TaxTMI 
TaxTMI 
2015 (4) TMI 1090
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....for consideration, in brief, are as follows:- "The appellant is a registered dealer on the rolls of the Commercial Tax Officer, Seetharampuram, Vijayawada. The appellant is engaged in the business of manufacture and sale of cement. Cement is taxable under item 18 of first schedule; and, HDPE bags are taxable under the then relevant item 188 of first schedule to the said Act. The appellant was finally assessed for the assessment year 1991-92 under the APGST Act by the Commercial Tax Officer concerned ('the CTO' for short) and the CTO had passed final orders dated 17.03.1996 levying tax at the rate of 14.05% on the turnover of Rs. 4,80,86,526/- representing the amount received by the dealer towards the sales of packing material i.e., HDPE bags/gunnies in which the cement was packed and sold. The CTO had thus levied tax at a higher rate i.e., on a rate on par with the rate of tax that was applicable to the sale of cement in that assessment year by invoking the provision of Section 6-C of the Act. Aggrieved of the said orders of the CTO, the appellant had preferred an appeal before the Appellate Deputy Commissioner (CT) ('the ADC' for short) by inter alia conte....
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....nted exemption in the hands of the appellant as second or subsequent sale. The sale invoice is itself a contract between the appellant and its buyer. The buyers had consciously paid for cement and packing material on independent terms. There is an express/implied sale of packing material. The appellant had separately charged for cement and packing material in the invoice. The payments were made accordingly. The HDPE bags are specifically taxable under the then relevant item 188 of first schedule. There will not be any chemical or physical change in the bag after emptying the cement. The same are durable and re-usable. The packing material is used for convenience of transport; and, the quantity of goods as such is not dependant upon packing. The cement was sold in quantities of metric tonnes as is evident from the invoice. The rate of cement and the cost of packing material are separately shown in the invoice. The facts of the case and the documents produced clearly established that there is a separate sale of packing material and there is no integrated sale of cement with HDPE bags/packing material. The appellant has not provided the bag free of cost considering the significant cos....
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....his Court. In case of commodities like Cement, the packing and the tolerance requirements of the packing material shall be in accordance with relevant provisions of the Standards of Weights and Measures (packaged commodities) Rules, 1977 ('the Rules' for short) and the standards prescribed by Bureau of Indian Standards ('the BIS' for short). The manufacturing process of cement in this case would show that the cement ultimately produced is being conveyed to automatic electronic packers and is being packed in 50 Kg polythene bags for dispatch in trucks. As per relevant Rules and the standards prescribed, any cement shall be packed in bags of whatever kind suitable and be delivered in bags/packing material and even the bags like HDPE bags must conform to the standards. Therefore, the contention that the cement and the bags are separately sold cannot be countenanced. The sale must be construed as an integrated sale. The question whether there is an agreement to sell packing material is a pure question of fact and it depends upon the circumstances that may be found in each case. Therefore, it is the duty of the appellant to discharge the burden of proof and establish tha....
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....ain (1974) 33 STC 536 (MP)" 7. Now the points that arise for consideration in this appeal are:- "(i) Whether the appellant/dealer had established that the sale of cement and the containers/bags is not an integrated sale and that the sale of cement and HDPE bags/packing material i.e., the containers are distinct and separate sales and that there was a contract express/implied for such separate sales of cement and the bags/packing material. (ii) Whether, in the facts and circumstances of the case, the Order of the Commissioner/respondent is liable to be set aside and the order of the ADC and the consequential order of the CTO are to be restored as contended by the appellant/dealer" 8. POINTS 1 and 2: 8. (a) There is no dispute with the facts, which are narrated supra. We have given earnest consideration to the facts, the submissions and the law applicable. The appellant is contending that there is a contract and that it is the agreement and intention of the parties that the sales of cement and packing material/HDPE bags are distinct and separate sales and that the sale of cement with packing material is not an integrated sale and that therefore, the packing....
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.... factors as above, having regard to the facts of the cited case, had observed as follows:- "We are constrained to observe that no attempt has been made by the tax authorities to ascertain the facts of each case and to determine what were the actual ingredients of the contract and the intention of the parties........... We are unable, in the circumstances, to hold that the cases can be regarded as disposed of finally. It is regrettable but the cases must go back for proper findings on facts to be ascertained on fuller investigation. In the circumstances, the appeals are allowed, the impugned judgment and order of the High Court in the several cases are set aside and the cases are remanded to the High Court for further consideration and disposal in the light of the observations made by us. In the case of the writ petitions before us, the assessing authority will allow the dealer to show cause and thereafter upon evidence led before it determine the matter." In Vasavadatta Cements v. State of Karnataka and another (1996) 101 STC 168 (SC) the Hon'ble Supreme Court while following the ratio in the above-cited decision, had held as follows:- "The appeals....
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....sable to sales tax under the Act if there was an express or implied agreement for the sale of such containers and the mere fact that the price of the containers was not separately fixed made no difference to the assessment of sales tax. The question as to whether there is an agreement to sell packing material is a pure question of fact depending upon the circumstances found in each case." In Jamana Flour and Oil Mill (P) Ltd., v. State of Bihar (7 supra) the Supreme Court had considered the ratio in the before mentioned cited case. In State of Tamil Nadu v. E.I.D. Parry (India) Ltd., (8 supra) the facts show that the respondent dealer had sold sugar, a controlled and exempted commodity, in gunny bags and chemicals in plastic jerricans. The assessing authority brought to tax an estimated turnover of gunny bags and the turnover of plastic jerricans for the years, which are relevant. He had disallowed the exemption under Section 6(2) of the Central Sales Tax Act, 1956 for failure to file the declarations in form E-1. On appeal, the appellate Assistant Commissioner had allowed exemption on the gunny bags and confirmed the assessment order in other respects. The respondent a....
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....s that of the goods packed or filled, whether or not there is separate sale or agreement for sale for the packing material and the goods packed or filled." In the present case the assessment year being 1991-1992, the section 6C as it stood prior to its amendment in 1995 is applicable. Section 6-C prior to its amendment reads as under:- "6-C Levy of tax on packing material: Notwithstanding anything in Sections 5 and 6-A, where goods packed in any materials are sold or purchased, the materials in which the goods are so packed shall be deemed to have been sold or purchased along with the goods and the tax shall be leviable on such sale or purchase of the materials at the rate of tax, if any, as applicable to the sale, or, as the case may be, purchase of goods themselves." 8. (c) In the amended new Section 6-C the words 'whether or not there is separate sale or agreement for sale for the packing material and the goods packed or filled' were introduced. Therefore, the amended section provides that the rate of tax on packing material sold with the goods shall be the same as that of the packed or filled"whether or not there is separate sale or agreement for sale ....
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.... Firstly, there should be no agreement about charging freight separately and, secondly, it should not be charged separately, but it should be a part and parcel of the total sale price that the assessee-dealer might charge the purchaser-customer. If these two things are present, the amount of freight or other sundry expenses can be said to constitute a part of the sale price. But, if there be other materials to show that there was agreement in this behalf not to charge freight so as to be included in the sale price, in that event, the freight cannot at all be made a part and parcel of the sale price and the bills would certainly constitute inclusive piece of evidence. But they cannot be treated to be a conclusive piece of evidence. After all, the presumption arising on account of the recitals in the bills would be rebuttable and if there be other material, in that event, and on proof of the two things, namely, that there was an agreement not to charge freight as part of the price and that actually it was not so charged, the freight cannot constitute a part and parcel of the sale price as defined by section 2(o) of the M.P. General Sales Tax Act, 1958." In the case on hand, there ....
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....case has to be made having regard to the facts of the instant case as per the ratios in the decisions, particularly, the decisions of the Supreme Court. The decision in Bengal Electric Lamp Works Ltd., v. State of Gujarat (1 supra) was rendered by the High Court of Gujarat. Even in that decision the Gujarat High Court found that the decision was rendered by the Tribunal being very much conscious of the fact that the facts and circumstances before the tribunal were entirely different from the cases cited before it. The decision in Dalmia Cement (Bharat) Limited v. State of Tamilnadu (2 supra) was rendered by the High Court of Madras. In this decision, it was pointed out that the proper way to locate the transactions would be to find out whether there was express/implied agreement between the parties to sell the goods along with the packing materials; and, in that case there is an implied agreement to sell magnesite in gunny bags. In the decision in Annapurna Insecticides Industries v. Commissioner of Commercial Taxes (3 supra) this High Court remanded the matter to the Commissioner with a direction to consider the matter afresh taking into consideration the entire correspondence etc....