- (1.) BRIJESH KUMAR, J. The petitioners, who carry on the business of sale and purchase of hides and skins of animals at Lucknow, feel aggrieved against the notice issued under section 21 of the Central Sales Tax Act, 1956 for the assessment year 1980-81. The main contention is that sale of raw skin for the purposes of export is exempt from the sales tax; therefore, the assessment proceedings cannot be reopened for levy of Central Sales Tax. We have heard the learned counsel for the petitioners and the learned State counsel.
(2.) IT appears that regular assessment for the assessment year 1980-81 was made under section 9 (2) of the Central Sales Tax Act, vide assessment order dated February 24, 1982. In the year 1984, the petitioners had been served with a notice under section 21 of the Central Sales Tax Act for reopening of the assessment. The reason indicated for reopening the assessment is that the raw skin which had been sold by the petitioners to the purchaser outside the State was dressed and then exported by the purchasers. The notice further indicates that the raw and the dressed skins are two different commercial items under section 14 of the Central Sales Tax Act. The petitioners were not entitled to the benefit given to them under section 5 of the Central Sales Tax Act. Under the provisions of the Central Sales Tax Act, certain items sold to the purchasers who export them to other countries, such sale to the exporter-purchasers is exempt from sales tax. The purchaser furnishes from H as prescribed to the seller and the seller has to submit the same, namely, from H, to the assessing authority so as to be entitled for the tax benefit, on such transactions. Learned counsel for the petitioners has drawn our attention to annexure VIII to the writ petition, dated December 2, 1981, which is a letter issued by the Commissioner, Trade Tax, U. P. , marking it as "confidential" for the use of the department. It is mentioned in this letter that legal opinion was taken from the Law Department of the State Government and on the basis of the decision of the honourable Supreme Court, reported in [1964] 15 STC 719 (SC); AIR 1964 SC 1729 (A. Hajee Abdul Shukoor and Co. v. State of Madras) it was held that the raw skin sold to the exporter is an item different from dressed skin exported by the purchaser, hence benefit of section 5 (3) of the Central Sales tax Act would not be admissible to the assessee. It is thus clear that the notice reopening the assessment was issued in view of the said letter of the Commissioner, Trade Tax, U. P. , dated December 2, 1981.
(3.) IT will be useful to reproduce sub-section (3) of section 5 of the Central Sales Tax Act : " 5. When is a sale or purchase of goods said to take place in the course of import or export.- (1 ). . . . . . . . . . . . . . . (2 ). . . . . . . . . . . . . . . (3) Notwithstanding anything contained in sub-section (1), the last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of the territory of India shall also be deemed to be in the course of such export, if such last sale or purchase took place after, and was for the purpose of complying with, the agreement or order for or in relation to such export. " Under section 14, certain goods have been declared of goods of special importance in inter-State trade or commerce, clause (iii) of which includes "hides and skins, whether in a raw or dressed state". On a perusal of the provisions quoted above, it is clear that for the purposes of section 14 of the Central Sales Tax Act, hides and skins in a raw or dressed form have been treated as one item, i. e. , as goods of special importance in inter-State trade or commerce. Further, according to section 5 (3) of the Central Sales Tax Act, the last sale of goods before export is to be treated as sale or purchase of goods in the course of import or export. According to the impugned notice, there does not seem to be any dispute that the goods sold by the petitioners was the sale preceding the export but the reason for reopening of the assessment is that the goods sold as raw skin has been exported by the purchaser as dressed skin/leather which, according to the opposite parties, is a different item from the raw skin; therefore, on the basis of the decision in the case of A. Hajee Abdul Shukoor and Co. [1964] 15 STC 719 (SC); AIR 1964 SC 1729, the transaction of sale of raw skin to the exporter was liable to be taxed.;