. State of Tamil Nadu [1998] 108 STC 258. Assessments were completed, keeping in view directions given. Orders of Deputy Commissioner were assailed before the Sales Tax Appellate Tribunal unsuccessfully. The question that falls for consideration was whether raw hides and skins are different from dressed hides and skins. Originally assessee claimed that they are same commodities which was accepted and therefore exemption was granted. In support of the application it has been urged that Anwar's case [1998] 108 STC 258 (SC) was rendered in contextually different context and even if some observations were made, which go against the claim of the assessee, that cannot be conclusive and in any event the action taken by the Deputy Commissioner was on account of change of opinion. Reference has been made to sections 14 and 15 of the Central Act to contend that raw hides and skins and dressed hides and skins constitutes the same commodity, and tax having been levied once, there was no scope for further levy. Learned counsel for the revenue referred to the order passed by the authority and submitted that the law on the point was elaborately stated by the apex Court in Anwar's case [1998] 108 STC 258 and therefore suo motu revisional action taken was proper. As question arises about the applicability of Anwar's case [1998] 108 STC 258, we need to put the challenges in proper perspective. The first submission is that even if it is considered for the sake of argument that raw hides and skins are different from dressed hides and skins, in view of section 14(iii) of the Central Act, they cannot be taxed twice over in any one State. The first submission is that even if it is considered for the sake of argument that raw hides and skins are different from dressed hides and skins, in view of section 14(iii) of the Central Act, they cannot be taxed twice over in any one State. Placing reliance on the decisions of apex Court in State of Tamil Nadu v. Mahi Traders [1989] 73 STC 228, State of Punjab v. Chandu Lal Kishori Lal [1970] 25 STC 52, Telangana Steel Industries v. State of Andhra Pradesh [1994] 93 STC 187 and State of Tamil Nadu v. Pyare Lal Malhotra [1976] 37 STC 319, it was urged that the assessee having paid purchase tax, the impugned levy is unsustainable. Secondly it is submitted that the process of dressing is such that it cannot be said that there were two different commercial commodities, i.e., raw hides and skins and dressed hides and skins. The assessing authority having earlier accepted that the above two commodities were same and that too on the basis of certain decisions of the apex Court, a change of opinion to come to a different conclusion was not permissible. Section 14(iii) of the Central Act, in any case, treats raw hides and skins and dressed hides and skins as one and the same commodity, because it is included in the same sub-heading in section 14. Each of the points raised, except the point relating to change of opinion, had been dealt with in Anwar's case [1998] 108 STC 258 (SC). As regards the stand regarding entry in section 14(iii) of the Central Act, reference was made to an earlier decision in Hajee Adbul Shukoor and Company v. State of Madras [1964] 15 STC 719 (SC). Apex Court in the said decision referred to a decision of the Madras High Court in Abdul Subhan & Co. v. State of Madras [1960] 11 STC 173, which had interpreted section 14(iii) of the Central Act to mean that hides and skins whether dressed or raw were a single commodity. This conclusion was disapproved. At page 728 of STC the apex Court observed in Hajee Abdul Shukoor's case [1964] 15 STC 719 that "no reason is given why the two kinds of hides and skins are treated as a single commodity". This conclusion was disapproved. At page 728 of STC the apex Court observed in Hajee Abdul Shukoor's case [1964] 15 STC 719 that "no reason is given why the two kinds of hides and skins are treated as a single commodity". The court was called upon to refer to the provisions of section 5, clause (vi) of the Madras General Sales Tax Act, 1959 which related to the levy of tax on the sale of hides and skins and which reads as follows : "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, sub-section (1) only at such single point in the series of sales by successive dealers as may be prescribed." This provision was replaced by section 5A(4) which is as under : "The sale of hides and skins, whether in a raw or dressed state, shall be liable to tax only at such single point in the series of sales by successive dealers as may be prescribed but at the rate of two per cent on the turnover at that point." The court while interpreting the said provisions then held as under : "The real question is whether these provisions treat raw hides and skins and dressed or tanned hides and skins as one class of goods for the purpose of taxation or as two different classes of goods. If they treat them as one class of goods, the contention for the petitioner loses force as taxing of hides and skins at the time of their sale in a raw condition meets the requirements of law as hides and skins could be taxed only at a single point. If the dressed or tanned hides and skins are not taxed at the time of their sale that does not offend against the statutory provisions. No question of discrimination arises as a sale of raw hides and skins of whatever origin, i.e., whether produced in the State or imported into the State would be equally liable to the levy of tax. No question of discrimination arises as a sale of raw hides and skins of whatever origin, i.e., whether produced in the State or imported into the State would be equally liable to the levy of tax. If the statute treats both these kinds of hides and skins as different commodities the provision of sub-rule (1) of rule 16 providing for the levy of tax on raw hides and skins at a certain point even in the absence of any provision for the taxation of dressed hides and skins cannot be said to be discriminatory and invalid. The articles to be taxed were not the same and the Legislature could provide differently about their taxation." Dressed hides and skins are different goods from raw hides and skins. There is nothing in the language of section 14 of the Central Sales Tax Act which can lead to the conclusion that these two different commodities were to be regarded as constituting a single commodity for the purpose of taxation. Sections 14 and 15 of the Central Act have to be read together as they constitute a scheme relating to taxation of goods of special importance in inter-State trade or commerce. While section 14 enumerates the items which are regarded as being goods of special importance in inter-State trade or commerce, it is section 15 which imposes the restrictions and conditions in regard to tax on sale or purchase of declared goods within a State. Section 14, in other words, is not a taxing provision but it merely classifies different commodities under the same species under one entry. Merely because different goods or commodities are listed together in the same sub-heading or sub-item in section 14, that does not mean that they are regarded as one and the same item. Whenever the Legislature wanted different goods placed in the same entry to be regarded as a single commodity it expressly provided for the same. By Act 103 of 1976, sub-sections (c) and (d) were inserted in section 15 of the Central Act. With the introduction of section 15(d), "each of the pulses referred to in clause (vi-a) of section 14, whether whole or separated, and whether with or without husk, were to be treated as a single commodity for the purposes of levy of tax under that law". With the introduction of section 15(d), "each of the pulses referred to in clause (vi-a) of section 14, whether whole or separated, and whether with or without husk, were to be treated as a single commodity for the purposes of levy of tax under that law". If the intention of the Legislature had been that the various commodities mentioned in the same clauses in section 14 were to be regarded as a single commodity it would have specifically provided as such. The Legislature, however, chose to single out different types of pulses only to be regarded as a single commodity. Notwithstanding the fact that the raw hides and skins had been held by the apex Court in Hajee Abdul Shukoor's case [1964] 15 STC 719, as being distinct from dressed hides and skins, Legislature did not think it appropriate to insert a clause similar to section 15(d) which may have had the effect of regarding raw hides and skins and dressed hides and skins as being treated as a single commodity for the purposes of levy of tax. These conclusions have been gathered by us from K. A. K. Anwar's case [1998] 108 STC 258 (SC). It was also observed by the apex Court in the said case that the words "hides and skins, whether in a raw or dressed state" in section 14(iii) of the Central Act clearly indicate that the Legislature recognised that raw hides and skins as an item different from dressed hides and skins. In paragraph 18 of the judgment in Anwar's case [1998] 108 STC 258, it was held that having come to the conclusion that raw hides and skins and dressed hides and skins are two types of commodities, it must flow therefrom that when the appellants purchased raw hides and skins on payment of tax they would be liable to pay sales tax in respect of dressed hides and skins and such levy will not fall foul of section 15 as the two goods are different taxable commodities. The pivotal plea of the petitioner therefore fails. To find out the question whether there was any change of opinion to justify the action, section 35 of the Act needs to be noted. The same reads as follows : "Section 35 : Powers of revision of the Deputy Commissioner suo motu. The pivotal plea of the petitioner therefore fails. To find out the question whether there was any change of opinion to justify the action, section 35 of the Act needs to be noted. The same reads as follows : "Section 35 : Powers of revision of the Deputy Commissioner suo motu. - (1) The Deputy Commissioner may, of his own motion, call for and examine any order passed or proceedings recorded under this Act by any officer or authority subordinate to him other than an Appellate Assistant Commissioner which in its opinion is prejudicial to revenue and may make such enquiry or cause such enquiry to be made and, subject to the provisions of this Act, may pass such order thereon as he thinks fit. (2) The Deputy Commissioner shall not pass any order under sub-section (1) if, - (a) the time for appeal against the order has not expired; (b) the order has been made the subject of an appeal to the Appellate Assistant Commissioner or the Appellate Tribunal or of a revision in the High Court; or (c) more than four years have expired after the passing of the order referred to therein. (2A) Notwithstanding anything contained in sub-section (2), the Deputy Commissioner may pass an order under sub-section (1) on any point which has not been decided in an appeal or revision referred to in clause (b) of sub-section (2), before the expiry of a period of one year from the date of the order in such appeal or revision or before the expiry of the period of four years referred to in clause (c) of that sub-section, whichever is later. (3) No order under this section adversely affecting a person shall be passed unless that person has had a reasonable opportunity of being heard." The powers of revision can be exercised when the following conditions co-exist : (i) there should be a proceeding under the Act, (ii) in such proceeding an officer or authority subordinate to the officer exercising the power of revision must have passed an order, and (iii) said officer should consider that such order is prejudicial to revenue. The expression "prejudicial to revenue" has not been defined. The expression "prejudicial to revenue" has not been defined. It must have been that the order sought to be revised is such that it is not in accordance with law, in consequence whereof lawful revenue due to the State has not been realised, or cannot be realised, or has not been levied. Law laid down by the apex Court is the law of the land and binding on all courts, Tribunals and forums. The Deputy Commissioner has the power to call for and examine any order passed or proceedings recorded under the Act by any officer or authority subordinate to him other than an Appellate Assistant Commissioner when the same is considered prejudicial to the revenue. Therefore, for exercise of the power an opinion that the order passed or recorded was prejudicial to the revenue was necessary. Undisputedly the orders which were subjected to the proceedings under section 35 were prejudicial to the revenue inasmuch as, tax to be actually levied, had not been levied. That being the position, the exercise of power cannot be said to be without authority. It is submitted that one of the cases, which was under examination by the apex Court along with Anwar's case [1998] 108 STC 258 (SC), was not decided in line with Anwar's case [1998] 108 STC 258. But in that case decision was not nullified. Reference is made to Civil Appeal No. 2046 of 1996. We find that the matter was remanded by the Madras High Court to the Appellate Assistant Commissioner and no finality had been arrived at. That appears to be the reason for making a departure. This is evident from the order passed by the apex Court, which reads as follows : "The matter has been remanded back to the Appellate Assistant Commissioner for fresh disposal. We, therefore, do not pass any order. Let the Appellate Assistant Commissioner dispose of the case in accordance with law." On a bare reading of the order passed by the apex Court, it is clear that the apex Court did not pass any order as there was an order for remand to the Appellate Assistant Commissioner, who was directed to dispose of the case in accordance with law. So far as the question whether manufacturing process is involved or not, in view of the categoric conclusions of the apex Court that raw hides and skins and dressed hides and skins are different commercial commodities, any detailed examination of the process of manufacturing would be really of academic nature. Therefore, we do not entertain these revision applications and accordingly they are dismissed. Order on C.M.P. No. 4130 of 1999 in T.R.C. No. 176 of 1999 dismissed. Petitions dismissed.