1. The unsuccessful assessee is the appellant before us. The above tax case has been filed against the order of the Sales Tax Appellate Tribunal, Madras, dated 8th June, 1981 made in T.A. No. 1217 of 1980 in common with certain other similar cases.
2. The petitioners are dealers in hides and skins. For the assessment year 1978-79, they filed A1 return declaring a total and taxable turnover of Rs. 4,23,96,766.15 and Rs. 6,50,297.60, respectively. After the examination of their accounts, the assessing authority proposed to determine the total turnover at Rs. 50,66,419.58 and the taxable turnover at Rs. 44,01,107.23 for the said assessment year. To the proposals, the assessee submitted its objections. It was the contention of the assessee that they purchased raw skins to the tune of Rs. 22,13,372.89 only for export and such raw skins were processed into dressed skins and exported in fulfilment of their foreign contracts and consequently and said turnover was eligible for exemption having regard to section 5(3) of the Central Sales Tax Act, 1956. In respect of certain other items of turnover also, they opposed the proposals of the assessing authority which need not detain us further by going into the details. The assessing authority, by its order dated 30th August, 1980, came to the conclusion that the raw and tanned skins are conmercially different commodities, that, therefore, what they had purchased is different from what they had exported and consequently, the exemption claimed as above was rejected. The total and taxable turnover were fixed at Rs. 50,66,419.58 and Rs. 38,47,256.55, respectively and assessed to tax of Rs. 99,078.85. So far as the raw hides and skins locally purchased by them are concerned, the same were subjected to tax at 3 per cent.
3. Aggrieved, the assessee filed an appeal before the first appellate authority and contended that under the Central Sales Tax Act, hides and skins whether in a raw or dressed state, are classified as one category under section 14(iii) of the said Act. The first appellate authority also was of the view that raw hides and skins purchased by the assessee were not exported in the same form, that they were converted into tanned items and consequently the goods exported were different from the goods purchased and, therefore, the levy under item 7(a) of the Second Schedule to the Tamil Nadu General Sales Tax Act, 1959, was in order and calls for no interference. On further appeal to the Tribunal, the Tribunal confirmed the orders of the authority below and in doing so, the Tribunal applied the decision of a Division Bench of this Court in T.C. Nos. 824 to 827 of 1980 dated 21st January, 1981, wherein it was held that where the petitioner purchased raw hides and skins and converted them into dressed hides and skins, the same did not satisfy the requirements of section 5(3) of the Central Sales Tax Act for the reason that the goods exported and those purchased were different ones. Hence the above revision before us.
4. Mr. C. Natarajan, learned counsel appearing for the petitioner, while reiterating the contentions which failed before the authorities below, submitted that having regard to the provisions of section 5(3) read with sections 14 and 15 of the said Act, the fact that raw hides and skins and dressed hides and skins are commercially different commodities was totally irrelevant for purposes of exemption claimed under section 5(3) of the Act, since the Central Act treats hides and skins, whether in a raw or dressed state, as a single item and they must be understood as the same goods for purposes of section 5(3) of the Central Sales Tax Act also and consequently the turnover to the tune of Rs. 22,13,372.89 was eligible for exemption from taxation under the Tamil Nadu General Sales Tax Act, 1959. It was submitted that the principle laid down in T.C. Nos. 824 to 827 of 1980 dated 21st January, 1981 is opposed to the radio of another Division Bench decision reported in Mahi Trader v. State of Tamil Nadu  45 STC 327 which has since been confirmed by the Supreme Court in the decision reported in state of Tamil Nadu v. Mahi Traders  73 STC 228. Further, it was submitted that a Division Bench of the Andhra Pradesh High Court in the decision reported in State of Andhra Pradesh v. Mohd. Basheer & Company  72 STC 185, a special leave petition against which has been dismissed by the Supreme Court on 3rd December, 1990 (vide  80 STC FRSC 4, S1. No. 15) squarely supports the stand of the petitioner and consequently in the light of the subsequent developments of the law as emanating from the Supreme Court, the conclusions of the Tribunal as well as that of the judgment in T.C. Nos. 824 to 827 of 1980 cannot be sustained and are liable to be set aside. In other words, learned counsel contended that lack of commercial identity, if any, in the raw hides and skins purchased and those subsequently tanned and exported outside the country is not a ground to deny the benefit of section 5(3) of the Central Sales Tax Act so long as the goods exported had the character, properly and use of original goods. According to learned counsel, unless the charge takes the new commodity to a point where commercially it can no longer be recognised as the original one and unless an essential difference on the identity between the original commodity and the one produced is shown to exist, after processing, it cannot be said that a new product had come into existence as a consequence of the manufacturing process.
5. The learned Additional Government Pleader (Taxation) submitted that inasmuch as the petitioner has not exported what has been purchased by him, the authorities below were right in denying the exemption claimed under section 5(3) of the Act particularly when the Tribunal has chosen to apply the ratio of an earlier decision of this Court to come to such a conclusion. It was also contended that the earlier decisions of this Court have not been shown to require reconsideration and, therefore, no interference is called for with the order of the Tribunal in favour of the assessee in this revision.
6. We have carefully considered the issue raised before us in the light of the various decisions relied upon in support of their submissions and in our view the forensic issue involved herein stands concluded by the decision of the Apex Court in Mahi Traders case  73 STC 228 and the dismissal of the special leave petition filed by the State against the Division Bench judgment of the Andhra Pradesh High Court in Mohd. Basheer & Company's case  72 STC 185 and that the decision in T.C. Nos. 824 to 827 of 1980, etc., dated 21st January, 1981 is no longer good law.
7. Before proceeding further with an analysis of the various decisions on the subject, we consider it necessary to deal first with the decision of the Division Bench in T.C. Nos. 824 to 827, etc., of 1980 dated 21st January, 1981 which has been relied upon by the Tribunal against the petitioner and by the Revenue before us too. That was a case where the petitioner purchased raw hides and skins, tanned them, converted them into dressed hides and skins and thereafter exported them to a foreign country. The assessee claimed that by virtue of section 5(3) of the Central Sales Tax Act, 1956, it was not only the export sale that was exempted from sales tax but the last purchase of raw hides and skins made by the petitioner was also exempt from sales tax. The Tribunal rejected such a contention. The other issue with which the Court was concerned in that case needs no reference for the purpose of this case. With reference to the issue raised as referred to above before the Division Bench in the tax case filed against the order of the Tribunal, it was held as hereunder :
"Simply, as a matter of construction, the goods contemplated by section 5(1) must be identical with the 'goods' referred to in section 5(3). As a matter of fact, in section 5(3) the word 'goods' occurs in two places, in the first place 'any goods' and in the second place 'those goods'. Thus, it is clear that 'any goods' must be the same as 'those goods' referred to at the subsequent stage in section 5(3) itself. In this case, what was purchased by the petitioner was raw hides and skins and what was exported by the petitioner was dressed hides and skins and, therefore, the goods that were exported were not the same goods purchased by the petitioner. Consequently, simply as a matter of construction of the word occurring in the relevant statutory provisions it must follow that the petitioner cannot rely upon section 5(3) for the purpose of claiming that his purchase of raw hides and skins in exempt from liability to sales tax."
The Division Bench was of the view that the decisions in (Kailash Nath v. State of U.P.) and
(Commissioner of Sales Tax v. Bist) were of no application and ultimately came to the conclusion that on the admitted facts that the petitioner purchased raw hides and skins and converted them into dressed hides and skins and in the context of the language used in section 5(1) and 5(3) of the Central Sales Tax Act, 1956, the view taken by the Tribunal in that case does not suffer any error of law. On that view, the Division Bench seems to have dismissed the case even at the stage of admission.
8. The next decision that requires our consideration is the one reported in  45 STC 327 (Mad.) (Mahi Traders v. State of Tamil Nadu) wherein the expression "hides and skins, whether in a raw or dressed state" used in section 14(iii) of the Central Sales Tax Act, 1956, came in for consideration and it was held thus :
"Section 14(iii) states 'hides and skins, whether in a raw or dressed state'. The Board of Revenue has wrongly understood it as meaning 'raw or dressed skin'. The second mistake committed by the Board of Revenue is in thinking that coloured leather and leather splits are commercially different products and that, therefore, section 14(iii) will not apply. For the purpose of the application of section 14(iii), it is not necessary to find out whether the resultant product is commercially different or not, and the only thing necessary to find out is whether it comes within the expression 'hides and skins, whether in a raw or dressed state' or not. The expression used in section 14(iii), namely, 'hides and skins, whether in a raw or dressed state', is of wide connotation and the latter part of the expression is not restrictive in any way of the goods mentioned earlier, namely, hides and skins, but, on the other hand, is intended to cover all hides and skins in all states, whether dressed or raw. Simply because a dressed skin is split or the split skin is coloured, it does not cease to be 'hides and skins', though in a dressed state and does not become a totally different commodity. Consequently, we are clearly of the opinion that leather splits and coloured skins will come within the scope of the expression 'hides and skins, whether in a raw or dressed state' under section 14(iii) of the Central Sales Tax Act and would, therefore, be liable only to single point levy as provided for in section 15 of that Act and not to multi-point levy."
Though the consideration was in the context of leather splits and coloured skins, that does not in any way detract the authenticity or authority or law contained in the said judgment on the relative scope of section 14(iii) read with section 15 of the Act, as a matter of principle of construction of the provisions concerned.
9. The Apex Court before whom the matter was taken upon further appeal in the decision reported in State of Tamil Nadu v. Mahi Traders  73 STC 228 confirmed the decision of this Court in Mahi Traders' case  45 STC 327 holding thus :
"The above definitions show that hides and skins acquire the name of 'leather', even if the hair or wool has not been removed therefrom, as soon as they receive some treatment which prevents them from putrefaction after treatment with water. Dressing is a stage must later than tanning. Indeed, from the definitions quoted above, it will be seen that it is practically the same as given finishing touches to the leather and making it suitable for the manufacture of particular types of goods."
Further, the Supreme Court quoted with approval, as laying down the correct position of law, the views expressed by the Tribunal in a connected case, but was not appealed against by the department as set out hereunder :
"Leather from the stage of raw skins to the stage of dressed hides and skins may undergo various stages of changes. Under the classification for the purposes of section 14 of the Central Sales Tax Act, the various stages are irrelevant. For the purposes of the Tamil Nadu General Sales Tax Act, 1959, only two stages that are relevant are the skins at the raw stage and the skins in the form of dressed hides and skins (or tanned hides and skins). The appellant purchases semi-finished leather and undertakes further process of finishing with a view to colour the hides and skins for certain uses of skins. He says that he purchased the same tanned hides and skins and sold the tanned hides and skins. According to him the products purchased and sold are not different even under the classification by way of the dichotomy between raw and dressed hides and skins under the Tamil Nadu General Sales Tax Act. Under the Central Sales Tax Act, the appellant is in a much better position, because all the hides and skins are brought together in one entry. Whether raw or dressed, the product falls under the same entry.
We are of opinion that this represents the correct view of the scope of the entry in question."
10. The Andhra Pradesh High Court had an occasion to deal with this very question which is now before us in Mohd. Basheer's case  72 STC 185. That was a case where the assessee purchased raw hides and skins of animals to comply with the orders entered into with the foreign buyers for supply of leather of various specifications, tanned them and exported them in pursuance of the orders already entered into with the foreign buyers. Under the provisions of the Andhra Pradesh General Sales Tax Act, the assessee claimed that he was not liable to pay any tax on the purchase of untanned hides and skins, inasmuch as the said purchase is a purchase in the course of export within the meaning of sub-section (3) of section 5 of the Central Sales Tax Act read with section 38 of the Andhra Pradesh General Sales Tax Act. The assessing authority accepted the same. But it was set aside by the revising authority holding that the assessee was not entitled to any exemption under section 5(3) of the Central Sales Tax Act for the reason that untanned hides and skins and tanned hides and skins are different goods. The matter was pursued before the Tribunal and the Tribunal seems to have held that they are not different goods or commodities and, therefore, section 5(3) of the Central Sales Tax Act enures in favour of the assessee and the turnover in such goods was exempt. The view of the Tribunal was questioned before the Division Bench of the Andhra Pradesh High Court by the State on revision and in that context, the scope of section 14(iii), sections 15 and 5(1) and 5(3) were elaborately considered and ultimately the view of the Tribunal was confirmed. The ratio of the said decision finds expression thus :
"A review of the above decisions yields the following principles : (1) Merely because particular goods are treated as different commodities for the purposes of the State Act, it does not necessarily follow that for the purposes of the Central Act also they should be treated as different goods (2) In determining whether the goods purchased and the goods exported are the same goods or not for the purpose of section 5(3) of the Central Sales Tax Act, the context and setting of the relevant description of the commodity in section 14 is relevant. For example, because section 14(ii) of the Central Sales Tax Act declares 'cotton, ginned or unginned', as goods of special importance in the course of inter-State trade or commerce, they are treated as same goods. (3) The question whether the goods purchased and the goods exported are the same or not, has to be decided applying the test of commercial parlance. In other words, the said question has to be determined keeping in view whether in commercial parlance they are understood as different goods or as same goods. On this question, differentiation or distinction made, if any, for the State enactment for its own purposes of levy of tax is not relevant."
A special leave petition filed against this judgment, as pointed out earlier, came to be dismissed by the Supreme Court.
11. In State of Tamil Nadu v. P. L. Malhotra , section 14(iv) and section 15 of the Central Sales Tax Act came in for construction before the Apex Court. That was a case where the assesses, who were dealers in iron and steel, used to purchase iron scrap which was subjected to tax once and thereafter used to convert them into steel rounds, flats, plates, etc. The assessee contended that the entry "iron and steel" was wide enough to include scraps as well as steel rounds, flats, plates, etc., made out of scrap which was once already subjected to tax and therefore the steel rounds, flats and plates, etc., cannot be subjected to tax again under the Tamil Nadu General Sales Tax Act. This Court upheld the plea of the appellant and the State went on appeal to the Supreme Court. The Apex Court, while reversing the judgment of this Court, held that the intention was to consider each sub-item in clause (iv) of section 14 of the Central Sales Tax Act, as a separate taxable commodity for the purposes of sales tax and the object was not a lay down that all categories or sub-items of goods specified separately were to be viewed as a single salable commodity called iron and steel for purposes of determining a starting point for a series of sales. The chemical composition of iron and steel, it was held, cannot afford a clue to the meaning of iron and steel, the levy of sales tax being one on the sales of goods and not a taxation on sales of substance and that it was not established in that case that any provision of the Tamil Nadu General Sales Tax Act violates section 15 of the Central Sales Tax act. The said conclusions of the Supreme Court were rendered in the context of the legislative intent of Parliament expressed in the scheme of the entry in the Central Sales Tax Act that each of the sub-items separately specified constitutes separate taxable commodity.
12. The case reported in Guruviah Naidu and Sons v. State of Tamil Nadu was one which considered the question of a plea of
discrimination said to have resulted on account of raw hides and skins locally purchased being subjected to an higher rate than the tanned hides made out of raw hides brought from outside the State. The Apex Court repelled the plea of discrimination based upon article 304(a) of the Constitution of India since the criteria relevant in such context for consideration is wholly different. In Anwaraulla AM. Ghouse & Co. v. State of Tamil Nadu  28 STC 610, a Division Bench of this Court held that since the State Legislature was unable to levy tax on first sales of dressed hides and skins made out of raw hides and skins which had suffered tax earlier because of the restrictions contained in section 15(a) of the Central Sales Tax Act, no discrimination by the State Legislature can be said to have been made having regard to the fact that the said consequence was the indirect result of sections 14 and 15 of the Central Sales Tax Act, 1956. That apart, having regard to the scheme of item 7(a) and (b) of the Second Schedule to the Tamil Nadu General Sales Tax Act, which treated raw hides and dressed hides to be different commodities commercially and for the purposes of the levy under the Tamil Nadu General Sales Tax Act, 1959, it was held that no discrimination could be said to have been made by the State Act. The entry, as it stood in the Second Schedule to the State Act, provided for ensuring levy only at one stage in the series fixing alternative points. Further, there was no occasion to consider the scope of a provision like section 5(3) of the Central Sales Tax Act, in these decisions.
13. In Consolidated Coffee Ltd. v. Coffee Board  46 STC 164, the Apex Court had an occasion to deal with the scope of section 5(3) of the Central Sales Tax Act and the question as to what was intended to be conveyed when section 5(3) uses the word "deemed" and says that the penultimate sale "shall also be deemed to be in the course of export", and it was held therein that what was intended to be conveyed was that the penultimate sale shall also be regarded as being in the course of such export which will result in such local sales too going outside the net of taxation under the State law. In the decision reported in R. B. Takkur Takkur (P) Ltd. v. Coffee Board  80 STC 199, a Division Bench of this court considered the scope of section 5(3) of the Central Sales Tax act. That was a case where the assessee, an exporter of coffee registered with the Coffee Board secured an order from Romania for supplying 2,000 tonnes of coffee powder and in order to effect that supply he participated in the auction held by the Coffee Board, purchased and got released the coffee on payment of price as well as sales tax, and after roasting and converting coffee seeds into powder, exported the same. The assessee claimed refund of sales tax paid claiming exemption under section 5(3) of the Act, but the Coffee Board declined to refund since it was of the view that the assessee purchased coffee seeds but exported only coffee powder after conversion. The Division Bench was of the view that the words used in section 5(3) of the Central Sales Tax Act were "those goods" and not "such goods" and upheld the plea of the assessee.
14. After a careful consideration of the various decisions referred to before us and the principles laid down therein, we are of the view that the ratio of the decision of the Supreme Court in Mahi Traders case  73 STC 228 which affirmed the decision of this Court in  45 STC 327 (Mahi Traders v. State of Tamil Nadu) and the factum of dismissal by the Apex Court of the appeal filed by the State of Andhra Pradesh against the decision in (State of Andhra
Pradesh v. Mohd. Basheer and Co.) by refusing to grant leave to appeal, thereby according its approval to the decision of the Andhra Pradesh High Court, directly undermine the correctness and legality of the principles laid down by the decision of the Division Bench of this Court in T.C. Nos. 824 to 827 of 1980 and the plea of the petitioner before us has to be sustained. That apart, in our view, for purposes of entitling an assessee to the benefits of section 5(3) in respect of a commodity subject to the limitations contained in section 14(iii) read with section 15 of the Central Sales Tax Act, the so-called lack of commercial identity has no relevance and what is really relevant is whether the sale or purchase in question is the "penultimate sale or purchase" that satisfies the two conditions specified in section 5(3), namely, (a) that such penultimate sale must take place (i.e., become complete) after the agreement or order under which the goods are to be exported; and (b) it must be for the purpose of complying with such agreement or order and it is only then that such penultimate sale or purchase is deemed to be in the course of export. We are also of the view that the words "those goods" found in section 5(3) of the act do not mean and refer to the goods sold or purchased preceding the sale or purchase occasioning the export, in the same condition as it was when so purchased or sold immediately before export so long as the identity of the goods is not altered bringing into existence a new commercial product of different character and property.
15. With reference to some of the decisions, wherein hides and skins in dressed state were held to be commercially different than hides and skins in a raw state, it has been submitted by the learned counsel for the petitioner that those findings were rendered in the context of a challenge of discrimination based on either article 304(a) or article 14 of the Constitution of India and not with reference to a claim vis-a-vis section 5(3) of the Central Act. According to the learned counsel, the words "those goods" referred to in section 5(3) imply goods which have the same character and property. Learned counsel also placed reliance upon a decision of the Constitutional Bench of the Supreme Court in Kailash Nath v. State of U.P.  8 STC 358. That was a case where the assessee claimed exemption under a notification issued by the Uttar Pradesh Government in respect of sales of cotton cloth or yarn manufactured in Uttar Pradesh, made on or after 1st December, 1959, with a view to export such cloth or yarn outside the territories of India on the condition that the cloth or yarn was actually exported and proof of such actual export was furnished. The assessee in that case, a textile mill in U.P. sold cotton cloth manufactured by them to their constituents who thereafter dyed and printed such cloth with handmade apparatus and exported them overseas as hand-printed cloth. In those circumstances, the question that arose was whether the assessee was entitled to exemption. The Constitutional Bench held that by using the words "such cloth or yarn" in the notification, what was laid down was not that the identical thing should be exported in bulk and quantity or that any change in appearance would be crucial to alter it. In other words, it was held that those words would mean the cloth or yarn manufactured in the State and sold and that they have nothing to do with the transformation by printing and designs on the cloth and although the colour of the cloth had changed by printing and processing, the cloth exported was the same as the cloth sold by the assessee and, therefore, sustained the claim of the assessee for exemption. A careful consideration of the principles laid down in the various decisions would also indicate that ultimately the extent of the manufacturing process and the nature of the resultant commodity after such processing, would also be a relevant criterion in adjudicating as to whether in a particular case the goods exported satisfy the test of "those goods" in relation to the goods purchased as found in section 5(3) of the Central Sales Tax Act. Thus, this decision of the Constitutional Bench of the Supreme Court categorically lays down that if the sale is of the same goods even after some processing, then the sale would be exempt notwithstanding the processing unless the goods exported totally changed their character and property from the goods purchased for sale for purposes of considering a claim under section 5(3) of the Central Act. Unless, the processing of goods results in altogether a new commodity, to the extent that it ceases to be the original commodity, it cannot be considered to be a different commodity. When there is no essential difference in the identity between the original commodity and the processed article, it may not be proper to say that the processed article does not satisfy the test of "those goods" found in section 5(3) of the Central Act.
16. 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 a 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 is so far as the claim pertaining to exemption claimed under section 5(3) of the Central Act is concerned.
17. Since the authorities rejected the claim at the threshold holding that the provisions of section 5(3) of the Central Act have no application to the item of turnover in question, there was no occasion for the authorities to consider the further question as to whether and to what extent the essential prerequisites stipulated in section 5(3) are fulfilled by the turnover and the transactions in question. These aspects require proper verification with reference to the relevant records and the counsel on either side are agreed that, if at all, the matter should be relegated to the assessing authority for such verification. Thus, while setting aside the order of the Tribunal, we direct the matter be remitted to the assessing authority with a direction to consider, in the light of the declaration of law by us, the satisfaction of the norms and conditions fixed to consider the claim made by the assessee under section 5(3) of the Central Sales Tax Act, afresh and in accordance with law. The tax (revision) case is allowed in the above terms; but in the circumstances, there will be no order as to costs.
18. Petition allowed.