TaxTMI 
TaxTMI 
1965 (1) TMI 57
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.... Andhra Pradesh General Sales Tax Act, 1957, hereinafter called the Act, to sales tax on its turnover of Rs. 1,77,363,01 for the period October 1, 1957, to December 13, 1957. As by a notification dated December 13, 1957, issued by the State Government, sales or purchases of tobacco and all its products were exempted from sales tax with effect from December 14, 1957, the turnover in respect of the sales of tobacco was excluded from the total turnover. But, on the ground that the exemption did not apply to containers and the packing materials, which consisted of cardboard and dealwood, the Commercial Tax Officer issued a notice to the appellant on March 22, 1962, proposing to assess the escaped turnover in respect of the said materials. The assessee, inter alia, contended that there was no sale of packing materials at all and that it sold only cigarettes at Rs. 8.75 per thousand without charging anything extra for the packing materials and that the price was the same to whatever place they were sent. In other words, the contention of the appellant was that the packing materials were not part of the agreements of sale between itself and its customers. The Commercial Tax Officer, by hi....
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....ettes which included the packing materials. Under section 9(1) of the Act, read with the notification issued thereunder by the State Government the assessee was exempted from paying the said tax and, therefore, the scope of the exemption was coextensive with that of the tax payable on the sale transactions. Further, the excise duty imposed by the Central Government under the Central Excises and Salt Act, 1944, was really a tax imposed and collected by the Central Government in substitution of the sales tax payable to the States. The exemption under the Act was given to prevent double taxation and, therefore, the exemption must cover the entire field of the excise duty. If the Central Government collected the excise duty on cigarettes, including the packing materials and the State imposed sales tax on the packing materials in effect the State would be collecting a part of the tax over again. Mr. Munikannaiah, learned counsel for the State of Andhra Pradesh, contended that throughout all the stages of the proceedings the only question raised was whether the consolidated price for which the packed cigarettes were sold represented in part the sale price of the packing materials and ....
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....ended to sell or buy the packing materials, or whether the subject-matter of the contracts of sale was only the cigarettes and that the packing materials did not form part of the bargain at all, but were used by the seller as a convenient and cheap vehicle of transport. He may also have to consider the question whether, when a trader in cigarettes sold cigarettes priced at a particular figure for a specified number and handed them over to a customer in a cheap card- board container of insignificant value, he intended to sell the cardboard container and the customer intended to buy the same. It is not possible to state as a proposition of law that whenever particular goods were sold in a container the parties did not intend to sell and buy the container also. Many cases may be visualized where the container is comparatively of high value and sometimes even higher than that contained in it. Scent or whisky may be sold in costly containers. Even cigarettes may be sold in silver or gold caskets. It may be that in such cases the agreement to pay an extra price for the container may be more readily implied. In the present case, if we may say so with respect, all the authorities, includin....
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....he end of the year the account relating to packing material (cardboard and wrapping paper) has been transferred to manufacturing account and that the account relating to the dealwood boxes has been transferred to trading account. This would indicate that in determining the price of cigarettes the appellants have taken into consideration the price of the packing material also. When in fixing the price of the cigarettes, price of the packing material has been taken into consideration, the contention that the rate at which the cigarettes are sold is the same either with or without the packing cases is not of much assistance to the appellants." This passage indicates that the Tribunal rejected the contention on the ground that the value of the packing materials must have been taken into consideration in fixing the price of the cigarettes. But that reasoning does not answer the contention that howsoever the price was fixed, the cigarettes were sold, whether packed in cardboards or wooden boxes, in or outside the State of Andhra Pradesh, at the same rate. The High Court also held that though there was no express contract to sell the packing materials and the packets separately, such a....
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....d on the facts, accepted the principle that to attract sales tax the packing material or the container, as the case may be, should have been the subject-matter of an agreement to sell. In this case the High Court has not arrived at that finding on the consideration of the relevant material. We have, therefore, no option but to remand the case to the High Court to consider the question whether, having regard to the facts of the case and the observations made by us, there was an agreement, express or implied, between the assessee and its customers to sell the packing materials or whether the packing materials, which were comparatively of insignificant value, were used only as a convenient vehicle to put the purchasers in possession of the cigarettes sold. Before remanding the case, we shall consider the third argument of the learned counsel for the assessee. The relevant provisions bearing on the said question are: section 5 of the Act, item No. 24 of the Second Schedule to the Act, sections 2(s) and 9(1) of the Act, the notification dated December 13, 1957, issued by the State Govern ment under section 9(1) of the Act and rule 6(1) of the Andhra Pradesh General Sales Tax Rules....