Ramanujam, J.@mdashThe two items of turnover which are disputed in this appeal are (1) the sales turnover of empties (packing materials) to the
extent of Rs. 48,179 and (ii) the proportionate local purchases of raw hides and skins attributable to inter-State sales of tanned hides amounting to
Rs. 2,73,092. The assessee is a dealer in hides and skins. During the course of the assessment under the Tamil Nadu General Sales Act, for the
assessment year 1970-71, the assessee disputed the liability to pay tax on the above two items of turnover. The assessing authority, however,
brought the above two items of turnover to charge rejecting the assessee''s claim. On appeal the Appellate Assistant Commissioner, however,
upheld the assessee''s claim and held that these two items of turnover cannot be brought to charge. Thereafter the Board of Revenue, in exercise of
its suo motu revisional power issued a show cause notice to the assessee to show cause why the order of the appellate authority so far as it
excluded the said two items of turnover from charge should not be set aside. The assessee submitted his representations. However, the Board,
after considering the representations of the assessee, by its order dated 28th April, 1977, set aside the order of the appellate authority so far as it
granted the relief to the assessee in respect of the said two items of turnover. Aggrieved by the order of the Board of Revenue, the assessee has
come up in appeal before us.
2. The first item of turnover refers to the sale of the used packing material and other unserviceable items. The assessee''s contention with reference
to this turnover was that it is not a dealer in packing materials and unserviceable articles, that, the sales of these items cannot be taken to have been
made in the course of the assessee''s business as a dealer in hides and skins and that therefore, it cannot be included as part of the taxable
turnover. But it has been held by the Supreme Court in State of Tamil Nadu Vs. Burmah Shell Oil Storage and Distributing Co. of India Ltd. and
Another, that having regard to the extended definition of ""business"" in section 2(d) as amended by Act 15 of 1964 it will definitely take in all the
ancillary activities carried on by the assessee. Therefore, even if the dealer is not doing business of purchase and sale of packing materials, the sales
turnover of such materials will form part of the taxable turnover of the dealer. In view of the said decision of the Supreme Court, the view taken by
the Board of Revenue that the sales turnover of empties (packing materials) to the extent of Rs. 48,179 should be taken to be part of the
assessee''s taxable turnover is correct.
3. Coming to the second item of turnover amounting to Rs. 2,73,092 it is seen that the assessee in this case purchased raw bides and skins locally,
tanned them and sold them inter-State. Since no tax has been paid under the Tamil Nadu General Sales Tax Act on the inter-State sales of tanned
hides and skins, the corresponding purchase value was sought to be taxed by the revenue. The contention of the assessee was that even though the
inter-State sales of tanned hides and skins had not been taxed under the Tamil Nadu General Sales Tax Act, the same having been taxed under the
Central Sales Tax Act as inter-State sales and they being declared goods, the assessee cannot be taxed over again on the purchase value of raw
hides and skins under the Tamil Nadu General Sales Tax Act. In support of the said submission, it relied on the decision in Sadak Thamby & Co.
v. Appellate Assistant Commissioner of Commercial Taxes [1969] 24 STC 468. However, the subsequent decisions in V. Guruviah Naidu and
Sons and Others Vs. State of Tamil Nadu and Others, , Gordon Woodroffe & Co. (Madras) P. Ltd. v. State of Tamil Nadu [1979] 44 STC 485
and Bava Prima Tannery v. State of Tamil Nadu [1981] 47 STC 7 have taken a view contrary to the view taken by this Court in Sadak Thamby
& Co. v. Appellate Assistant Commissioner of Commercial Taxes [1969] 24 STC 468.
4. In Guruviah Naidu and Sons v. State of Tamil Nadu [1976] 38 STC 655, the assessee has purchased raw hides and skins locally as well as in
the course of inter-State trade and commerce, converted them into dressed hides and skins and sold them either locally or in the course of export.
Since raw hides and skins as well as dressed hides and skins were declared goods u/s 14(iii) of the Central Sales Tax Act, 1956, it was contended
by the assessee that the hides and skins being declared goods could be taxed only at one stage and the assessee having sold tanned hides and
skins in the course of inter-State trade and paid Central sales tax he cannot be taxed on the purchase of raw hides and skins. This contention was
rejected by the Supreme Court by pointing out that though hides and skins are declared goods u/s 14(iii) of the Central Sales Tax Act, 1956, raw
hides and skins, and dressed hides and skins should be treated as two separate commodities for the purpose of trade and commerce and the fact
that the dressed hides and skins have suffered tax under the Central Sales Tax Act, exemption cannot be claimed in respect of transactions in raw
hides and skins.
5. In Gordon Woodroffe & Company (Madras) Private Ltd. v. State of Tamil Nadu [1979] 44 STC 485 which is the assessee''s own case for the
earlier year, the same question has been considered. There the assessee was the last purchaser of raw hides and skins in the State, tanned them
and sold such tanned hides and skins inter-State. The assessee claimed that once raw hides and skins had been converted into tanned hides and
skins, the tax imposed on raw hides and skins by item 7(b) of the Second Schedule to the Tamil Nadu General Sales Tax Act, 1959, will stand
shifted to the inter-transaction of sale of tanned hides and skins and it was, therefore, not liable to further tax. The court held that item 7(b) of the
Second Schedule will not apply as there has been no local sale of tanned hides and skins made out of the raw hides and skins purchased locally. In
this case, the decision relied on by the assessee Sadak Thamby & Co. v. Appellate Assistant Commissioner of Commercial Taxes [1969] 25 STC
468 has been referred to but distinguished on the ground that on the facts of that case the same decision has no application.
6. Subsequently, the same question came up for consideration before another Division Bench of this Court and the Bench has held that the decision
in Sadak Thamby & Co. v. Assistant Commissioner of Commercial Taxes [1969] 24 STC 468 must be deemed to have been overruled by the
Supreme Court by its decision in V. Guruviah Naidu and Sons and Others Vs. State of Tamil Nadu and Others, .
7. Thus the decision in Sadak Thamby & Co. v. Assistant Commissioner of Commercial Taxes [1969] 24 STC 468 is not good law as on date in
view of the decision of the Supreme Court above referred to. Therefore, the fact that the assessee has been subjected to tax in respect of inter-
State transactions in relation to tanned hides and skins under the Central Sales Tax Act is not a bar for bringing to charge the proportionate
purchase value of raw hides and skins under the provisions of the Tamil Nadu General Sales Tax Act. Thus the view taken by the Board of
Revenue in this case in respect of both the items of turnover is correct and does not call for any interference.
8. The tax case is therefore dismissed. The revenue will have its costs from the assessee. Counsel''s fee Rs. 250.
