1972 (6) TMI 66 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the packing material provided by the dealers was subject to sales tax.
2. Whether there was an implied sale of the containers along with the snuff to the purchasers.

Analysis:
The case involved dealers in snuff challenging an assessment under the Tamil Nadu General Sales Tax Act for the year 1958-59. The Additional Commercial Tax Officer determined the total turnover, considering the purchase of packing material separately. The dealers contended that only the snuff was sold, not the packing material, and objected to the assessment. The Appellate Assistant Commissioner and the Tribunal upheld the assessment, leading to a revision petition by the dealers.

The petitioners argued that the packing materials were given to customers for free, and the price charged only represented the snuff's cost, with no intention to sell the packing materials. Citing a Supreme Court decision, the petitioners emphasized that sales tax can only be imposed if there was a sale of packing material to the purchasers. The key issue was whether there was an implied sale of the containers to the purchasers along with the snuff.

The court referred to a Supreme Court case regarding the concept of "implied sale" of packing materials in a sale transaction. The court analyzed the pricing structure of the snuff, which included the value of the containers, indicating that the containers were not of insignificant value. The court found that the sale price indeed included the value of the packing material, supporting the tax assessment.

The petitioners argued that since the containers had no resale value to the purchasers, there was no intention to sell them. However, the court rejected this argument, noting that the containers' value was factored into the sale price, and the goods were sold as packed with the containers. Therefore, the ground that the containers had no resale value was not considered valid.

Ultimately, the court dismissed the revision petition, upholding the tax assessment and ordering the petitioners to pay costs. The judgment emphasized that the value of the containers was included in the sale price of the snuff, leading to the conclusion that there was an implied sale of the containers along with the snuff to the purchasers.