GOVERNMENT OF ANDHRA PRADESH Vs. GUNTUR TOBACCOS LTD

JUDGEMENT

(1.) I regret my inability to agree. The facts may be briefly stated. The respondent-Company is a dealer carrying on the business of re-drying in its factory raw tobacco entrusted to it by its customers. Its usual course of business may be described thus:A customer gives to the respondent raw tobacco for re-drying. It re-dries it in its factory, packs it in gunny, waterproof paper, bales, etc., and delivers it to the customer. It charges the customer at a consolidated rate for re-drying and for the packing material supplied by it. The proportionate price of the packing material comes to about 25 per cent of the re-drying charges. For the assessment years 1951-52, 1952-53 and 1953-54, the Deputy Commercial Tax Officer assessed the respondent under the Madras General Sales Tax Act, 1939, by different orders, on the sale price of the said packing material. The assessee took the question of his liability through a hierarchy of tribunals, but they all confirmed the assessments made by the Deputy Commercial Tax Officer. It preferred revisions to the High Court of Andhra at Guntur, and the said High Court allowed the revisions. Hence the present appeals.

(2.) Mr. A. Rangandham Chetty, learned counsel for the Revenue, contended that then was a sale of the packing material for price by the respondent to its customers and, therefore, it was liable to pay sales tax on the said sales.

(3.) Mr. Thyagarajan, learned counsel for the respondent, argued that packing was part of the process of re-drying and, therefore, there was no question of any sale of the packing material by the respondent to its customers. He further argued that the necessary ingredient of a sale, namely, a contract to sell, was absent in the transactions between the respondent and its customers and, therefore there were no sales within the meaning of the definition of "sale" in the Madras General Sales Tax Act, 1939.