PETITIONER:
JAMANA FLOUR & OIL MILL (P) LTD.
Vs.
RESPONDENT:
STATE OF BIHAR
DATE OF JUDGMENT16/04/1987
BENCH:
MISRA RANGNATH
PATHAK, R.S. (CJ)
CITATION:
1987 AIR 1207 1987 SCR (2)1047
1987 SCC (3) 404 JT 1987 (2) 155
1987 SCALE (1)835
ACT
Bihar Sales Tax Act, 1959 and Roller Mills Wheat Products (Price Control) Order, 1964--Wheat products sold in gunnybags--Whether gunny bags a different commodity and sale thereof assessable to higher rate of tax--Whether there was contract to sell packing material along with the product--Question of fact depending on circumstances of each case.
HEADNOTE
For the year 1964-65, the assessee, a registered dealer, under the Bihar Sales Tax Act, 1959 returned a gross turnover of Rs.53,39,981 which was accepted by the Assessing Officer. He determined the taxable turnover at Rs.52,79,962 representing the sale of wheat products taxable at 2%. He found that the dealer has sold gunny bags in which wheat products had been packed and determined its turnover at Rs.1,37,150 and assessed the same at 4-1/2%.
The First Appellate Authority on assessee’s appeal held that the Assessing Officer was not justified in adding back the price of container in the gross turnover. What he should have done is to tax a portion of the taxable turnover at a different rate or out of the turnover taxable, the price of bags calculated at the rate of 70 paise per 100 kilogram should have been deducted and taxed at the rate of 4-1/2%. The remaining was to be taxed at the rate of 2%.
In the revision before the Tribunal the assessee contended that the demand of sales-tax payable at different rates on the calculated turnover of gunny bags was not at all warranted as no price had been charged for the containers. The Tribunal held that the lower Courts were justified in levying tax at a different rate on the turnover on account of sale of gunny bags in which the wheat products were sold and directed that the Assessing Officer should ascertain from the accounts, the turnover on account of sale of gunny bags as container of wheat products during the period under consideration and assess tax thereon at the prescribed rate of 4-1/2%. The balance turnover shall be assessed at 2%. In the reference the High Court affirmed this view. Dismissing the appeal, 1048
HELD: 1. The Control Order contemplates a net weight which means that the weight of the bag is included in the price to be charged by the dealer. Under the explanation when packing is done in clothbags, a higher rate is admissible. The scheme clearly suggests that the price of gunnybags is inclusive and where cloth-bag is used, a higher price over and above what has been provided for ordinary containers is permitted. [1051C-D]
Commissioner of Taxes v. Prabhat Marketing Company Ltd., 19 STC 84, referred to.
2. The Tribunal rightly came to the conclusion that there was implied agreement of sale of the gunny-bags. Admittedly, gunny bags are a different commodity and sale thereof is assessable to tax at 4V1%. It is not disputed that appellant bought gunny-bags for packing wheat products for the purpose of sale. [1051C]
3. The question as to whether there was an agreement to sell packing material is a pure question of fact depending upon the circumstances found in each case. [1051G-H]
4. The Tribunal and the High Court in the instant case, have recorded a clear finding that there was an implied contract for sale of the gunny bags with the products contained therein. [1051H]
JUDGMENT
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 103 of 1975.
From the Judgment and Order dated 19.4.1974 of the Patna High Court in Taxation Case No. 21 of 1970. S.K. Dhingra and K.B. Rohtagi for the Appellants. D .N. Goburdhan and D. Goburdhan for the Respondents. The Judgment of the Court was delivered by
RANGANATH MISRA, J. This appeal is by special leave. Challenge herein is to the decision of the Patna High Court rendered on a reference under Section 33(1) of the Bihar Sales Tax Act, 1959. The following question was referred to the High Court for its opinion, by the Commercial Taxes Tribunal of Bihar:- 1049
"Whether in the facts and circumstances of the
case, the direction of the Tribunal to ascer-
tain the price of the containers (gunny bags)
of wheat products sold for an all inclusive
price under the provisions of the Roller Mills
Wheat Products (Price Control) Order, 1964,
for taxing the same at a higher rate of 4-1/2
% is legally valid? For the year 1964-65, the assessee, a registered dealer, under the Bihar Sales Tax Act returned a gross turnover of Rs.53,39,981 which was accepted by the assessing officer. He determined the taxable turnover at Rs.52,79,962 representing sale of wheat products taxable at 2 per cent. He found that the dealer had sold gunny bags in which wheat products had been packed and determined its turnover at Rs. 1,37,150 and assessed the same at 4-1/2 %. The First Appellate Authority on assessee’s appeal held:
"The learned Assessing Officer was not justi-
fied in adding back the price of container in
the gross turnover. What he should have done
is to tax a portion of the taxable turnover at
a different rate or in other words out of the
turnover taxable under the Bihar Sales Tax
Act, the price of bags calculated @ Rs.O.70
paise per hundred kilogram should have been
deducted and taxed @ 1/2%. The remaining was
to be taxed @2%
The dealer filed a Revision before the Tribunal and contended that the demand of sales-tax payable at different rates on the calculated turnover of gunny bags was not at all warranted as no price had been charged for the containers. The Tribunal found:-
"(1) The dealer transferred the property in
the gunny bags, the packing material, to the
purchasers f:or price.
(2) The price of the gunny bags was included
in the consolidated rates of price charged by
the dealer.
(3) There was an implied agreement for the
sale of gunny bags between the dealer and the
different purchasers to whom the wheat
products were supplied.
(4) The transfer of gunny bags was impliedly
covered by the contract of sale with regard to
the wheat products.
1050
On these findings the Tribunal held:-
"We hold that the learned lower courts were
justified in levying tax at a different rate
on the turnover on account of sale of gunny
bags in which the wheat products were sold."
It further found:-
"The learned Deputy Commissioner has
given a direction for determination of the
turnover on account of sale of gunny bags. On
being asked the applicant accepted that the
accounts maintained by him would reveal the
exact number of gunny bags used in the trans-
action of sale under consideration as also the
price of the same. Hence we direct in modifi-
cation of the orders passed by the learned
Deputy Commissioner in this behalf that the
learned Assessing Officer should ascertain
from the accounts, the turnover on account of
sale of gunny bags as container of wheat
products during the period under consideration
and assess tax thereon at the prescribed rate
of 4-1/2 %. The balance turnover shall be
assessed at 2%"
Reliance was placed on the provisions of
clause (3) of the Roller Mills Wheat Products
(Price Control) Order, 1964. That clause
provides:-
"3. Maximum ex-mill prices of wheat products.
"No owner or other person in charge of a
roller mill shall sell, or offer for sale,
ex-mill any of the wheat products specified in
column 1 of the Schedule II to this Order--
(
a
)
...............................................
(b) In the State of Maharashtra (excluding
Greater Bombay) and in any other State (not
being a State specified sub-clause (a), to
which this Order applies, at a price exceeding
the price specified against the clause 3
thereof.
Explanation :-The prices referred to in this
clause are:
(i) Exclusive of:
1051
(
a
)
...............................................
(
b
)
...............................................
(ii) for net weight (inclusive of the cost of
the bag), but where wheat products are sold in
cloth bags in quantities of 40 kgs. net, 20
kgs. net and 10 kgs. net, a sum of 70 np. 37
np. and 19 np. respectively, towards the cost
of the cloth bag may be charged in addition to
the said prices."
In our view, the Tribunal rightly came to the conclusion that there was implied agreement of sale of the gunny bags. Admittedly gunny bags are a different commodity and sale thereof is assessable to tax at 4-1/2 %. It is not disputed that appellant bought gunny bags for packing wheat products for the purpose of sale. The Control Order contemplates a net weight which means that the weight of the bag is included in the price to be charged by the dealer. Under the explanation when packing is done in cloth-bags, a higher rate is admissible. The scheme clearly suggests that the price of gunny bags is inclusive and where cloth-bag is used, a higher price over and above what has been provided for ordinary containers is permitted.
This Court in Commissioner of Taxes v. Prabhat Marketing Company Ltd., 19 STC 84 has held:-
"In Hyderabad Deccan Cigarette Factor)’ v. The
State of Andhra Pradesh, (17 STC 624) it was
held by this Court that in a case of this
description what the Sales-tax Authorities had
to do was to ask and answer the question
whether the parties, 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 an exempted article (here exigible to tax
at redical rate), and packing materials did
not form part of the bargain at all, but were
used by the sellers as a convenient and cheap
vehicle of transport." In that decision it was further pointed out that the question as to whether there was an agreement to sell packing material was a pure question of fact depending upon the circumstances found in each case. The Tribunal and the High Court have recorded a clear finding that there was an implied contract for sale of the gunny bags along with the products contained therein. 1052
In this Court, the assessee filed an affidavit and produced a communication purporting to be of the Regional Director (Food), Eastern Region, Government of India, dated July 23, 1957. This not being the part of the record and the affidavit having been filed at a belated stage has got to be rejected.
There is no scope to dispute the assessability of sales-tax on the turnover of gunny bags. This appeal fails and is dismissed. Parties are directed to bear their own costs. A.P.J. Appeal dismissed. 1053