TaxTMI 
TaxTMI 
TaxTMI 
1992 (9) TMI 344
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....nd taxable turnover at Rs. 1,57,469 and Rs. 57,845 respectively taxable at 10 per cent. 3.. The respondent-assessee in T.C. No. 225 of 1983 was also a dealer in salt and for the assessment year 1975-76, he was assessed under the provisions of the Central Sales Tax Act on a total and taxable turnover at Rs. 21,71,756 and Rs. 9,10,383 respectively taxable at 10 per cent. In all the above three cases the respondent-assessees admittedly sold salt packed in gunnies and that the sale of salt was exempt from the levy of tax by virtue of a notification issued by the State Government in exercise of its powers under section 17 of the Tamil Nadu General Sales Tax Act, 1959. Consequently the taxable turnover determined and subjected to levy of tax was only the estimated sale value of the gunnies sold along with the salt depending upon the prevailing rate and the number of gunnies utilised by the respective assessees for selling the salt. The rate of 10 per cent was applied since the sales effected to dealers outside the State in the course of inter-State trade and commerce were not covered by C forms. 4.. Aggrieved against the orders of the respective assessing officers, the assessees filed ....
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.... the assessees could not be subjected to levy of tax in respect of the gunny bags used for selling the salt since the exemption granted in respect of the sale of the commodity would enure to the rescue of the assessees. According to the learned counsel, what was sold by the respective assessees was a bag of salt and consequently in the light of the opinion expressed by the Full Bench in para 6 of its judgment the price of salt must be taken to be the price of a bag of salt and since the salt itself is exempt there is no scope for levying tax on the bag of gunny alone by dividing separately the components consisting of the commodity and the gunny which constituted a sale. The learned counsel for the assessee also relied upon the decision in Raj Sheel v. State of Andhra Pradesh [1989] 74 STC 379 (SC) and Deputy Commissioner of Sales Tax v. Aysha Hosiery Factory (P) Ltd. [1992] 85 STC 106 (SC) in support of his submission. 7A. We have carefully considered the submission of the learned counsel appearing on either side in the light of the decisions relevant for our consideration. We are unable to approve the findings of the Tribunal in setting aside the assessment against the assessees....
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....Nadu v. V.V. Vanniaperumal & Co. [1990] 76 STC 203 which reads as hereunder: "But we do not agree with the other finding in that judgment referred to earlier that the sale price of the oil shall be separately taxed and the sale price of the tin should be separately taxed at the rates applicable to each of them. As we said above only tin of oil is sold. There is no intention for sale or purchase of tin. The intention is to purchase of oil which of course is in tin. Therefore, whatever is the price paid, it must be taken to be the price of the oil. May be if more oil is sold and delivered in a container brought by the purchaser the price may be lesser than the oil sold in tin container, but nevertheless, when oil is sold in tin, the price that is paid is the price of the oil. Therefore, total turnover of the price has to be taxed and there is no question of taxing separately for the price of oil and price of tin at different rates." The reasoning of the Full Bench that when oil is purchased, what was sold was a tin of oil and not oil alone, was meant to convey that that goods were sold as composite goods so that a contract to sell the packing material can be inferred or implied fro....
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....nded to the sale value of the gunnies though the gunnies have been found used for packing and selling the salt as a composite transaction. The same view has been taken in A.R. Manickam Chettiar & Sons v. State of Tamil Nadu [1992] 87 STC 134 (Mad.); (1992) 2 MTCR 6 also while considering the issue in respect of the sales of paddy and rice which also were exempted goods while sustaining the levy of tax on the sale value or the price of gunnies used for the sale of rice and paddy. The Division Bench, while dealing with these aspects, has held in the following terms: "The exemption under the Tamil Nadu General Sales Tax Act, 1959 is in respect of sale of paddy and rice. However, when those commodities are packed in gunny bags, the gunny bags cannot be said to lose their physical or commercial identity and merge as if they were part of the foodgrains themselves. The argument that since paddy and rice were exempt from sales tax and, therefore, no tax can be levied on the cost of the gunny bags in which they were packed is futile. When bags of paddy or rice are sold for a price which, as in the instant case as borne out from the reply of the assessee to the notice includes price of gunn....