VISVESVARAYA IRON AND STEEL LTD Vs. DEPUTY COMMISSIONER OF COMMERCIAL TAXES APPEALS MYSORE DIVISION MYSORE

JUDGEMENT

(1.) THESE three sales tax revision petitions arise out of the common order dated March 31, 1984, passed by the Karnataka Appellate Tribunal in Sales Tax Appeal Nos. 123, 124 and 125 of 1983. The questions raised for our determination in these revision petitions are also common. They are as follows :

(2.) THE fact leading to these revision petitions may be stated as follows : These revision petitions relate to three different assessment years, 1972-73, 1973-74 and 1974-75. The petitioner-assessee is M/s. Visvesvaraya Iron and Steel Ltd. , Bhadravati, which, among other things, is a manufacturer of cement. For the relevant assessment years, the assessee-company claimed deduction under rule 6 (4) (ff) of the Karnataka Sales Tax Rules, 1957, of the cost of packing material together with the labour charges for packing provided thereunder. That came to be allowed by the Assistant Commissioner of Commercial Taxes (Assessment), Mysore, by his order dated February 25, 1976, with reference to the year 1973-74. However, his successor-in-office found such allowance or deduction out of the total turnover of the amount spent by the assessee-company on packing material in the sale of cement was impermissible and constituted an error of law and, therefore, proposed to rectify the same under sector 25-A of the Karnataka Sales Tax Act, 1957. Notice in that behalf calling upon the assessee-company to show cause was issued and the assessments concluded were reopened and rectified in the light of the decision rendered by the High Court of Madras in the case of Natarajan and Sons v. State of Tamil Nadu [1977] 39 STC 443 in which the High Court of Madras had held that sale of kerosene in tins impliedly included the sale of the container and as such the cost of container was not liable to be computed out of the total turnover under rule 6 (cc) (i) of the Tamil Nadu General Sales Tax Rules, 1959, which is in pari materia with Rule 6 (4) (ff) of the Karnataka Sales Tax Rules.

(3.) IT is common knowledge that during the relevant assessment years, cement was declared to be a controlled commodity and its sale and distribution were controlled by order made by the Government of India under the provisions of the Industries (Development and Regulation) Act, 1951. Under the provisions of the order so made, price of cement was fixed from time to time and that price was uniform throughout India. The components of such sale price itself was provided in the order. One such component of the price fixed under the Cement Control Order, 1967, was the cost of the packing material. Therefore, it is obvious that cement was envisaged as a controlled commodity and it could not be sold without containers for consumption of the general public. In that view of the matter, sale of cement in bags impliedly included the sale of the bags themselves for which the consumer had paid. If that is the correct position, pressing into service rule 6 (4) (ff) to compute out the turnover relating to the cost of packing material was clearly an error of law which could be rectified under section 25-A of the Act. If that power is exercised and the assessment rectified (we may mention here, due to some unfortunate error, the rectified assessment order of the original assessing authority has not been produced and in its place the original assessment order, which was rectified, has been produced), the second question really does not arise for our consideration at all.