TaxTMI 
TaxTMI 
1982 (9) TMI 218
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.... the sale of bardana (gunny bags), the learned counsel for the parties also agree that the matter is covered by a judgment of this Court reported as Saddana Sugar Co., Ludhiana v. Assessing Authority, Ludhiana (see infra) 1976 RLR 109 wherein it was held that if the petitioner-company had really supplied the controlled sugar under the orders of a statutory authority to various retail dealers, the transaction could not be regarded as "sale" within the meaning of the Punjab General Sales Tax Act, 1948. 4.. Both the counsel further state that the impugned order dated 25th March, 1974, be quashed and the case may be remanded to the Assessing Authority to make fresh assessment in the light of the authorities mentioned above. It is ordered accordingly and directed that the Assessing Authority shall reassess the sales keeping in view the principle of law as laid down in the aforesaid authorities. No costs. Appendix [The judgment of M.R. SHARMA, J., of the Punjab and Haryana High Court in Saddana Sugar Co. v. Assessing Authority, Ludhiana (Civil Writ No. 2390 of 1973 decided on 17th October, 1975) is printed below: ] SADDANA SUGAR CO. v. ASSESSING AUTHORITY, LUDHIANA ....
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....d not charge the price of the bags in which the sugar was contained. The respondent, on the other hand, has relied upon some extracts from the report of the Tariff Commission made in 1969, showing the break-up of cost elements of sugar. This reads as under: "Items/Break-up of cost elements (A) Cane and related costs- (i) Cost of cane (including transport and harvesting). (ii) Cess/purchase tax Total (A) (B) Conversion charges- (a) Cane development expenses at cane centres. (b) Salaries and wages. (c) Power, fuel and stores. (d) Repairs and maintenance. (e) Other overheads. (f) Depreciation. (g) Packing. Total (B) (C) Total (A) and (B). (D) Less credits for recoveries. Total cost." On the basis of clause (g) relating to packing appearing under the head "Conversion charges", it is submitted that the cost of packing material is included in the price of a bag of sugar. The wholesale dealer while purchasing sugar from the manufacturers pays the price of packing material and also realises the same when he sells the bags of sugar to the retail dealers. The controversy raised will have to be resolved on the basis of decided cases. Sh....
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....d at certain rates. The respondent-firm filed appeals before the Assistant Commissioner of Taxes, which were dismissed. The second appeals were also dismissed by the Assam Board of Revenue. The respondent-firm then filed an application under section 32 of the Assam Sales Tax Act, 1947, for reference of two questions of law to the High Court. For our purpose, question No. (2) only is relevant and reads as under: "(2) Whether the value of the containers of hydrogenated oil is assessable to sales tax under the Act (Assam Sales Tax Act) though the oil itself is not taxable under it?" The High Court held that the value of the containers was not assessable to sales tax unless separate price had been charged for the containers. The Commissioner of Taxes went in appeal before the Honourable Supreme Court of India. The court followed with approval the following passage appearing in Hyderabad Deccan Cigarette Factory v. State of Andhra Pradesh [1966] 17 STC 624 (SC): "In the instant case, it is not disputed that there were no express contracts of sale of the packing materials between the assessee and its customers. On the facts, could such contracts be inferred? The authority concer....
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.... In such a case also the Tribunal has to determine whether there was any express or implied contract for the sale of these containers. He has once again emphasised in this context that since, while fixing the price of sugar, the cost of packing material had been taken into consideration it should be inferred that there was an implied contract for the sale of packing material. The submission made by Mr. Jain appears to be attractive on the face of it, but item (g) relating to packing in Table 9-4, reproduced above, does not necessarily include the cost of gunny bags only. It also includes therein the cost of labour involved for packing sugar in gunny bags. From this entry alone, which represents the cost of gunny bags and labour charges, it would be difficult to hold that there was an express or implied contract for the sale of gunny bags between the wholesale dealers like the petitioner-firm and the retail dealers or the consumers. Further, the authorities under the Act have not made any attempt to compare the cost of gunny bags with the cost of sugar packed therein. Though this factor is not conclusive, yet it has an important bearing on the point whether there was an expres....