TaxTMI 
TaxTMI 
1965 (2) TMI 92
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....able at 2 percent., and Rs. 3,638.8 1, being the cost of the packing material sold subsequent to 1st October, 1958, and taxable at 7 per cent. On checking the accounts, the assessing authority thought that the value of gunnies sold before and after 1st October, 1958, should be computed at Rs. 15,491.25 and Rs. 4,851.75 respectively, He, therefore, issued a notice to the respondent to show cause why the assessable turnover should not be determined on that basis. As no objections were filed, the assessment was finalised and the tax payable by the assessee was fixed at Rs. 649.45. It is to remove these proceedings on certiorari that the jurisdiction of this Court was invoked under Article 226 of the Constitution. Acceding to the proposition advanced on behalf of the respondent, that the assessee in this case was not a dealer in gunnies and that, therefore, his turnover was not amenable to tax, Veeraswarmi, J., allowed the writ petition. It is this conclusion of the learned Judge that is assailed before us. In support of this appeal, it is urged by Sri V. Ramaswami, learned Additional Government Pleader, that the respondent answered the definition of a "dealer" enshrined in section ....
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....d range of the definition of "dealer". The expression "carrying'' on the business is one of wide import and is calculated to cover an activity like the present, where, undoubtedly, the respondent has been buying and selling the goods. It could also be gathered from the relevant contents of the affidavit that he was also making a profit out of this business of selling and buying gunnies. It appears that the respondent charges a sum of Rs. 2-4-0 for packing charges, porter, cooly, etc. It is stated from the Bar that these gunnies are bought for less than 12 annas, whereas a sum of Rs. 2-4-0 is charged to the buyer. It may legitimately be inferred that the assessee was charging much more than the price he bought for. Be that as it may, it can be said that the definition is fulfilled the moment it is established that the respondent was buying and selling gunnies. We are not persuaded that this definition of "dealer" lends any countenance to the theory propounded by learned counsel for the respondent. We are not impressed with the argument based upon the definition of ''sale price" either. It is true that the "sale price" is the amount payable as consideration for the sale of goods. But....
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.... goods sold: (i) freight; (ii) charges for packing and delivery and other such like services." Sri Venkatachari lays stress on the terms of sub-clause (ii), viz., charges for packing and delivery, and maintains that all expenses incurred in respect of packing and delivery are to be excluded from the turnover of a dealer, and that, as the gunnies in this case are an integral part of packing and delivery, the assessee is entitled to exclude the cost of gunnies as well. We are unable to give weight to this contention. In our opinion, the charges for packing and delivery mean charges for labour expended in regard to packing and delivery. It does not take in the cost of material supplied for the purpose of packing and delivering the goods. Obviously, what is contemplated is the work and labour in connection with packing and delivering the articles. It is not wrong to suppose that the Government permitted the dealer to deduct this item from the turnover, for the reason that work and labour are not goods which should enter the calculation of price of a commodity. We are, therefore, not convinced that subclause (ii) of clause (g) of rule 5(1) enables the assessee to claim a deduct....
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....h the above-mentioned doctrine. The learned Judges in that case were concerned with an agreement to purchase cotton to be delivered to the buyers by sellers, and a claim was made on behalf of the assessee that the material in which the cotton was packed, was not liable to be taxed as the cotton was not amenable to sales tax. This claim was negatived by this Court for the reason that there was a contract to pay for and purchase the packing material, and, consequently, the turnover in respect of packing material was amenable to sales tax. Yet another case of this Court which has a bearing on this enquiry is Nagarathinam and Bros. v. The State of Madras[1960] 11 S.T.C. 342. decided by a Division Bench. In this case also, the enquiry turned on the provisions of the notification exempting vegetables from payment of sales tax. The learned Judges held that the assessee could not claim exemption in regard to gunny bags and that they were assessable to tax by the department. The cited case is on all fours with the present case, since both are governed by the same notification, and so, the principle formulated there applies with full vigour to the case on hand. A similar view was taken by th....
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.... "Thus, in order that there could be a levy of sales tax, there should be a sale. Whether in regard to packing materials utilised in the performance of a contract between the parties there was a sale, would depend on the agreement between the parties. Such an agreement could be express or implied. Where the main contract was one of sale of goods as packed, such an agreement to sell the packing materials could, having regard to the nature of the contract, be readily implied; but, where the main contract was merely one of service, the fact that in the performance of such service, the packing materials are used and charged for, would not lead to a necessary inference that a sale of the materials was intended. In such a case, the onus would be on the taxing authority to prove that there was an agreement to sell the packing materials and a sale by the passing of property therein." Indisputably, the case on hand falls under the first category of contracts indicated in the above passage. It is interesting to note that these very learned Judges who decided that case gave the judgment, on the same day, in Chidambara Nadar Sons and Co. v. State of Madras[1960] 11 S.T.C. 321. , holding that....