Commissioner
of Sales Tax, U.P. Vs. Rai Bharat Das & Bros [1988] INSC 255 (30 August 1988)
Mukharji,
Sabyasachi (J) Mukharji, Sabyasachi (J) Kania, M.H.
CITATION:
1989 AIR 315 1988 SCR Supl. (2) 685 1989 SCC (1) 143 JT 1988 (4) 3 1988 SCALE
(2)1073
ACT:
Central
Sales Tax Act, 1956: s. 2(h)--Packing expenses incurred on putting the goods in
deliverable state-Whether could be included in sale price-Whether exigible to
tax.
HEAD NOTE:
Section
2(h) of the Central Sales Tax Act, 1956 contemplates sale price as the
consideration for the sale of any goods, inclusive of any sum charged for
anything done by the dealer in respect of the goods at the time of or before
the delivery thereof, other than cost of freight or delivery and cash discount.
The assessee
carried on the business of mining and sale of silica sand. The sales tax
authorities sought to levy tax on the packing charges that he had received from
the purchasers. The Tribunal found that there was an implied agreement for
sending silica in gunny bags, that the expenses on packing were incurred in
order to put the goods in deliverable state prior to the delivery, that these
expenses were rightly included in the sale price and hence exigible to tax.
The
High Court came to the conclusion that since the Tribunal had not recorded the
finding that there was implied agreement to sell the gunny bags by the assessee
to its customers, the packing charges were mentioned and not cost of gunny bags
and since the price of goods and the packing charges were separately charged
the said charges could not be included in the sale price paid by the purchasers
to the assessee.
Allowing
the appeal by special leave, HELD : The High Court was in error in the view it
took.
[689B]
Whether there is an implied agreement to sell packing material along with the
product contained therein is a pure question of fact depending upon the
circumstances of each case. In the instant case the Tribunal found that the
packing in the gunny bags was done by the dealer in respect of the goods at the
time of or before the delivery thereof, that it was done at the request of
buyers as it was a PG NO 686 convenient mode of delivery and that the buyers
had given directions for the quality of packing. In view of these facts found
by the Tribunal, which must be taken to be conclusive, it could not be said
that the parties did not intend to sell or buy the gunny bags. [687E-G] In view
of the definition of s. 2(h) of the Act, anything which was integral part
including any sum charged for anything done by the dealer in respect of the
goods, may form part but anything supplied separately pursuant to a separate
order, directions or specifications to the purchaser could not form part of the
sale price. In the instant case the packing was done in order to putting the
goods in deliverable state and incidental to the same. Such packing charges,
therefore, could be included. The mere fact that price of silica was shown
separately and the cost of packing was also shown separately makes no
difference to the assessment of sales tax. [688D,F-G] Commissioner of Taxes, Assam v. Prabhat Marketing Co. Ltd., 19
STC 84 and Jamanu Flour ,e Oil Mill (P) Ltd. v. State of Bihar,65 STC 462
applied.
CIVIL
APPELLATE JURISDICTlON: Civil Appeal No. 2456 of 1986.
From
the Judgment and Order dated 12.7. 1982 of the Allahabad High Court in Sales Tax Revision No. 42 of 1982.
S.C. Manchanda
and Ashok K. Srivastava for the Appellant.
The
Judgment of the Court was delivered by SABYASACHl MUKHARJI, J. This is an
appeal by leave from the judgment and order of the High Court of Allahabad,
dated 12th July, 1982. The decision was rendered in a
revision by the assessee which was directed against the order of the Sales Tax
Tribunal. The year involved is the assessment year 1974-75.
The assessee
carried on the business of mining and sale of silica sand. The question was
whether the sales tax could be charged from the assessee in respect of packing
charges received by the assessee from the purchaser. The sales tax authorities
as well as the Tribunal held that the assessee was liable to pay sales tax on
the packing charges that he had received from the purchaser. From the facts
found by the Tribunal it appears that there was a contract for packing PG NO
687 the silica sand in gunny bags and packing charges had been realised on the
basis of mt. tons though these were separately shown and were added up with the
price of the silica sand and on the total sales tax was charged.
Section
2(h) of the Central Sales Tax Act, 1956 (hereinafter called `the Act') provide
as follows:
"sale
price" means the amount payable to a dealer as consideration for the sale
of any goods, less any sum allowed as cash discount according to the practice
normally' prevailing the trade, but inclusive of any sum charged for anything done
by the dealer in respect of the goods at the time of or before the delivery
thereof other than the cost of freight or delivery or the cost of installation
in cases where such cost is separately charged. " The tribunal
categorically found that there was a contract for packing the silica sand in
sound gunny bags, hence,held that there was an implied agreement for sending
silica in gunny bags though these could be sent loose in wagons. As mentioned
hereinbefore, Section 2(h) contemplates sale price as the consideration for the
sale of any goods unless any sum allowed as cash discount according to the
practice prevailing in the trade, but inclusive of any sum charged for anything
done by the dealer in respect of the goods at the time before the delivery thereof
other than the cost of freight or delivery or the cost of installation in cases
where such cost is separately charged. Hence, the short question is whether the
price was charged for anything thing done in respect of the goods at the time
of or before the delivery thereof.
The
Tribunal also found that packing was done at the request of the buyer and that
it was a convenient mode of delivery. The buyers had given directions for the
quality of packing and it appears from the order form this always done in
respect of the goods for putting these in deliverable state and so the packing
charges, according to the Tribunal,are exigible to tax in this case.
The-Tribunal clearly came to the conclusion that all the these expenses were
incurred in order to put the goods in deliverable state prior to their
delivery. As per the agreement these expenses were rightly included in the sale
price and it could not be said that these were not part of the sale price.
Hence the Tribunal held that the tax was rightly levied under the Act on the
sale price so computed.
PG NO
688 The High Court came to the conclusion that the Tribunal had not recorded
the finding that there was an implied agreement to sell the gunny bags by the assessee
to its customers. Packing charges were mentioned and not the cost of gunny
bags. Packing charges for each metric ton obviously include labour charges. In
view of the fact that the price of goods and the packing charges were
separately charged, the High Court came- to the conclusion that the packing
charges could not be included in the sale price paid by the purchasers to the assessee.
That is impugned in this appeal.
We are
of the opinion, in view of the facts found by the Tribunal which must be taken
to be conclusive, and in the light of Section 2(h) of the Act, the High Court
was in error. In the facts of this case such packing charges could be included.
There was an agreement to sell the gunny bags, as found by the Tribunal. The
price of silica was shown separately and the cost of packing was also shown
separately. In view of the definition of Section 2(h) of the Act, anything
which was an integral part included any sum charged for anything done by the
dealer in respect of the goods, may form part but anything supplied separately
pursuant to a separate order, directions or specifications to the purchaser
could not form part of the sale price of the gunny bags. This was done in order
to putting them in deliverable state and incidental to the same.
In a
slightly different state of facts this question came before this Court in
Commissioner of Taxes, Assam v. Prabhat Marketing Co. Ltd., 19
STC 84. There, the respondent sold hydrogenated oil which was exempt from sales
tax under the Assam Sales Tax Act, 1947. The question was whether the value of
the containers in which hydrogenated oil was sold could be assessed to sales
tax under the Act. The High Court held that the value of the containers was not
assessable to sales tax unless separate price had been charged for the
containers. On an appeal this Court held that the value of the containers was
assessable to sales tax under the said Act if there was an express or implied
agreement for the sale of such containers and the mere fact that the price of
the containers was not separately fixed, made no difference to the assessment
of sales tax. This Court, however, came to the conclusion that where there was
an agreement to sell packing material is a pure question of fact depending upon
the circumstances of each case.
In
this case this Court asked the question that the sales tax authorities had to
address themselves the question whether the parties having regard to the
circumstances of the case, intended to sell or buy packing material and PG NO
689 whether the subject-matter in the context of sale, was only an exempted
article or packing material did not form part of the bargain at all.
In
that being the principle and the fact that here packing in the gunny bags was
done by the dealer in respect of the goods at the time of or before the
delivery, in our opinion, the High Court was in error in the view it took.
This
Court had to consider again this aspect of the matter in Jamana Flour & Oil
Mills (P) Ltd. v. State of Bihar, 65 STC 462. There this Court held that
whether there was an implied agreement to sell packing material along with the
products contained therein, is a question of fact.
In
view of the principles enunciated in these two decisions, though the facts were
different, and on the basis of the conclusive findings recorded by the Tribunal
that there was a contract for packing the silica in sound gunny bags, the cost
of packing materials had been realised, we are clearly of the opinion that the
High Court was in error.
In the
aforesaid facts and circumstances of the case the judgment and order of the High
Court are set aside and the order of the Tribunal is restored. There will,
however, be no order as to costs.
P.S.S.
Appeal allowed.
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