1977 (1) TMI 137 - HC - VAT and Sales Tax

Polythene bags with 'chikki' qualify as sales under tax law, clarifies High Court judgment

The Bombay High Court, in a judgment by Justice Kania, ruled that 'chikki' packed in heat-sealed polythene bags qualifies as sales under entry 6 of ... - Issues:Interpretation of scope of entry 6 of Schedule E to the Bombay Sales Tax Act, 1959 regarding sales of 'chikki' packed in heat-sealed polythene bags.Detailed Analysis:The judgment by the Bombay High Court, delivered by Justice Kania, pertains to a reference under section 61(1) of the Bombay Sales Tax Act, 1959. The core issue revolves around determining whether sales of 'chikki' packed in heat-sealed polythene bags fall under entry 6 of Schedule E to the Act. The respondent, a manufacturer of 'chikki', sold the product in various ways, including inserting paper-packed 'chikki' in heat-sealed polythene bags. The Sales Tax Officer classified these sales under entry 6 of Schedule E, which was contested by the respondent. The Tribunal, however, held that the polythene bags did not qualify as sealed containers as they could be opened without tools. The Court analyzed the definition of a container based on a Supreme Court precedent and concluded that the polythene bags constituted sealed containers, as access to the contents required breaking the fastening.The Court referenced a prior case involving plain cashew-nuts packed in plastic bags to distinguish the current scenario. In that case, the bags were deemed non-sealed containers as they could be resealed easily. The Court emphasized that the ease of opening a container with bare hands does not negate its classification as a sealed container. The key criterion is whether access to the contents necessitates breaking the fastening, which was evident in the case of the polythene bags used by the respondent. The Court rejected the argument that the size of the bags influenced their classification, emphasizing that the ability to open and close the bags was not the determining factor for sealed container status.In conclusion, the Court answered the reference question in the negative, ruling that the polythene bags used by the respondent for packing 'chikki' qualified as sealed containers. The respondent was directed to pay the costs of the reference. This judgment provides a comprehensive analysis of the interpretation of the relevant entry in the Bombay Sales Tax Act and clarifies the criteria for classifying containers as sealed, setting a precedent for similar cases in the future.