MEWAR SUGAR MILLS LTD Vs. STATE OF RAJASTHAN

JUDGEMENT

(1.) THIS is a reference from the Single Bench constituted by Shri R. N. Madhok, Member of this Board, to this larger Bench to decide the question of law whether gunny bags in which sugar is sold by the assessee company, that is, the Mewar Sugar Mills Limited, Udaipur, are liable to sales tax or not.

(2.) BRIEFLY, the facts of the case are that the Mewar Sugar Mills are the manufacturers of sugar. They sell sugar in gunny bags. The sale of sugar is exempted from the sales-tax for the reason that a separate excise duty under a Central Act is charged on the manufacture of sugar. After the sugar was exempted from sales tax the Sales Tax Officer assessed the company on the turnover of the gunny bags in which the sugar was supplied for the period 1957 to 1960. The Deputy Commissioner, in appeal, upheld the order of the assessing authority. Aggrieved by that order, a revision petition was filed in the Board of Revenue. The case was argued before the Single Member who constituted the Bench. It was the contention before him that in a decision of this Board in Sales Tax Revision No. 127/61 (Chittorgarh) decided on 10-9+1962 it has already been held that an assessee was not liable to sales tax on the gunny bags in which the sugar was sold. The Government Advocate on the other hand, contended that in the decision of the Hyderabad High Court in the case of Nizam Factory Limited versus the Commissioner of Sales Tax Hyderabad, a similar point arose and it was held by their Lordships of the High Court that the gunny bags in which the sugar was sold were not so inseparably integrated with sugar that they had lost their identity, and therefore the tax was leviable on the turnover of the gunny bags. The single Member was thus persuaded to follow the ruling of the Hyderabad High Court, and not that of this Board in which no case law had been discussed. As he could not pass an order differing from the view taken by the Division Bench of this Board, he had no alternative but to refer this case to this larger Bench.