TMI Blog1995 (3) TMI 444X X X X Extracts X X X X X X X X Extracts X X X X ..... able writ, order or direction restraining the opposite parties from assessing, imposing, levying, realising any sales tax on the value of gunny bags in respect of sale of sugar effected by the petitioners. A relief for quashing of a circular issued by the Commissioner, Trade Tax, U.P., dated April 2, 1991, has also been prayed for. The circular is addressed to all Trade Tax Officers and Assistant Commissioners (Assessment), Trade Tax. It refers to a decision rendered by this Court, reported in 1991 UPTC 341 (Chhatta Sugar Company Ltd., Mathura v. Commissioner of Sales Tax) wherein it has been held that the assessees are liable to pay sales tax on gunny bags used for packing sugar. The circular in the end desired the officers of the department to ensure compliance of the decision in the above noted Chhatta Sugar Company's case 1991 UPTC 341, in the interest of the State. In the circular, it is also mentioned that this Court in Chhatta Sugar Company's case 1991 UPTC 341 followed the decision of the honourable the Supreme Court, reported in [1987] 65 STC 462; 1987 UPTC 861 [Jamana Flour Oil Mill (P.) Ltd. v. State of Bihar]. It is submitted that on issuance of the said circular, not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ular by the Commissioner, Sales Tax, has also been justified on the ground that, being the head of department, he could issue a circular informing the subordinate authorities about the legal position as held in a decision of this Court. It is denied that circular dated April 2, 1991, restricts the discretion of the assessing authority. It is also averred that the propositions laid down in the case of Raj Sheel v. State of Andhra Pradesh [1989] 74 STC 379 (SC); 1989 UPTC 1393, are not applicable and since the price of gunny bag is included in the price of the sugar and is an integral part thereof, thus, it is liable to be taxed. The case of the State further is that special gunny bags are purchased from outside the State and the petitioners are to sell sugar in the said special type of gunny bags price of which was included in the fixation of price of sugar. Hence, there was an implied contract for sale of gunny bags. It was also averred that one Writ Petition No. 3303(MB) of 1994 was dismissed in limine by a Division Bench of this Court by order dated August 23, 1994, on the ground of availability of alternative remedy. Surprisingly, however, in the counter-affidavit, we do not fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 87 UPTC 861, and observed that the Sales Tax Tribunal had committed no error in holding that the sale of gunny bags was included in the price of sugar. The learned Judge also observed that in the case of Jamana Flour Oil Mill (P.) Ltd. [1987] 65 STC 462; 1987 UPTC 861 it was held that the sale of gunny bags was implied in the sale of wheat products. There is no discussion whatsoever in the judgment except narration of the findings of the Appellate Tribunal and reference to the decision of the honourable Supreme Court in Jamana Flour Oil Mill case [1987] 65 STC 462; 1987 UPTC 861. It would thus be necessary to examine as to what has been held in Jamana Flour Oil Mill case [1987] 65 STC 462 (SC); 1987 UPTC 861. The decision of the honourable Supreme Court in the case of Jamana Flour Oil Mill [1987] 65 STC 462; 1987 UPTC 861 is a Division Bench judgment presided over by the then Chief Justice, honourable R.S. Pathak, J. The point related to taxability of gunny bags packing wheat. It was held that the price of gunny bags was included in the price charged by the dealers and there was, thus, an implied agreement for sale of gunny bags. The above finding was recorded in view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to sell or buy the packing materials, or whether the subject-matter of the contracts of sale was only the cigarettes and that the packing materials did not form part of the bargain at all, but were used by the seller as a convenient and cheap vehicle of transport." It has also been held that the burden lay upon the Sales Tax Officer to prove that the turnover was liable to tax and he could ask the assessee to produce relevant material, but this question must be decided whether there was an express or implied contract of sale. In the Burhwal Sugar Mill case [1969] 23 STC 241 (All.), the revisional court had taken into consideration four items while holding that the gunny bags were liable to be taxed, first, that the gunny bags are items of commercial and marketable commodity; (2) They are included within the definition of goods; (3) There was transfer of property in such goods; and (4) The price of gunny bags is deemed to be included in the ex-factory price as prescribed by the Government of India. To this, the honourable Judge observed that the Sales Tax Officer omitted to consider the crucial question as to whether the transfer of property in gunny bags was as a result of any c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Sugar (Price Determination for 1988-89 Production) Order, 1988. He has placed a copy of the same before us. It has also been filed as annexure RA-1 along with the rejoinder affidavit in Writ Petition No. 5122(MB) of 1992. It says that the Central Government determines the prices payable for the Indian Sugar Standard (ISS) grades of sugar, packed in "'A' twill new gunny bags..........". The learned Standing Counsel submits that mentioning of the fact that the prices of the sugar have been fixed which are packed in "A" twill new gunny bag, leads to the infer- ence that the price of the gunny bag is included in the fixation of the price. We, however, fail to appreciate as to how it is inferable. As a matter of fact, there is Sugar (Packing and Marketing) Order, 1970, which prescribes packing of sugar in "A" twill new gunny bag. In our view, it only describes the packing which is prescribed under the said Order. There is nothing to indicate that the price of the twill bag is included by the Central Government in fixing the price of the sugar. This position is further clear as in the explanation, it is clarified that the price does not include the duty of excise, additional duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery case the assessing authority is obliged to ascertain the true nature and character of the transaction upon a consideration of all the facts and circumstances pertaining to the transaction. It requires factual investigation into the nature and ingredients of the transaction. A contract of sale, express or implied, will have to be there before packing material can be taxed and for coming to a conclusion whether there is or not an implied contract to sell the packing material, relevant facts and circumstances will have to be seen. It has been observed by the honourable Supreme Court that it is not right in law, to pick one ingredient only to the exclusion of others and deduce from it the character of the transaction. Their Lordships of the Supreme Court have also referred to the observations made in Hyderabad Deccan Cigarette Factory v. State of Andhra Pradesh [1966] 17 STC 624 (SC) where it was observed that the burden lies upon the Commercial Tax Officer to prove that a turnover is liable to tax. No doubt he can ask the assessee to produce the relevant material and if it has not produced the same he may draw an adverse inference against him but he must decide the crucial quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that price of packing was to be taken into consideration while fixing the price of sugar. Packing material of sugar has been presented under the Sugar (Packing and Marketing) Order, 1970 but that would not lead to the inference that price of packing of sugar is included in the price of sugar. Many other considerations as indicated by different judgments have also to be taken into account. So far reference of the judgment of the honourable Supreme Court in Jamana Flour Oil Mill [1987] 65 STC 462; 1987 UPTC 861 is concerned, we have already indicated in the earlier part of this judgment that the provision of the Roller Mills Wheat Products (Price Control) Order, 1964 contained entirely different provision clearly indicating that the price of wheat is inclusive of cost of bag and higher charges could be charged if wheat was sold in cloth bags. We are, therefore, of the opinion, that judgment in Chhatta Sugar Company Ltd.'s case 1991 UPTC 341 cannot have any general application to all or any kind of transaction ignoring other consideration on facts as well as provisions of particular Sugar Price Fixation Order. In view of the above, the circular issued by the Commissioner, Trade Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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