NIMAR COTTON PRESS Vs. SALES TAX OFFICER

JUDGEMENT

(1.) By this application under Article 226 of the Constitution of India, the petitioner seeks a writ of certiorari for quashing an order of assessment of the Sales Tax Officer, Khandwa, imposing on him sales-tax of Rs. 1291-3-0 and a penalty of Rs. 800/- for his failure to apply for registration under the Central Provinces and Berar Sales Tax Act, 1947. The assessment was made in the following circumstances.

(2.) The petitioner is the proprietor of a cotton pressing concern at Khandwa. The business of the concern consists in pressing and baling ginned cotton supplied by merchants. The cotton is delivered by the petitioner to his clients in bales covered with hessian cloth and secured by iron hoops. The petitioner charged an inclusive rate for pressing and for packing. The Sales Tax Officer held that the applicant was liable to pay sales-tax on the value of hessian cloth and iron hoops used in the baling process and accordingly made an assessment of sales- tax for the period front 1st September 1956 to 31st August 1957. He relied on the decision of a Division Bench of this Court in Jaikishan Gopikishan v. Commissioner, Sales Tax, 1957 MFC 94: 1957-8 STC 286: ((S) AIR 1957 Madh Pra 40) where it was held with reference to the Madhya Bharat Sales Tax Act, 1950, that the owner of a ginning and pressing factory carrying on the business of baling and pressing cotton supplied by the customer and of delivering the pressed cotton in the form of bales covered with hessian cloth and secured by iron hoops, and making a consolidated charge for the pressing as well as packing was liable to pay sales tax on the value of hessian and iron hoops used in the baling process as these materials were goods and there was a sale in regard to them when the assessee transferred the property in those goods to the customers for consideration. The Sales Tax Officer determined the value of hessian cloth and iron hoops by adding ten per cent as "reasonable margin profit" to the price paid by the assessee for the purchase of hessian and hoops. He found the purchase price paid by the assessee was Rs. 38,736/- and after making the ten per cent addition determined the sale price of hessian and hoops used in the baling process at Rs. 42,610/-.

(3.) The present petition is founded mainly on the ground that the decision in 1957 MPC 94: 1957-8 STC 286: ((S) AIR 1957 Madh Pra 40) (supra) was contrary to the later decisions of the Supreme Court in State of Madras v. G. Dunkerley and Co., AIR 1958 SC 560, and Banarasi Das v. State of M. P., AIR 1958 SC 909; that the Sales Tax Officer should have held on the authority of the Supreme Court decisions that the transaction of the supply of ginned cotton by merchants to the petitioner for pressing and baling and of the delivery by the petitioner to the merchants of the pressed cotton in the form of bales was a works contract; that in the absence of an agreement between the petitioner and the merchant concerned with regard to the sale and purchase of hessian and iron hoops it could not be held that there was a sale of this material in the transaction; that, therefore, the petitioner was not liable to pay any sales-tax on the value of hessian and iron hoops used by him in the baling process; and that such an agreement could not be inferred merely by the circumstance that a consolidated charge was made for pressing and packing. When this petition first came up for hearing before a Division Bench, Shri Dabir, learned counsel for the assessee, urged that the decision in the case of M/s Jaikishan Gopikishan, 1957 MPC 94: 1957-8 STC 286: ((S) AIR 1957 Madh Pra 40) (supra) required reconsideration in the light of the judgments of the Supreme Court in the two cases referred to above. The Division Bench thought it desirable that the present case should be heard by a larger Bench as the argument advanced by the learned counsel raised various important questions, one of them being whether the authority of 1957 MPC 94: 1957-8 STC 286: ((S) AIR 1957 Madh Pra 40) (supra) was in any way weakened or destroyed altogether in its application to the present case because of the two decisions of the Supreme Court. Accordingly the matter has come up before us.