Court sets aside sales tax assessment on hessian and hoops, finding no sales agreement. Petitioners allowed to challenge under Article 226(1)(b).

The court allowed the petition, setting aside the assessment of sales tax on hessian and hoops, as there was no express or implied agreement for their sale. The court held that the petition fell within the ambit of Article 226(1)(b) of the Constitution, allowing the petitioners to challenge the assessment. The final judgment granted costs to the petitioners and ordered the refund of the security amount.

---

---

Issues Involved:
1. Validity of the sales tax assessment on hessian and hoops used for packing fully pressed cotton bales.
2. Applicability of Article 226 of the Constitution of India in challenging the sales tax assessment.

Detailed Analysis:

1. Validity of the Sales Tax Assessment on Hessian and Hoops

Background:
The petitioners, a partnership firm dealing in cotton and its by-products, challenged the assessment orders for the years 1960-61 to 1963-64. The primary issue was the levy of sales tax on hessian and hoops used for packing fully pressed cotton bales.

Petitioners' Argument:
The petitioners contended that:
- They paid ginning and pressing charges but not for the bardana, hessian, and hoops.
- The price of cotton was quoted per khandi, and the weight of the packing material was deducted from the weight of each bale.
- There was no express or implied agreement for the sale of packing material.
- The assessment of tax on hessian and hoops was not justified as these were not sold separately but used as packing material.

Respondents' Argument:
The respondents argued that:
- The pressing charges included the price of the packing material.
- The contract for the sale of fully pressed cotton bales implied the sale of the packing material.
- The selling rate of cotton bales included pressing charges and thus the price of the packing material.

Court's Analysis:
- The court noted that neither party disputed that the price of cotton was quoted per khandi and the weight of the packing material was deducted.
- The court referred to previous judgments, including Hyderabad Deccan Cigarette Factory v. State of Andhra Pradesh, M.S. Chidambara Nadar v. State of Madras, and Binod Mills Co. v. Commissioner of Sales Tax, M.P., to determine if there was an implied contract for the sale of packing material.
- The court concluded that, based on the facts, no inference could be drawn of an implied contract for the sale of packing material. Therefore, the assessment of tax on hessian and hoops was not justified.

Conclusion:
The court allowed the petition, setting aside the assessment of sales tax on hessian and hoops, as there was no express or implied agreement for their sale.

2. Applicability of Article 226 of the Constitution of India

Respondents' Argument:
The respondents contended that the petition under Article 226 of the Constitution could not be entertained due to the amended provisions of Article 226.

Court's Analysis:
- The court examined the amended Article 226, which empowers the High Court to issue directions, orders, or writs for the redress of any injury by reason of any illegality in any proceedings by or before any authority.
- The court found that the tax levied on hessian and hoops did not fall within the ambit of a sale under the Act, resulting in an injury to the petitioner.

Conclusion:
The court held that the petition fell within the ambit of Article 226(1)(b) of the Constitution, allowing the petitioners to challenge the assessment.

Final Judgment:
The petition was allowed, and the assessment regarding item No. (2) (sales tax on hessian and hoops) was set aside. The petitioners were entitled to the costs of the petition, with counsel's fee fixed at Rs. 200. The security amount was to be refunded to the petitioners after verification.

---