1985 (3) TMI 251 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Rate of tax on sealed tins filled with vanaspati.
2. Separate charges for packing materials.
3. Concessional tax rate applicability.
4. Penalty for evading tax.

Issue-wise Detailed Analysis:

1. Rate of Tax on Sealed Tins Filled with Vanaspati:
The primary issue was determining the rate of tax applicable to sealed tins filled with vanaspati where separate charges were made in the bills. The Board of Revenue questioned whether the tax rate should be 10% (same as vanaspati ghee) or 3% (applicable to empty tins). The assessee argued that separate charges for tins should attract a 3% tax rate as per proviso (v) to section 5 of the Rajasthan Sales Tax Act, 1954. However, the Commercial Taxes Officer and subsequent authorities, including the Board of Revenue, held that the main business of the assessee was selling vanaspati ghee in tins, not empty tins. Thus, the tax rate should be 10%, applicable to vanaspati ghee.

2. Separate Charges for Packing Materials:
The assessee contended that there were three types of transactions:
1) Purchasers supplied their tins, and 10% tax was charged on vanaspati.
2) Consolidated price for ghee and tin, with 10% tax on the total sale.
3) Separate charges for ghee and tins, with respective tax rates of 10% and 3%.
The assessee claimed that the transactions in question fell under the third category. However, the authorities found that the assessee was not dealing in empty tins separately and reverted to charging 10% tax on both ghee and tins after inspection.

3. Concessional Tax Rate Applicability:
The assessee argued that the concessional rate of 3% for empty tins should apply, citing Notification No. F. 5(21) FD (T)/71-3 dated March 27, 1971. The Deputy Commissioner and the Board of Revenue found no evidence that the assessee manufactured empty tins during the relevant period. The Board of Revenue concluded that the concessional rate was only applicable if the tins were sold separately, not when filled with vanaspati and sold together.

4. Penalty for Evading Tax:
The Commercial Taxes Officer imposed a penalty of Rs. 157.85 for evading tax at the rate of 7% on the sale of tins. The Board of Revenue, however, remitted the penalty under section 16(i) of the Act, concluding that the penalty was wrongly imposed.

Conclusion:
The High Court upheld the Board of Revenue's decision, stating that the rate of tax on tins filled with vanaspati should be 10%, aligning with the tax rate for vanaspati ghee. The Court emphasized that the assessee's business was primarily selling vanaspati ghee in tins, not empty tins, and the separate charges in the bills did not warrant a concessional tax rate. The reference was answered accordingly, with each party bearing its own costs.