TMI Blog1967 (8) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... essee, the Nimar Cotton Press, Khandwa, carries on the business of ginning and pressing cotton. After the cotton is pressed and turned into bales, the hessian cloth is wrapped round it and the same is tied down with iron hoops. The Sales Tax Authorities assessed the assessee to sales tax on the price of the hessian cloth and the iron hoops supplied by the assessee. The contention of the assessee was that there was no sale of hessian cloth or iron hoops as such, the hessian cloth and iron hoops were used as an integral part of the works contract of pressing the cotton and no separate charge was made for the said articles. This contention was negatived by the Sales Tax Tribunal, relying on the decision of this Court in Nimar Cotton Press v. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be pressed into bales. The compressing is not done by the hessian cloth or the iron hoops, but by a machine worked by mechanical or hydraulic power which exerts great and steady pressure on the ginned cotton in a cast and thus compresses it into bales. The packing material is for convenience of transport and to prevent the bales from being 'unloosened' during the course of handling. The necessity of packing compressed cotton varies with the factor of transport and the time within which the pressed cotton is to be spun and used for manufacture in the textile mills. If the pressed cotton is to be taken immediately to an adjoining textile mill and used for manufacture, it may be wholly unnecessary to use any packing material. The necessity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was immaterial and as the property vested in the assessee, there was an implied agreement of sale. This view of the matter has not been, in any way, affected by the decision -of the Supreme Court in Government of Andhra Pradesh v. Guntur Tobaccos Ltd.[1965] 16 S.T.C. 240. 4.. In the case of Government of Andhra Pradesh v. Guntur Tobaccos Ltd.(1) their Lordships of the Supreme Court (majority judgment) enunciated the following propositions: (i) The fact that in the execution of a contract for work some materials are used and property in the goods so used passes to the other party, the contractor undertaking to do the work will not necessarily be deemed on that account to sell the materials. (ii) A contract for work in the execution of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erforming service or executing the contract stands transferred to the other party. 5.. In that particular case their Lordships observed that the departmental authorities had proceeded on the assumption that immediately after the tobacco emerged from the reconditioning chamber and it was packed in waterproof material, it was handed over to the owners of the tobacco and therefore packing of tobacco was not an integral part of the process of re-drying. Their Lordships, after considering the whole process of re-drying, came to the conclusion that the use of the packing material was an integral part of the whole re-drying process. That process continued even after the tobacco was packed in the packing material and hence it was an integral part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] 11 S.T.C. 321. In that case it was held that where under an agreement to purchase cotton to be delivered by the seller to the buyer, it was implicit that the goods should be delivered as packed, the contract to pay for and purchase the packing material may be implied and the turnover relating to the packing material would be liable to sales tax. This case was quoted with approval by their Lordships of the Supreme Court. The facts of that case are in no way different from the facts in Nimar Cotton Press v. Sales Tax Officer, Nimar Circle, Khandwal. In this case also this Court held that the two processes, namely, the pressing of cotton and the packing thereof, were two different processes and that the packing was not an integral part of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssary implied contract to sell the packing materials. 9.. Shri Dharmadhikari then urged that there was no finding by the taxing authorities as to how much material was used by the assessee for packing purposes during the assessment period. This submission is also without any substance. The assessee itself had claimed deduction of certain amount indicating the cost price of the material utilised by it in packing the cotton bales. That amount was taken to be the sale price of the material supplied by the assessee and that was treated as the turnover. There was, therefore, no question of determining the quantity of the material used by the assessee. 10.. For the aforesaid reasons, our answer to the question is in the affirmative. The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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