UNION OF INDIA Vs. PALAM POTTERIES

JUDGEMENT

(1.) The question for determination in the present appeal is whether the order of appellant No. 3 dated January 16, 1975, deleting the packing materials, Nails, Packing cases, strips from the registration certificate of the respondent-dealer (depriving the dealer of the benefit of exemption from payment of sales-tax on the said packing materials), was lawful and proper. M/s. Palam Potteries, the writ petitioner in C. W. Petition No. 249 of 1975 challenged the deletion of the said items from the Registration Certificate as contrary to Section 5(2)(a)(ii) of the Bengal Finance (Sales-tax) Act, 1941 (as extended to the Union Territory of Delhi) and the rules framed thereunder.

(2.) The learned Single Judge, Rangarajan J., by his order of April 15, 1975 quashed the impugned order and directed that the matter be re-heard after giving proper opportunity to the respondent-Assessce. For answering the said question, it is necessary to decide whether under the relevant provisions of the Bengal Finance (Sales-tax) Act, 1941 (as extended to the Union Territory of Delhi) a dealer who manufactures goods for sale is entitled to deduct from his gross turnover the amount spent by him for containers or other materials for the packing of goods manufactured for the purposes of sales. It is not in dispute that the respondent-dealer's registration certificate since the year 1962-63 included the packing materials mentioned above (thereby permitting the dealer to exclude from the gross turn-over the amounts spent on the packing material) and it was after thirteen years that the said benefit was taken away by the impugned order.

(3.) For proper appreciation of the problem it is necessary to understand the importance of packaging in the modern commercial life Encyclopaedia Britanica, 1969 (Edn.) succinctly summarised them as follows: