TMI Blog1998 (9) TMI 617X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. Feeling aggrieved, the dealer moved before the competent authority but the revisional authority uphold the levy of tax on containers, hence the writ petition. The learned single Judge vide impugned order dismissed the writ, holding that there is no merit, hence the present appeal. 2.. In the present case, there is no dispute at the Bar that the goods sold by the assessee are exempted from tax under section 9(1) of the Act. The list of exempted items is provided in Schedule I of the Act. There is also no dispute that the containers, that is, the gunny bags and tin are liable to be taxed at 8 per cent under section 8 of the Act. Shri O.P. Bhati, learned counsel for the appellant, has also submitted that although the seller had not charged separately for the containers used as packing materials, these were not sold without consideration. As a matter of fact, the practice is that the weight of the gunny bag is included in the costs of materials. The goods contained in the gunny bags are weighed and the price is realised from the total weight of the goods including the bag. At this stage, it will be useful to refer to Explanation 2 of sub-clause (34) of section 2 of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... G. Viswanathan v. Honourable Speaker, Tamil Nadu Legislative Assembly, reported in (1996) 2 SCC 353, the apex court while considering the scope of legal fiction observed: The Legislature is competent to enact a deeming provision for the purpose of assuming the existence of a fact which does not even exist. It means that the courts must assume that such a state of affairs exist as real, and should imagine as real the consequences and incidents which inevitably flow therefrom, and give effect to the same. 5.. The above legal fiction was reiterated in the case of A.S. Clitters v. Commissioner of Income-tax, Kerala (1997) 9 SCC 546. In case of Raj Sheel v. State of Andhra Pradesh [1989] 74 STC 379 (SC); (1989) 3 SCC 262, the honourable Pathak, C.J., as he then was, was of the view that the deeming clause should be given a restricted meaning. In a later case, Premier Breweries v. State of Kerala [1998] 108 STC 598 (SC); (1998) 1 SCC 641, the above view did not find favour with the apex Court. The learned single Judge in the above mentioned observation was also of the view that the full effect of legal fiction must be given effect to attain the purpose for which the fiction was cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amending Act, Assam Act 22 of 1994. The said statement of objects and reasons does not contain anything about the packing materials but clause 2(b) of the clause-wise explanatory notes read as follows: There was some controversy over the question of levy of tax on the containers sold with the exempted goods. Hence by deletion of the words as proposed, the containers sold with the exempted goods are sought to be taxed. It is thus seen that while enacting the above mentioned amending Act the Government intended to impose tax on containers used for selling non-taxable goods but mere intendment cannot fasten fiscal liability. Therefore, the deletion of abovementioned words from Explanation 2 cannot be said to provide tax on packing materials used for selling non-taxable goods, and in our view the Explanation 2 remains ambiguous inspite of the deletion made in by the amending Act. 10.. While considering explanation 2 of section 2(34) of the Act, it will be useful to reproduce the words of Maxwell on Statutes Imposing Burdens . Statutes which impose pecuniary burdens are subject to the same rule of strict construction. It is a well-settled rule of law that all charges upon t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt the contention of the petitioner that the packing materials which are shown sold separately should be taxed at a lower rate of 8 per cent and not at 50 per cent which was the rate prescribed for the goods. Under the Assam Act also the packing materials are taxable at the rate of 8 per cent and liquor is taxable at 50 per cent. 12.. There is another aspect of the matter. In a given case, where the price of the container or packing materials have been charged separately by the dealer, in view of the deeming provisions, the same shall be included in the sale price. Naturally the question is why and for what purpose this is to be done? If the containers are to be taxed separately, there was no need for such legal fiction. This goes to show that when the goods contained in containers are sold, the containers will have to be taxed at the same rate at which the goods are liable to tax, and as a corollary, as the goods are not liable to taxed, the containers are also not liable to be taxed. This interpretation seems to be the only outcome of the language of explanation 2, wherein it is stated that the containers or other packing materials should be of small value in comparison with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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