Commissioner of Taxes Assam, Shillong
Vs. Prabhat Marketing Co. Ltd., Gauhati [1966] INSC 235 (27 October 1966)
27/10/1966 RAMASWAMI, V.
RAMASWAMI, V.
SHAH, J.C.
BHARGAVA, VISHISHTHA
CITATION: 1967 AIR 602 1967 SCR (1) 961
CITATOR INFO:
RF 1987 SC1207 (6) APL 1989 SC 315 (8) F 1989
SC1696 (7)
ACT:
Assam Sales Tax Act (Act 17 of 1947)-Packing
materials of exempted goods when liable to sales tax.
HEADNOTE:
The respondent was a registered dealer under
the Assam Sales Tax Act, 1947. The Sales-tax Officer assessed the respondent to
Sales-tax in respect of the containers of hydrogenated oil and other exempted
goods. Appeals to the Assistant Commissioner of Taxes failed as also second appeals
to the Assam Board of Revenue. In reference the High Court held that the value
of the containers was not assessable to sales tax "unless separate price
has been charged for the containers." This finding was based on the view
that there was no evidence to show that actually separate price was paid for the
containers and hence there was no sale and there could not be any tax on the
containers. In appeal to this Court by the Commissioner of Taxes it was urged
that the parties may have intended in the circumstances to sell the
hydrogenated oil apart from the containers the mere fact that the price of the
containers was not separately fixed would make no difference
HELD : The question as to whether there is an
agreement to sell packing material is a pure question of fact depending upon
the circumstances found in each case. The High Court was in error when it
answered the question of law referred to it without addressing itself to the
question whether there was an express or implied agreement for the sale of the
containers of hydrogenated oil in the present case. [963 HI Hyderabad Deccan
Cirgrette Factory v. State of Andhra Pradesh, 17 S.T.C. 624, relied on.
CIVIL APPELLATE JURISDICTION: Civil Appeal
Nos. 199 and 200 of 1966.
Appeals by special leave from the judgment
and order dated May 20, 1964 of the Assam and Nagaland High Court in Sales Tax
Reference No. 1 of 1963.
Naunit Lal, for the appellant (in both the
appeals).
B. P. Maheshwari, for the respondent (in
both, the appeals).
The Judgment of the Court was delivered by
Ramaswami, J. These appeals are brought, by special, leave, from the judgment
of the High Court of Assam and Nagaland dated May 20, 1964 in Sales Tax
Reference No. 1 of 1963.
The respondent is a registered dealer under
the Assam Sales Tax Act (Act 17 of 1947). For the two periods ending September
30, 1959 and September 30, 1960, the Sales Tax Officer assessed the 962
respondent to sales tax holding that hydrogenated oil was exempt from sales tax
but the value of the containers should be assessed at Re. 1/for each container
of hydrogenated oil and at 2 annas for salt bag and a small mustard oil tin
which are other exempted goods for the period ending September 30, 1959. For
the other period ending September 30, 1960, the value of the containers of the
exempted goods was estimated at Rs. 21, 5001. The respondent preferred appeals
to the Assistant Commissioner of Taxes, but the appeals were dismissed. The
respondent preferred second appeals-before the Assam Board of Revenue which by
its order dated June 17, 1963 also dismissed the appeals. The respondent
thereafter filed an application under s. 32 of the Assam Sales Tax Act, 1947
for reference of the following two questions of law to the High Court "(1)
Whether delivery. of goods made to the Assam Rifles and NEFA, at Rowriah Air
Port for consumption outside the State of Assam, constitutes a sale liable to
Sales Tax under the Act ? (2) Whether the value of the containers of
hydrogenated oil is assessable to Sales Tax under the Act though the oil itself
is not taxable under it ?" By its judgment dated May 20, 1964 the High
Court answered the first question against the assessee. With regard to the
second question, the High Court held that the value of the containers was not
assessable to sales-tax "unless separate price has been charged for the
containers". The High Court took the view that there was no evidence to
show that actually separate price was, paid for the containers and hence there
was no sale and there could not be any tax on the containers. The High Court
accordingly answered the second question in favour of the assessee.
The question presented for determination in
these appeals is whether the value of containers of hydrogenated oil is
assessable to sales-tax under the Assam Sales Tax Act, 1947.
On behalf of the appellant Mr. Naunit Lal
contended that the High Court has erred in holding that unless a separate price
has been charged for the containers the value of the containers is not
assessable to sales-tax. It was submitted that the parties may have intended in
the circumstances to sell the hydrogenated oil apart from the containers; and
the mere fact that the price of the containers was not separately fixed would
make no difference to the assessment of sales-tax. In our opinion, the argument
put forward on behalf of the appellant is well-founded and must be accepted as
correct. It is well established that in order to constitute a sale it is
necessary that there should be an agreement between the parties for the purpose
of transferring title to goods, the 963 agreement must be supported by money consideration,
and that as a result of the transaction the property should actually pass in
the goods. Unless all the ingredients are present in the transaction there
could be no sale of goods and sales-tax cannot be imposed [State of Madras v.
Gannon Dunkerley and Co. [(Madras)](1). But the contract of sale may be express
or implied. In Hyderabad Deccan Cigarette Factory v. The State of Andhra
Pradesh(2). It was held by this Court that in a case of this description what
the Sales-tax authorities had to do was to ask and answer the question whether
the parties, having regard to the circumstances of the case, intended to sell
or buy the packing materials or whether the subject matter of the contracts of
sale was only an exempted article, and packing materials did not form part of
the bargain at all, but were used by the sellers as a convenient and cheap
vehicle of transport. At page 628 of the Report Subba Rao, J., speaking for the
Court,, observed as follows:
"In the instant case, it is not disputed
that there were no express contracts of sale of the packing materials between
the assessee and its customers. On the facts, could such contracts be inferred
? The authority concerned should ask and answer the question whether the
parties in the instant case, having regard to the circumstances of the case,
intended to sell or buy the packing materials, or whether the subject-matter of
the contracts of sale was only the cigarettes and that the packing materials
did not form part of the bargain at all, but were used by the seller as a convenient
and cheap vehicle of transport. He may also have to consider the question
whether, when a trader in cigarettes sold cigarettes priced at a particular
figure for a specified number and handed them over to a customer in a cheap
card-board container of insignificant value, he intended to sell the cardboard
container and the customer intended to buy the same ? It is not possible to
state as a proposition of law that whenever particular goods were sold in a
container the parties did not intend to sell and buy the container also. Many
cases may be visualized where the container is comparatively of high value and
sometimes even higher than that contained in it. Scent or whisky may be sold in
costly containers. Even cigarettes' may be sold in silver or gold caskets. It
may be that in such cases the agreement to pay an extra price for the container
may be more readily implied." The question as to whether there is an
agreement to sell packing material is a pure question of fact depending, upon
the circumstances found in each case. But the High Court answered the (1)
[1959] S. C. R. 379.
(2) 17 S. T. C. 624.
964 question of law referred to it by the
Board of Revenue without addressing itself to the question whether there was an
express or implied agreement for the sale of the containers of hydrogenated oil
in the present case.
We accordingly set aside the judgment of the
High Court and direct that the answer to the second question should be that the
value of containers of hydrogenated oil is assessable to sales tax under the
Act if there is an express OK, implied agreement for the -sale of such
containers. These appeals are, accordingly, allowed At the time of grant of
special leave this Court made a condition that the appellant will pay the cost
of the respondent in any event.
Mr. Naunit Lal on behalf, of the appellant
gave an under -taking that if these appeals are allowed no further steps will
be taken to tax the respondent for the containers for the periods covered in
the present case.
G.C.
Appeals allowed.
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