Packing charges deductible from taxable turnover when separately charged as a service in consumer sales under controlled supply arrangements.

Packing charges separately specified and charged in connection with cement supplied under the controlled sales scheme were held deductible from taxable turnover under rule 6(5)(f)(ii). The Court treated the packing done at the Corporation's instance as a service rendered in the course of the consumer sale, and rejected the narrower view that the dealer had to perform the service personally. On that construction of the Cement Control Order and the sales tax rule, disallowance of the deduction was incorrect and the assessment was to be modified by excluding the packing charges, with consequential refund if tax had been paid on that amount.

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Issues: Whether packing charges incurred for cement supplied under the controlled sales scheme were deductible from taxable turnover under rule 6(5)(f)(ii) of the Mysore Sales Tax Rules, 1957.

Analysis: The deduction under the rule is available only where the amount is separately specified and charged and represents freight, packing, delivery, or like services rendered in the context of the sale. The decisive question was whether the packing done by the producer at the Corporation's instance was in substance a service rendered for the consumer in the course of the onward sale, and not whether the producer was the agent of the Corporation. Reading the Cement Control Order as a whole, the Court held that the producer packed the cement only when the Corporation required it to do so for delivery to the consumer, and that such packing was part of the service connected with the consumer sale. The view that the service had to be personally rendered by the dealer himself was rejected as too narrow.

Conclusion: The packing charges were deductible under rule 6(5)(f)(ii), and the disallowance was incorrect.

Final Conclusion: The revision succeeded and the assessment was to be modified by excluding the packing charges from taxable turnover, with consequential refund if tax had been paid on that amount.

Ratio Decidendi: Amounts separately charged for packing are deductible from taxable turnover when the packing is done in the context of the consumer sale and constitutes a service rendered for the consumer, even if the service is performed through another person and not personally by the dealer.

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