TaxTMI 
TaxTMI 
1989 (5) TMI 292
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....as delivered by R.S. PATHAK, C.J.I.-These appeals are directed against the judgment of the High Court of Andhra Pradesh dismissing several writ petitions filed by the appellants challenging assessments made under the Andhra Pradesh General Sales Tax Act, 1957, on the value of packing material at the rate applicable to goods packed therein. The appellants in some of the appeals are manufacturers of or dealers in beer, the appellants in the other appeals are manufacturers of or dealers in cement. The beer is sold in bottles packed in cartons. The cement is sold in gunnies. Section 5 of the Andhra Pradesh General Sales Tax Act (hereinafter referred to as "the Act") provides for the levy of sales tax on the turnover of goods at the rates specified in that provision. In the case of goods mentioned in the First Schedule to the Act tax is leviable at the rates, and at the point of sale, specified therein. In the case of goods mentioned in the Sixth Schedule, likewise tax is leviable at the rates and at the points specified therein. Item 19 of the First Schedule speaks of "containers other than gunnies and bottles". These goods are subject to tax at the rate of 5 paise in the ru....
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....writ petitions, out of which the present appeals arise, in the High Court at Hyderabad challenging the assessments to sales tax made on the turnover of packing material employed either by way of bottles for containing beer or by way of gunny bags for packing cement. The appellants challenged the application of such rate in assessments made in relation to the period before July 8, 1983. The appellants also challenged the application of that rate proposed pursuant to section 6-C in show cause notices issued by the concerned authority. While dismissing the writ petitions, the High Court has proceeded on the basis that having regard to the nature of the goods and to the trade practice in respect of beer and cement the containers were necessary concomitants in the transactions, and the transfer of property in the containers was incidental or unavoidable, that the sale transactions had to be regarded as composite and integrated sales of the containers and their contents and what was really sold was the bottled beer or the cement packed in gunny bags. The learned judges observed further that even where money was paid to the dealer as security deposit refundable on the return of the bottl....
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....ed to the dealer the deposit is returned by way of consideration for the resale. In every case, the assessing authority is obliged to ascertain the true nature and character of the transaction upon a consideration of all the facts and circumstances pertaining to the transaction. That the problem almost always requires factual investigation into the nature and ingredients of the transaction has been repeatedly emphasised by this Court. In Hyderabad Deccan Cigarette Factory v. State of Andhra Pradesh [1966] 17 STC 624 this Court said: "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, including the High Court, dealt with the question as a question o....
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....n each case." There can be as many different kinds of transactions as the circum- stances of the case may require either by reason of prevailing trade practice or market conditions or personal convenience, and as human ingenuity may devise for bona fide reducing the burden of tax. In State of Karnataka v. Shaw Wallace and Co. Ltd. [1981] 48 STC 169 the High Court of Karnataka pointed out that there was an agreement to sell the bottles and crates in which the liquor was conveyed and there was also an agreement in regard to the price of those containers, and therefore the turnover in regard to those items had to be determined and the appropriate rate of sales tax had to be charged as provided in the Karnataka Sales Tax Act. Reference was made to the requirement in the Karnataka Excise Act, 1966, that the liquor had to be sold in sealed containers but that, the High Court said, did not automatically lead to the conclusion that the same rate of sales tax was applicable to containers also. It was observed that such a presumption could not be made, specially when separate rates were specified in the Sales Tax Act in regard to the containers and the contents. In Arlem Breweries Ltd. v. ....
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....ll depend upon several factors, some of them being: 1.. The packing material is a commodity having its own identity and is separately classified in the Schedule; 2.. There is no change, chemical or physical, in the packing either at the time of packing or at the time of using the content; 3.. The packing is capable of being reused after the contents have been consumed; 4.. The packing is used for convenience of transport and the quantity of the goods as such is not dependent on packing; 5.. The mere fact that the consideration for the packing is merged with the consideration for the product would not make the sale of packing an integrated part of the sale of the product. In one case, Punjab Distilling Industries Ltd. v. Commissioner of Income-tax [1959] 35 ITR 519 (SC); [1959] Supp 1 SCR 683 where the bottles were sold by the assessee under a buy-back scheme, the security deposit for the return of the bottles was held to be merely in the nature of an incentive to the buyer to return the bottles. Turning to section 6-C of the Act, it seems to envisage a case where it is the goods which are sold and there is no actual sale of the packing material. The section provides by legal....