AMBAL AND COMPANY Vs. GOVERNMENT OF MADRAS

JUDGEMENT

(1.) THE petitioners are dealers in snuff and for the assessment year 1958-59, the total turnover determined by the Additional commercial Tax Officer, North Madras , was Rs. 13, 00, 695. 47 under the Tamil Nadu General Sales Tax Act. THE account books of the petitioners revealed purchase of packing material to the value of Rs. 1, 28, 018. 88 and the balance out of the total turnover determined, represented the actual value of the snuff sold. Snuff is exempted from sales tax and, therefore, only the value of the packing material was subjected to tax. THE petitioners objected to this assessment and filed an appeal against the order contending that the entire turnover represented the sale of snuff and there was no sale of packing material as such. It may be mentioned that in the bills for sale of snuff the packing materials have not been separately specified and charged by the petitioners. THE appeal was dismissed by the Appellate Assistant commissioner. THE Tribunal confirmed the order.

(2.) IN this revision petition, the petitioners contended that the packing materials were given to the customers free and the price charged in the bill represented only the cost of the snuff and that they had no intention to sell the packing materials. As held by the Supreme Court (sic) in the latest decision in Binod Mills Co. Ltd. v. Commissioner of Sales Tax sales tax can be imposed only on the basis that the dealer sold the packing material to the purchasers of goods. For coming to the conclusion that there was sale of packing material, it has to be found that there was an agreement, express or implied, for the sale of packing material for a price to be paid by the customers. IN the present case, it is not disputed that there was no express agreement for the sale of packing material and no price was separately charged for its sale. The only point, therefore, is whether there was any implied sale of the containers to the purchasers. IN Hyderabad Deccan Cigarette Factory v. State of A. P. the Supreme Court in dealing with the question of "implied sale" of packing materials in the sale of cigarettes made the following observations : "in the instant case, it is not disputed that there were no express contracts of sale of the packing materials between the assessee and its customers. On the facts, could such contracts be inferred " The authority concerned should ask and answer the question whether the parties in the instant case, having regard to the circumstances of the case, intended to sell or buy the packing materials, or whether the subject-matter of the contracts of sale was only the cigarettes and that the packing materials did not form part of the bargain at all, but were used by the seller as a convenient and cheap vehicle of transport. He may also have to consider the question whether, when a trader in cigarettes sold cigarettes priced at a particular figure for a specified number and handed them over to a customer in a cheap cardboard container of insignificant value, he intended to sell the cardboard container and the customer intended to buy the same " It is not possible to state as a proposition of law that whenever particular goods were sold in a container the parties did not intend to sell and buy the container also. Many cases may be visualised where the container is comparatively of high value and sometimes even higher than that contained in it. Scent or whisky may be sold in costly containers. Even cigarettes may be sold in silver or gold caskets. It may be that in such cases the agreement to pay an extra price for the container may be more readily implied."