TMI Blog1975 (4) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... 7). The petitioner complains and, not without force, that when the petitioner's accountant Shri Des Raj Wadhwa had gone to the office of the Assistant Sales Tax Officer on 16th January, 1975, in connection with another matter, he was handed over the said show cause notice, and without giving any real occasion or opportunity to show cause, the impugned order was passed. It is further stated that it was remarked by the officer concerned (respondent No. 2) that the deletion was being made in pursuance of a policy decision and instructions issued by the Commissioner of Sales Tax (respondent No. 1). The allegations to this effect in the petition were attempted to be solemnly met in the affidavit filed by Shri Kasturi Lal, Assistant Sales Tax Officer, filed in opposition to this writ petition by an assertion that the petitioner had appeared and made its submissions, which were incorporated in the impugned order, and that the petitioner did not ask for any further time to enable it to make further submissions. In the rejoinder-affidavit of Shri Onkar Nath Joshi, partner of the petitioner-firm, the averments of Shri Kasturi Lal made contrary to those in the petition in this regard were aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ployers, transporters or even customers; even the slightest negligence in handling them can cause damage and render the products useless for use. The firm had been including the cost of packing of crockeries/potteries in the cost of manufacture itself and this always formed part of the manufacturing expenses. The sale price of the goods is finalised and submitted to the excise department (they being an excisable item) only after calculating the total cost including the material required for packing. A representative copy of the price list of the various items (annexure P 3) has also been appended to the writ petition, wherein it has been clearly stated in column 5(f) that the packing charges have been included in the selling price. A representative copy of the bill issued to a customer has also been annexed as annexure P 4 to facilitate a comparison with the price list (copy of which is annexure P 2). Section 4(4)(d) of the Central Excises and Salt Act, 1944, as amended by Amendment Act No. 22 of 1973, provides that the value in relation to the excisable products shall include the cost of packing. But, it is stated for the revenue that this does not have any bearing on the interpre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peaks of; for goods purchased for resale or for use as raw materials, which are specified in the registration certificate of the purchasing registered dealer and also a separate certificate for containers or other materials purchased for the packing of goods specified in the registration certificate of the purchasing dealer. An application for registration under section 7 (with which alone we are concerned) shall, according to rule 3, be made to the appropriate assessing authority in form S.T.I. The particulars which such an application should contain have been specified in rule 4. Sub-rule (iii)(b) of rule 4 speaks of "for use as raw materials in the manufacture in the Union Territory of Delhi of goods (other than goods declared tax-free under section 6) for sale in the manner specified in section 5(2)(a)(ii) of the Act" and (c) "for containers or other packing materials". What the registration certificate should contain has been specified in rule 6 as follows: "(1) The registration certificate shall specify the following amongst other particulars: (a) the location of the business and of any branch of the business: (b) the nature of the business; (c) the class or class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I in this case was originally issued for six items and four more items were added with effect from 4th November, 1963. On the right-hand side under the title "(b) for resale" the word "Nil" had been noted, but had not been scored out. It was further added as follows (on the right-hand side): "w.e.f. 18-1-62 1. Packing materials. 2. Nails. 3. Packing cases and strips (3 items). w.e.f. 4-11-63 4. Electrical goods. 5. Crockery (5 items)." No application for amendment made by the petitioner which led to the inclusion of the packing materials, etc., with effect from 18th January, 1962, is found on the file. No statement, therefore, is possible concerning what was mentioned in that application and how these items came to be added. No reasons have been mentioned in the impugned order for the deletion of the items in question from the certificate. One has only to look into the affidavit of Shri Kasturi Lal for an explanation concerning the circumstances in which the said deletion was made. It is worth recalling that in the show cause notice (annexure P 6) it is only mentioned that the aforesaid goods in the registration certificate were erroneously specified and that the same wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . B. N. Kirpal's contention derives support from the observations of Basu, J., in Dabur (Dr. S.K. Burman) Pvt. Ltd. v. Commercial Tax Officer, Bhowanipore Charge, and Others[1967] 19 S.T.C. 447 at 453-454.While holding that only goods which are directly necessary for the manufacture of finished products, which would come within the purview of section 5(2)(a)(ii) and not those which were indirectly necessary, Basu, J., pointed out that there are two parts of section 5(2)(a)(ii): (1) those which are used in the manufacture of the finished products and (2) materials for packing of such products. Regarding the latter they stood out as an independent category. In the case before Basu, J., the business concern was one of manufacturing patent and proprietary medicines and toilet goods, etc., and the discussion centered round the materials for packing of goods like paper and ink. Paper and ink had been deleted by the assessing authority from the registration certificate for the following reasons: "Moreover a careful reading of the section will reveal that even the packing materials required for packing the finished product cannot be purchased tax-free under this section because the finis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er's specific case, which is not disputed, that the crockery, etc., manufactured by it are for sale. It was further argued for the revenue that the packing materials in this case were included in the registration certificate in respect of resale only and, since in respect of resale there is no need to specifically mention packing materials, they were deleted. In the first place, neither the show cause notice (annexure P 6) nor the order of cancellation (annexure P 7) mention the precise reason for the cancellation except that it is stated in annexure P 6 that the mention of those goods was erroneous with the further addition that these goods were neither raw materials nor intended to be resold. At one stage the learned counsel for the revenue urged that the petitioner had not applied for exemption in respect of the containers. Apart from this not being the stand taken in the return (the return even indicating a contrary stand), it is seen from the original application S.T.I. (extracted above) that the packing materials had been included in column 11. In the circumstances, I do not wish to be detained further with the above argument, which was only feebly put forward. The learne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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