1980 (1) TMI 180 - HC - VAT and Sales Tax

Summary

Issues:
- Whether there was an implied sale of packing material along with the sale of bales of cloth and yarnRs.

Analysis:
The judgment pertains to a reference under section 44(1) of the M.P. General Sales Tax Act, 1958, where the main issue was whether there was an implied sale of packing material along with the sale of bales of cloth and yarn. The assessee, engaged in the business of manufacturing and selling cotton textile products, was assessed for the implied sale of bardana and iron hoops used as packing material for cloth and yarn. The assessing authority held that there was an implied sale of the packing material and assessed it accordingly. The assessee contended that there was no contract to sell the packing material and that the price was stipulated based on meterage or weightage. The Deputy Commissioner of Sales Tax upheld the assessing authority's finding, leading the assessee to appeal to the Board of Revenue. The Board, relying on a previous decision, held that there was no implied sale of the packing material. The Commissioner contended that the Board erred in its decision, citing other cases, but the Court ultimately ruled in favor of the assessee.

The Court analyzed the facts and determined that the burden of proof lay with the department to establish the implied sale of packing material, which was not done conclusively. It was noted that there was no express agreement for the sale of packing material, and the price was not separately charged for it. The Board's decision was upheld as it was found that the burden to prove the sale of packing material was not discharged by the department. The Court emphasized that the question referred to it was a question of fact, and based on the evidence, the Board rightfully concluded that there was no implied sale of the packing material by the assessee.

The Court distinguished the cases cited by the Commissioner, emphasizing that those cases involved different factual scenarios where the price of packing material was considered in fixing the price of goods sold or was obligatory to supply with the goods. In contrast, in the present case, no such findings were made by the Board. Therefore, the Court upheld the Board's decision that there was no implied sale of the packing material along with the sale of bales of cloth and yarn. Consequently, the reference was answered in the affirmative, ruling against the department, and each party was directed to bear their own costs related to the reference.