2001 (9) TMI 1092 - HC - VAT and Sales Tax

Judgment Upholding Tax Treatment for Packing Material under Sales Tax Act

KCP. Ltd. and another Versus Commercial Tax Officer, Macherla, Guntur District and others

The court dismissed the writ petition challenging the constitutional validity of section 6-C of the Andhra Pradesh General Sales Tax Act, 1957. The court ... - Issues:Constitutional validity of section 6-C of the Andhra Pradesh General Sales Tax Act, 1957 challenged. Application of section 6-C to transactions of sale or purchase of specific articles under item Nos. 157 and 188 of the First Schedule disputed. Discretion of assessing authority in determining contract of sale or agreement for sale relating to containers questioned.Analysis:The petitioners challenged the constitutional validity of section 6-C of the Andhra Pradesh General Sales Tax Act, 1957, as amended by Act 22 of 1995. They sought a declaration that the amended section 6-C should not apply to transactions involving articles specified under item Nos. 157 and 188 of the First Schedule. The petitioners argued that if section 6-C applied to these transactions, it would violate articles 14, 19(1)(g), and 301 of the Constitution as being arbitrary, discriminatory, and unreasonable.The court referred to a previous judgment in Raasi Cement Ltd. v. Commercial Tax Officer, where the constitutional validity of the provisions of section 6-C was upheld. The court noted that despite the petitioners' contentions, the judgment in Raasi Cement's case directed the assessing authority to determine the contract of sale or agreement for sale relating to containers based on the intention of the parties in each case.The Special Government Pleader for Taxes argued that there was no discretion left for the assessing authority to determine the contract of sale or agreement for sale relating to containers, citing the clear provisions of section 6-C and the judgment in Premier Breweries v. State of Kerala. The court emphasized that section 6-C mandated that the rate of tax on packing material sold with goods should be the same as that of the goods packed or filled, regardless of separate sales agreements.The court reiterated that the constitutional validity of section 6-C had already been upheld in Raasi Cement's case, and there was no need to revisit that issue. The court emphasized that the assessing authority had no discretion to tax containers and goods separately due to the deeming clause in section 6-C. Referring to the apex court's opinion in Premier Breweries's case, the court held that the point and rate of tax on containers and packing material should align with the goods sold, even if containers or packing materials were sold separately.In conclusion, the court dismissed the writ petition, stating that there was no need to direct the assessing authority to determine the contract of sale or agreement for sale relating to containers, as section 6-C clearly outlined the tax treatment for packing material sold with goods.Judgment:The writ petition challenging the constitutional validity of section 6-C of the Andhra Pradesh General Sales Tax Act, 1957, was dismissed.