LALCHANDRA SHYAM SUNDER Vs. COMMISSIONER OF SALES TAX

JUDGEMENT

(1.) THE Board of Revenue, Madhya Pradesh, Gwalior, which is the Tribunal constituted under the M. P. General Sales Tax Act, 1958 (in short "the Act") has referred the following three questions to this Court under Section 44 (1) of the Act, for its opinion:

(2.) THE facts in brief necessary to appreciate the import of the questions referred to us are that the assessee-applicant is a sole selling agent of M/s. Udhavji Shrikrishna Das, Satna, who are manufacturers of bidis. The manufacturers supply bidis to the applicant duly packed and it sells the same in the same form and condition. The applicant sells bidis in the course of inter-State trade without using any bardana of its own. During the accounting year 4th November, 1975 to 23rd October, 1976 bardana worth Rs. 43,474 is said to have been used in the inter-State sale of bidis, after 1st September, 1976. Even without recording a finding that factually bardana also was sold by the applicant along with bidis and price therefor was realized by it, sales tax on the price of bardana was also imposed on the view that the sale of bardana was to be inferred, inasmuch as bidis which were sold were contained in the bardana. The order of the assessing officer having been affirmed on appeal as also on second appeal by the Tribunal an application was made by the assessee under Section 44 (1) of the Act and on that application the aforesaid three questions were referred to this Court, as already indicated above.

(3.) THE real question for our consideration in the instant case is as to whether it was open to the assessing authority to presume that there was an implied sale of bardana along with the sale of bidis and whether in the absence of any finding that as a fact the applicant did sell bardana also for separate consideration, it was open to the taxing authorities to assess sales tax on the price of bardana on the basis of assumed sale thereof. In Hyderabad Deccan Cigarette Factory v. State of Andra Pradesh [1966] 17 STC 624, it was held by the Supreme Court that whether there was an agreement to sell the packing materials was a pure question of fact and that question could not be decided on fictions or surmises. The burden lay upon the Commercial Tax Officer to prove that a turnover was liable to tax and he could ask the assessee to produce the relevant material. If the assessee did not produce the same, he could draw adverse inferences against the assessee, but he had to decide the crucial question whether the packing materials were the subject of the agreement of sale, express or implied. It was further held that in order to constitute a sale, it was necessary that there should be an agreement between the parties for the purpose of transferring title to goods, that it should be supported by money consideration and that as a result of the transaction property should actually pass in the goods. Unless all these elements were present there could be no sale. In the instant case, no finding has been recorded by the taxing authorities on the aforesaid relevant points. They have just presumed that there was implied sale of bardana also. As pointed out by the Supreme Court, the question as to whether there was any agreement to sell the packing material was a pure question of fact and that question could not be decided on fictions and surmises. In Commissioner of Sales Tax, M. P. , Indore v. Bhopal Sugar Industries Ltd. , Sehore1981 MPLJ 395, a Division Bench of this Court with regard to the question as to whether the assessee was liable to pay sales tax on the price of gunny bags containing sugar which was sold, held that the assessee was not liable to pay sales tax. It was pointed out that the property in the gunny bags no doubt passed to the purchasers of sugar and the gunny bags did not become useless in the hands of the purchaser. But before holding that there was an implied sale of containers, one has to exclude the possibility that the containers were used by the dealer as a convenient and cheap mode of transporting the goods to the purchaser without charging any price for them. It has also to be kept in mind that the burden of proof that there was an implied sale of packing material or container is on the department and the assessee is not required to prove the negative.