Lt. Governor of Delhi & Ors Vs.
M/S. Ganesh Flour Mills Co. Ltd. [1973] Insc 3 (9 January 1973)
KHANNA, HANS RAJ KHANNA, HANS RAJ HEGDE, K.S.
REDDY, P. JAGANMOHAN
CITATION: 1973 AIR 705 1973 SCR (3) 211 1973
SCC (1) 487
ACT:
Central Sales Tax Act 1956-S.
8(3)(c)-Respondent dealing in vegetable products applied for amendment of the
Registration Certificate to include Tin plates or tin sheets used for packing.
Whether respondent can invoke the benefit of the said clause.
HEADNOTE:
The respondent company is a registered dealer
under the Central Sales Tax Act 1956 and deals mainly with vegetable products.
It was granted the registration certificate under the Central Sales Tax
(Registration and Turnover) Rules, 1957. In 1958, the respondent, applied to
the Sales Tax Officer for amendment of the Registration Certificate so as to
include Tin-plates or Tin-sheets under Sub-section (3) of Section 8 of the Act
on the ground that those goods were used by the respondent for packing its
vegetable products for sale.
The application was rejected by the Sales Tax
Officer on the ground that the goods in question were "Declared
Goods" and therefore, their purchase on the strength of registration
certificate could be allowed only if they were to be resold in the form in
which they had been purchased A revision petition against the said order was
dismissed by the Commissioner of Sales Tax who held that, the goods in question
were not containers and that "Tin Plates", or "Tin Sheets"
did not constitute packing material. Further revision filed before the Chief
Commissioner was dismissed.
The respondent thereafter, filed an
application for making a reference to the High Court, but it was rejected by
the Chief Commissioner on the ground of limitation. The respondent, thereafter,
moved the High Court for direction to the Chief Commissioner to refer the
question of law to the High, Court. In addition, the respondent filed a
petition under Art.226 and 227 of the Constitution for a direction to the
appellants to decide the application for amendment of the Registration
Certificate in accordance with law. The High Court allowed the writ petition
and held that the words in See. 8(3) (c) of the Act were wide enough to cover
the goods in question. On appeal to this Court, the appellant raised the
following question The "Tin Sheets and Tin Plates" are not covered by
clause (c) of Sub-section (3) of Section 8 of the Act, as those goods
constitute neither "containers nor materials intended for being used for
packing of goods for sale." Further as tin sheets and tin plates cannot he
used by the respondent unless they. are converted into. containers, the
respondents cannot invoke the benefit of S.8(3)(c), of the Act.
Dismissing the appeal, HELD:(i) The materials
referred to in Clause (c) of Sec.8(3) according to its plain language, should
be such as are intended for packing of goods for sale. Once the intention of
using the materials for packing of goods for sale is proved. the requirements
of the Clause would be satisfied.
The fact that tin sheet and tip plates have
to be subjected by the respondent to the Process of cutting and moulding into
tin containers would not take them out of the category of materials intended
for being used for the packing of goods 'for sale. The cutting and moulding is
essential for putting the tin sheets and tin plates into 212 shape with a view
to adapt them for actual user. The process of cutting and moulding does not
alter the nature of the materials intended for use in packing the goods for
sale. It only facilitates the actual user for packing. [214 FG] (ii) Packing
materials are necessary not only for solid articles, but also for those in
liquid and semi-liquid form.
In a society that produces foodstuffs and
manufactured articles in one. locality and use them in another' a wrapping or
container is necessary during storage, transport and sale. [215-B]
Encyclopaedia of Britannica, Vol. 17 of 1968 Edn. p. 22 referred to.
The functions of a package are (1) to contain
a convenient sized unit or amount of a product; (2) to protect it in transit;
(3) to aid its safe delivery to the consumer and (4) in some cases, to display
the product or promote its sale, or to act as a dispenser of it. The packing
industry has expanded to meet the demands for processed and preserved foods
rather than seasonal crops and new materials are being used for containers. In
the present case, as the tin-sheets and tin-plates purchased by the respondent
were intended to be used for packing of vegetable products sold by the
respondent, it is entitled to invoke the benefit of Clause (c) of S. 8(3).
[215C-D]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1776 of 1969.
Appeal by certificate from judgment and order
date May 3, 1968 of the High Court of Delhi at New Delhi in Civil Writ No.
135-D of 1960.
S. K. Aiyar, S. P. Nayar and R. N. Sachthey
for the appellants.
Rameshwar Nath for the respondent.
The, Judgment of the Court was delivered by
KHANNA, J. This appeal on certificate by the Lt. Governor Delhi and two others
is directed against the judgment of Delhi High Court whereby it accepted the
petition under article 226 and 227 of the Constitution of India filed by the
respondent company and directed the appellants to decide the respondent's
application for amendment of registration certificate in the light of
observations made by the court.
The respondent company is a registered dealer
under the Central Sales Tax Act, 1956 (hereinafter referred to as the Act) and
deals mainly in vegetable products (vanaspati).
The respondent was granted registration
certificate under the Central Sales Tax (Registration and Turnover) Rules,
1957. On December 11, 1958 the respondent applied to the Sales Tax Officer for
amendment of the registration certificates so as to include therein tin plates
or tin sheets under sub-section (3) of section 8 of the Act on the allegation
that those goods were used by the respondent for packing its vegetable products
for sale. The said application was rejected by the Sales Tax Officer on the
ground that the goods in question were declared goods and, as such, their
purchase on the strength of registration certificate could be allowed only if
they were to be resold in the form in which they had been purchased. Revision petition
filed by the respondent against the order of the Sales Tax Officer was
dismissed by the Commissioner of Sales Tax on the ground that tin plates or tin
sheets were not declared. goods or goods of special importance. On the other
hand, according to the Commissioner, those goods could fall in the category
mentioned in clause (c) of sub-section (3) of section 8 of the Act provided
they were either containers or materials used for packing of goods for sale.
The Commissioner further held that the goods in question were not containers as
they had to undergo manufacturing process before they could be used as
containers. The goods were also held not to fall in the second category of
being materials used for packing vegetable oil because, according to him, the
word "packing" was invariably used for holding solid contents.
He, therefore, held that "tin
plates" or "tin sheets" did not constitute packing material.
Further revision filed by the respondent was dismissed by the Chief
Commissioner who agreed with the opinion of the Commissioner. An application
was thereafter filed by the respondent for making a reference to the High Court
of the question of law arising from the order of the Chief Commissioner. This
application too was rejected by the Chief Commissioner on the ground of being
barred by time. The respondent thereafter moved the High Court for a direction
to the Chief Commissioner to refer the question of law formulated by the
respondent to the High Court. In addition to that, the respondent filed a petition
under articles 226 and 227 of the Constitution of India for a direction to the
appellants to decide the respondent's application for amendment of the
registration certificate in accordance with law.
The writ petition was resisted by the
appellants. The High Court accepted the writ petition and held that the words
of clause (c) of sub-section (3) of section, 8 of the Act were wide enough to
cover the goods in question. According to the High Court, it was not necessary
that those goods should be capable of being used directly for the purpose of
packing. It was quite enough if the intention of the dealer was to acquire them
in order that they might be used for packing of. goods for sale even if in that
process of adapting them for such use, they bad to undergo some change in shape
or form. It was further observed that the respondent's object was to. convert
the tin sheets and tin Plates into tin containers with a view that the same,
might be filled with the vegetable oil products to be sold to different parties.
Before proceeding further, we may set out
sub-section (1) and clause (c) of sub-section (3) of section 8 of the Act 214
"(1) Every dealer, who in the course of inter State trade or commerce(a)
sells to the Government any goods; or (b) sells to a registered dealer other
than the Government goods of a description referred to in sub-section (3);
shall be liable to pay tax under-this Act,
which shall be three per cent of his turnover.
(3) The goods referred to in clause (b) of
sub-section (1) (b)* * * * (c) are containers or other materials specified in
the certificate of registration of the registered dealer purchasing the goods,
being containers or materials intended for being used for the packing of goods
for sale;
Mr. Aiyar on behalf of the appellants has
argued that tin sheets and tin plates are not covered by clause (c) of subsection
(3) of section 8 of the Act reproduced above as those, goods constitute
neither. containers nor "materials intended for being used for packing of
goods for sale". Mr.
Ramesliwar Nath on behalf of the respondent
has not disputed that tin sheets and tin plates do not constitute containers,
but, according to him, they fall in the category of materials intended for
being used for packing of goods for sale. There is, in our opinion,
considerable force in this sub-mission of Mr, Rameshwar Nath. The materials
referred to in clause (c) according to its plain language should be such as are
intended for being used for the packing of goods for sale. Once the intention
of using the materials for packing of goods for sale IS proved, the
requirements. of the clause would be satisfied. The High Court has found that
the respondent purchased tin sheets and tin plates from dealers in Bihar and
elsewhere with a view to convert those sheets and plates into tin containers in
order to fill the same with vegetable oil products for being sold to different,
parties. This finding of the High Court has not been questioned before us. It
has; however, been urged on behalf of the appellants that as tin sheets and tin
plates cannot be used by the respondent unless they are converted into
containers, the respondent cannot invoke the benefit of clause (c) of
sub-section (3) of section 8 of the Act. We find it difficult to accept this
contention. The fact that tin sheets and tin plates have to be subjected by the
respondent to the process of cutting and moulding into tin containers would not
take them out of the category of materials intended for being 215 used for the
packing of goods for sale.. The cutting and moulding is essential for putting
the tin sheets and tin plates into shape with a view to adapt them for actual
user.
The process of cutting and moulding does not
alter the nature of the "materials intended for being used for packing of
goods for sale"; it only facilitates the actual user for packing.
We are also of the view that packing
materials are necessary not only for solid articles but also for those in
liquid and semiliquid form. According to observations on page 22 of
Encylopaedia Britannica, Vol.17, 1968 Edition, in a society that produces
foods-stuffs and manufactured articles in one locality and uses them in
another, a wrapping or container is necessary during storage, transport, and
sale. The functions of a package are : (1) to contain, a convenientsized unit
or amount of a product; (2) to protect it in transit; (3) to aid its safe
delivery to the consumer; and (4) in some cases to display the product and
promote its sale or to act as a dispenser of it. Originally instituted to
produce simple containers, the, packing industry has expanded to meet the
demands for processed and preserved foods, rather than seasonal crops, and to
distribute increased varieties of manufactured items. Packing reflects
developments in other industries, especially petrochemicals and plastic's,
whereby new materials and methods of construction have been provided for
containers. It has further been observed that cans, both tin and aluminium,
are, now used for ready-cooked products, brewery products, soft drinks, and many
oils and semisolids. Where a reclosable pack is needed lever-lid or slip-lid
cans are, used instead of sealed cans.
As the tin sheets and tin plates purchased by
the respondent were intended to be used for packing of vegetable products sold
by the respondent, the respondent, in our opinion, was entitled to invoke the
benefit of clause (c) reproduced above. In the result, the appeal fails and is
dismissed with costs.
S.C. Appeal dismissed.
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