TMI Blog1995 (11) TMI 406X X X X Extracts X X X X X X X X Extracts X X X X ..... tention was that this packing material was used for the packing of agarbattis for sale and he is entitled to a deduction under section 2(r)(ii) of the Act. But this contention was not accepted by the assessing authority in view of the Explanation below section 2(o) of the Act, which was inserted with effect from September 1, 1976. 3.. Aggrieved against the order dated August 28, 1982 (annexure B), the assessee/applicant preferred first appeal before the Appellate Deputy Commissioner of Sales Tax, Jabalpur and there also, he failed and ultimately he preferred second appeal before the Board of Revenue. The Board of Revenue by order dated November 23, 1983 (annexure D), dismissed the appeal of the assessee. Hence, the assessee moved an application dated February 10, 1984 (annexure A) before the Board of Revenue for referring the matter to this Court and the Board of Revenue referred the aforesaid question to this Court for answer. 4.. We have heard the learned counsel for the Revenue as none has appeared on behalf of the assessee/applicant. 5.. Shri S.K. Seth, learned counsel for the Revenue, has submitted that in view of Explanation to section 2(o) of the Act, the assessee/appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m- (i)............... (ii) the sale price of goods mentioned in Parts II to VI of Schedule II, which are in the nature of tax-paid goods in the hands of such dealer; " Section 4 of the Act deals with the "incidence of taxation" and which says that the dealer is liable to pay tax under this Act on his taxable turnover in respect of sales or supplies of goods effected in Madhya Pradesh during a period of twelve months immediately preceding the commencement of this Act exceeding the limit specified in sub-section (5). Therefore, the incidence of tax is on taxable turnover and the taxable turnover is defined in section 2(r) of the Act as reproduced above. 9.. Now, in this scheme of the relevant provisions, we have to examine that whether the assessee is entitled to the deduction on the packing material used by him for selling end-product, i.e., agarbattis, in the packing material. Section 2(r)(ii) of the Act lays down that the sale price of goods mentioned in Parts II to VI of Schedule II which are in the nature of tax-paid goods in the hands of such dealer; then the dealer shall be entitled to the deduction of a tax, if he has used the goods for further sale. We are here conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... now proposed to replace the said Ordinance with the following modifications with a view to afford certain relief to dealers as well as consumers,- ........................ 2.. Opportunity has also been taken to introduce a few urgent amendments in some other sections of the principal Act (a) reduction of rate of tax on packing material from 8 per cent to 4 per cent, when sold separately and equal to the contents when sold along with it. .........................." It is clearly mentioned in the "Statement of Objects and Reasons" that these amendments are being made for the benefit of dealers as well as consumers. In fact, there was no need for providing the said Explanation under the "sale price". But, it appears that the Legislature in their wisdom thought it proper in order to make a definition of the "sale price" more specific and put it beyond any confusion; the said Explanation was added to the definition of "sale price". When the container is also sold together with the material contained therein then sale price is to be worked out as a total sale price inclusive of the price of the packing material. Therefore, an Explanation was inserted for abundant caution an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on obstante clause has to be kept in view. It is true, but that non obstante clause has only to be extended wherever any different provision has been made under the Act for working out the definition of "sale price" and which runs counter to the Explanation I, then it will have the overriding effect. But in clause (ii) of section 2(r) of the Act, there is no effect of this Explanation on "sale price" because there only deduction has to be given from the sale price of the goods which has been used as one of the components of finished goods. Therefore, the deduction is one part and determination of sale price is an another part and two cannot be confused together so as to deny the specific intended purpose with which the Legislature has conferred the benefit of the deduction to the assessee in the definition of the "taxable turnover". 12.. It is a trite position that the taxing statute has to be construed strictly and by giving a strict interpretation to the provisions, it would follow that the Explanation I has to be strictly construed in the context where it appears and it cannot be imported or it cannot be read in other provision where it is not warranted. The view we have tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , read with section 2(r)(ii), the dealer was entitled to the deduction from its taxable turnover of the value of the tax-paid packing material." Therefore, inspite of the Explanation I, the consistent view of this Court has been that the deduction, which the assessee is entitled under section 2(r)(ii), is still admissible to him and the Explanation I does not deprive that deduction to the assessee. 13.. Shri S.K. Seth, learned counsel for the Revenue, has also invited our attention to the decision of the honourable Supreme Court given in the case of Raj Sheel v. State of Andhra Pradesh [1989] 74 STC 379; AIR 1989 SC 1696 and in that case, section 6-C of the Andhra Pradesh General Sales Tax Act came up for consideration and section 6-C was almost in pari materia with the Explanation I of section 2(o) and there, the validity of this section was challenged and the same was upheld by their Lordships. It was held that "section 6-C merely clarifies and explains that the components which have entered into determining the price of the goods cannot be treated separately from the goods themselves and that no account was in fact taken of the packing material when the transaction took plac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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