TaxTMI 
TaxTMI 
2025 (8) TMI 406
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.... dated 11 October 2002 in Appeal No. 170 of 1997, made by the Maharashtra Sales Tax Tribunal ("the Tribunal"). The Reference Application No. 2 of 2003 was disposed of by the Special Bench by Judgment and Order dated 19 November 2005, referring the following questions to this Court for its decision: (i) "Whether on the facts and in the circumstances of the case and on true and correct interpretation of Section 15A of the Bombay Sales Tax, 1959, the Tribunal was justified in law in holding that section 15A is not a changing section and does not create any levy but merely declares the rate of tax? (ii) Whether on the facts and true interpretation of the case and on true interpretation of this contract for sale of packed cement, whether the Tribunal was justified in holding that there is an express and independent contract for sale of HDPE bags in which cement was sold?" 3. The Respondent M/s. Associated Cement Company Limited ("ACCL") is a manufacturer of cement, with factories located across the country, including at Chandrapur in the state of Maharashtra. For the period 01 April 1991 to 31 March 1992, ACCL was assessed by the Assistant Commissioner of Sales Tax,....
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....the Hon'ble Supreme Court in the case of Raj Sheel and Ors. V/s. State of Andhra Pradesh and Ors., the Tribunal was not justified in ruling that there was an explicit and independent contract for the sale of HDPE bags in which the cement was sold. 9. Ms. Chavan also submitted that Section 15A of the Bombay Sales Tax Act, 1959, was a charging provision and not a provision merely declaring the rate of tax. She submitted that the title to the Section or the marginal note is never conclusive in such matters. By referring to the actual provisions, she contended that the provision was a charging provision and not a provision dealing with the rate of tax. 10. Mr. Joshi, the learned counsel for ACCL, contested the above contentions. He submitted that the Tribunal, after detailed consideration of the decision in Raj Sheel (supra) and applying its ratio to the facts borne out from the record, has correctly concluded that there was an express and independent contract for the sale of HDPE bags in which ACCL sold the cement. He submitted that since this conclusion was backed by overwhelming evidence on record, this Court should consider endorsing the view expressed by the Tribunal in its ....
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.... the sale are. 17. The Hon'ble Supreme Court further held that it is not right in law to pick one ingredient only to the exclusion of the others and deduce from it the character of the transaction. For example, the circumstance that the price of the product and the price of the container are shown separately may be evidence that two separate transactions are envisaged, but that circumstance alone cannot be conclusive of the true character of the transaction. It is not unknown that traders may, for the advantage of their trade, show what is essentially a single sale transaction of product and container, or a transaction of a sale of the product only with no consideration for the transfer of the container, as divisible into two separate transactions, one of sale of the product, and the other a sale of the container, with a distinct price shown against each. Similarly, where a deposit is made by the purchaser with the dealer, the deposit may be pursuant to a transaction where there is no sale of the container and its return is contemplated, and in the event of its not being returned the security is liable to forfeiture. Alternatively, it may be a case where the container is sold....
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....ute bays or paper bags. On specific bulk orders, it is also supplied through specially built tankers. (ii) Most of the sales are to stockists appointed by the company. It is not sold in retail to individual retailers or customers except consumers like Mumbai Municipal Corporation or Public Works Department. (iii) Sale bills are issued in respect of each and every sale. In the sale bills issued, packing charges are separately shown. HDPE bags are purchased from registered dealers. The resale claims made exclusively for HDPE bags. No resale claim is made for packing material such as Jute bags and paper bags. (iv) Price of bags (HDPE) and cement are separately fixed. Price of bags is fixed at Mumbai after taking into consideration several factors such as investment made, overhead expenses and profit. Prices of cement are fixed depending upon demand and supply position, during a particular period and the competitors' price in the region. (v) When an order is placed by the stockist, he is informed of the separate consideration which he will have to pay for HDPE bags and for cement. The transaction of supply of HDPE bags for a particular considerat....
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....fiction or surmises. The Hon'ble Supreme Court also held that the burden lies on the Revenue to prove that a turnover is liable to tax. No doubt, the Revenue can require the Assessee to produce the relevant material and where such material is not produced, the Revenue can also draw an adverse inference. The Hon'ble Supreme Court also held that the parties could rely on oral statements, accounts and other documents, personal inquiries and relevant circumstances such as the nature and the purpose of the packing materials used. 23. The Revenue, in this case, produced no material to discharge the burden which the law had placed upon it. The Tribunal has recorded that the ACCL produced certificates received from stockists/customers, a set of sale bills issued by ACCL, copies of trial balance showing separate account codes for the sale of cement and an audited certificate certifying the separate sale of packing materials. The Tribunal has also referred to the statement showing the price of packing compared with the cement price with supporting invoices, purchase orders received from customers, registration certificates showing packing as traded goods, packing monthly price circulars, ....
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....the product does not make the sale of packing an integral part of the sale of the product. 27. The Hon'ble Supreme Court has clarified that the question whether there was an agreement to sell the packing materials is purely factual, and such a question cannot be determined based on fiction or conjecture. The Hon'ble Supreme Court also held that the burden rests on the Revenue to prove that a turnover is subject to tax. Therefore, after examining the material on record and considering the factors highlighted by Ms Chavan, we see no reason to overturn the findings of fact or the conclusion reached by the Tribunal in these cases. 28. Accordingly, for all the above reasons, in the facts and circumstances of the present case, we answer the second question referred for our determination against the Revenue and in favour of the Assessee, i.e. ACCL, 29. Regarding the first question referred for our decision, we believe that no ruling is necessary at this point, as we have upheld the Tribunal's findings that there was an independent and separate contract for the sale of HDPE bags in which the cement was sold. The first question might have had relevance if we had answered the second....
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....ed upon a consideration of several components, including the value of the packing material, but none the less the price is the price of the goods. It is not open to anyone to say that the value of the different components which have entered into a determination of the price of the goods should be analysed and separated, in order that different rates of tax should be applied according to the character of the component (for example, packing material). What section 6-C intends to lay down is that even upon such analysis the rate of tax to be applied to the component will be the rate applied to the goods themselves. And that is for the simple reason that it is the price of the goods alone which constitutes the transaction between the dealer and the purchaser. No matter what may be the component which enters into such price, the parties understand between them that the purchaser is paying the price of the goods. Section 6-C merely clarifies and explains that the components which have entered into determining the price of the goods cannot be treated separately from the goods themselves, and that no account was in fact taken of the packing material when the transaction took place, and tha....