TMI Blog1965 (2) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... ber, 1958, and taxable at 7 per cent. On checking the accounts, the assessing authority thought that the value of gunnies sold before and after 1st October, 1958, should be computed at Rs. 15,491.25 and Rs. 4,851.75 respectively, He, therefore, issued a notice to the respondent to show cause why the assessable turnover should not be determined on that basis. As no objections were filed, the assessment was finalised and the tax payable by the assessee was fixed at Rs. 649.45. It is to remove these proceedings on certiorari that the jurisdiction of this Court was invoked under Article 226 of the Constitution. Acceding to the proposition advanced on behalf of the respondent, that the assessee in this case was not a dealer in gunnies and that, therefore, his turnover was not amenable to tax, Veeraswarmi, J., allowed the writ petition. It is this conclusion of the learned Judge that is assailed before us. In support of this appeal, it is urged by Sri V. Ramaswami, learned Additional Government Pleader, that the respondent answered the definition of a "dealer" enshrined in section 2(g) of the Madras General Sales Tax Act even in regard to gunnies and that he could not derive the benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lculated to cover an activity like the present, where, undoubtedly, the respondent has been buying and selling the goods. It could also be gathered from the relevant contents of the affidavit that he was also making a profit out of this business of selling and buying gunnies. It appears that the respondent charges a sum of Rs. 2-4-0 for packing charges, porter, cooly, etc. It is stated from the Bar that these gunnies are bought for less than 12 annas, whereas a sum of Rs. 2-4-0 is charged to the buyer. It may legitimately be inferred that the assessee was charging much more than the price he bought for. Be that as it may, it can be said that the definition is fulfilled the moment it is established that the respondent was buying and selling gunnies. We are not persuaded that this definition of "dealer" lends any countenance to the theory propounded by learned counsel for the respondent. We are not impressed with the argument based upon the definition of ''sale price" either. It is true that the "sale price" is the amount payable as consideration for the sale of goods. But the price paid to the respondent in this case comprehends the price of the gunnies also. The price that the resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i lays stress on the terms of sub-clause (ii), viz., charges for packing and delivery, and maintains that all expenses incurred in respect of packing and delivery are to be excluded from the turnover of a dealer, and that, as the gunnies in this case are an integral part of packing and delivery, the assessee is entitled to exclude the cost of gunnies as well. We are unable to give weight to this contention. In our opinion, the charges for packing and delivery mean charges for labour expended in regard to packing and delivery. It does not take in the cost of material supplied for the purpose of packing and delivering the goods. Obviously, what is contemplated is the work and labour in connection with packing and delivering the articles. It is not wrong to suppose that the Government permitted the dealer to deduct this item from the turnover, for the reason that work and labour are not goods which should enter the calculation of price of a commodity. We are, therefore, not convinced that subclause (ii) of clause (g) of rule 5(1) enables the assessee to claim a deduction out of his turnover in regard to the sale of gunnies. It is conceded that the value of gunnies enters the price-str ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delivered to the buyers by sellers, and a claim was made on behalf of the assessee that the material in which the cotton was packed, was not liable to be taxed as the cotton was not amenable to sales tax. This claim was negatived by this Court for the reason that there was a contract to pay for and purchase the packing material, and, consequently, the turnover in respect of packing material was amenable to sales tax. Yet another case of this Court which has a bearing on this enquiry is Nagarathinam and Bros. v. The State of Madras[1960] 11 S.T.C. 342. decided by a Division Bench. In this case also, the enquiry turned on the provisions of the notification exempting vegetables from payment of sales tax. The learned Judges held that the assessee could not claim exemption in regard to gunny bags and that they were assessable to tax by the department. The cited case is on all fours with the present case, since both are governed by the same notification, and so, the principle formulated there applies with full vigour to the case on hand. A similar view was taken by the erstwhile Hyderabad High Court in Nizam Sugar Factory Ltd. v. Commissioner of Sales Tax, Hyderabad[1957] 8 S.T.C. 61. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lised in the performance of a contract between the parties there was a sale, would depend on the agreement between the parties. Such an agreement could be express or implied. Where the main contract was one of sale of goods as packed, such an agreement to sell the packing materials could, having regard to the nature of the contract, be readily implied; but, where the main contract was merely one of service, the fact that in the performance of such service, the packing materials are used and charged for, would not lead to a necessary inference that a sale of the materials was intended. In such a case, the onus would be on the taxing authority to prove that there was an agreement to sell the packing materials and a sale by the passing of property therein." Indisputably, the case on hand falls under the first category of contracts indicated in the above passage. It is interesting to note that these very learned Judges who decided that case gave the judgment, on the same day, in Chidambara Nadar Sons and Co. v. State of Madras[1960] 11 S.T.C. 321. , holding that the material used for packing cotton was amenable to tax, although the cotton contained in the gunnies was exempt from sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Guntur Tobaccos Ltd., Guntur v. The Government of Andhra (now Andhra Pradesh)[1961] 12 S.T.C. 668., on which reliance is placed by learned counsel for the respondent. Thus, neither of these two cases lends any colour to the proposition advanced on behalf of the respondent. Nor can West Coast Weaving Establishments v. State of Kerala[1964] 15 S.T.C. 898. render much service to the respondent. In that case, the argument presented on behalf of the Revenue Department was that the materials used for packing handloom cloth were containers within the meaning of the relevant statutory provision, and, consequently, attracted the tax liability. A Division Bench of the Kerala High Court held that such materials could not answer the description of containers to fall within the scope of the concerned taxing statute. We are unconcerned with the correctness of that opinion. But the statement of the learned Judges that, unless there be a sale of the packing materials directly or indirectly to the consignee, tax cannot be attracted, does not lend any countenance to the argument of learned counsel for the respondent. That statement implies that, if there was a sale of packing material, the tax li ..... X X X X Extracts X X X X X X X X Extracts X X X X
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