ATMARAM MANAKLAL Vs. COMMISSIONER OF SALES TAX

JUDGEMENT

(1.) BY this reference under Section 44 of the M. P. General Sales Tax Act, 1958, hereinafter called the Act, at the instance of the assessee, the following question of law has been referred to this Court for its opinion :

(2.) THE material facts giving rise to this reference briefly are as follows: The assessee is a dealer in cotton bales and has been assessed to sales tax under the Central Sales Tax Act for the year 1966-67. During this period, the assessee sold 1,842 bales of cotton for Rs. 4,94,914. The assessee contended that the sale was in respect of cotton only and that no price was charged in respect of packing materials consisting of bardana and patti. It was also contended by the assessee that the price of cotton charged was for net weight of cotton. The assessee also produced certificates from the purchasers to prove its contention that it had sold cotton alone and that no payment was made for packing material. The assessing authority rejected the contention of the assessee and held that there was an implied sale of packing material. On appeal; the Appellate Assistant Commissioner upheld the order of the assessing authority. On further appeal, the Board of Revenue held that in the light of the decisions of this Court in Vimalchand v. Commissioner of Sales Tax, M. P. 1968 M. P. L. J. 665 and Nimar Cotton Press v. Sales Tax Officer [1961] 12 S. T. C. 313 (F. B.), the contention of the assessee that there was no sale of packing materials was liable to be rejected. Aggrieved by the order of the Board the assessee submitted an application for making a reference to this Court, and it is at the instance of the assessee that the aforesaid question of law has been referred to this Court for its opinion.

(3.) NOW, the burden lay upon the department to prove that there was an implied sale of packing material. The Board has assumed that whenever goods, which are packed, are sold, there is an implied sale of packing material. But, as held by the Supreme Court in 'hyderabad Deccan Cigarette Factory v. State of A. P. [1966] 17 S. T. C. 624 (S. C.), the question as to whether there is an agreement to sell the packing material cannot be decided on fictions or surmises. The finding that there is an implied sale of packing material has to be arrived at on the basis of facts in each case. In Vimalchand v. Commissioner of Sales Tax, M. P. 1968 M. P. L. J. 665, on which reliance has been placed by the Board,: it was observed as follows : It must be noted that in Chidambara Nadar Sons and Co. v. State of Madras [1960] 11 S. T. C. 321, the Madras High Court held that where there is an agreement to purchase cotton to be delivered by the seller to the buyer, it is implicit in the contract that the goods should be delivered as packed ; and that in such a case a contract to pay for and purchase the packing materials can be implied and the turnover relating to the packing materials would be liable to sales tax. This decision of the Madras High Court was approved by the Supreme Court in Government of Andhra Pradesh v. Guntur Tobaccos Ltd. [1965] 16 S. T. C. 240 at 250 (S. C. ). While noting the decision of the Madras High Court, the Supreme Court observed (at page 250):