TMI Blog2010 (3) TMI 1018X X X X Extracts X X X X X X X X Extracts X X X X ..... d sale of the packing material namely, plastic drums and plastic bags, by the appellant to his vendees? Held that:- It is to be noted that in the matter of Dhariwal Bottle Trading Company [supra] this court held that an implied sale can be inferred only where the container is of such an exceptional type and of unusually high value which, in the ordinary course of business, is not used for packing the goods in question. In the present case, the respondents exported the chemicals out of India. For the purpose of export, the respondents used 315 new plastic drums as stated in the invoices produced by the learned counsel appearing for the applicant. This itself shows that the respondents especially purchased the new plastic drums for the purpose of export of chemicals. In any case the seller has to decide which type of packing material is required for safe dispatch of goods sold and supplied so that the purchaser shall not raise any objection about quantity/quality when he gets delivery of the goods. Therefore, the judgment in case of Dhariwal Bottle Trading Company cannot be considered for deciding the present case in hand. In favour of revenue. - - - - - Dated:- 18-3-2010 - DA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the alleged violation of form No. 14. The Tribunal vide its judgment dated December 17, 1996 partly allowed the second appeal and directed the assessing authority to classify the purchases of packing material, namely, plastic drums and plastic bags made by the respondents prior to August 11, 1988 and subsequent to August 11, 1988. The Tribunal held that the purchase tax under section 14 of the BST Act, 1959 would not be leviable in respect of the purchases made before August 11, 1988, however, such purchase tax shall be leviable on the purchases made on or after August 11, 1988 and consequentially additional tax if any would also be leviable. The Tribunal further directed the assessing authority to assess the tax accordingly and to pass the appropriate order including consequential order in accordance with law. Being aggrieved by the aforesaid order dated December 17, 1996, the present applicant filed the Reference Application No. 36 of 1997 under section 61(1) of the BST Act, 1959 with a request to refer questions of law to this High Court for opinion. The Tribunal by its judgment dated July 29, 2000 referred questions of law for the opinion of this court, which read as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BST Act, 1959 would not be leviable in respect of the purchases made before August 11, 1988 and the same would be leviable on the purchases made on or after August 11, 1988 only. He further submitted that the plastic bags and plastic drums were purchased by the respondents and the same were used in packing manufactured goods and packing material along with chemicals were exported out of India within stipulated time. He submitted that the Tribunal, while coming to the conclusion that there was implied sale of packing materials used, has heavily relied on the principles laid down by the apex court in the case of Raj Sheel v. State of Andhra Pradesh reported in [1989] 74 STC 379. In his submission, in the case of Raj Sheel [1989] 74 STC 379 (SC), it is ruled that the transaction for sale of packing material is always an independent transaction which will depend on several factors, some of them are (a) the packing material is a commodity having its own identity and is separately classified, (b) there is no change, chemical or physical, in the packing either at the time of packing or at the time of using the contents, (c) the packing is capable of being reused after the contents have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1995] 99 STC 326, this court held that an implied sale of packing material cannot be inferred in all cases but only in cases where the special facts and circumstances justify such an inference. It is further observed that the packing material is used merely as a cheap or convenient mode of transport and no sale of the packing material would be involved in such cases. It is further observed that an implied sale can be inferred only where the container is of such an exceptional type and of unusually high value which, in the ordinary course of business, is not used for packing the goods in question. Mr. Sonpal further submitted that in the present case the value of packing material is insignificant because it comes near about four per cent of the total export. Not only that but nowhere it is stated in the invoices or in any other document that the respondents are charging separately for packing material. He placed reliance on the judgment in the case of Associated Cement Company Ltd. v. State of Maharashtra passed by the Maharashtra Sales Tax Tribunal, Mumbai in Appeal No. 170 of 1997 dated October 11, 2002 wherein it is observed that there should be sufficient material on record t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the turnover in question was liable to tax, i.e., the packing material was sold along with the goods and liable to the same rate of tax. 7.. Each case has to be decided on its own facts. Every case, therefore, calls for factual investigation into the nature and ingredients of the transaction for finding out the real intention of the parties. 8.. Whether a transaction for sale of packing material is an independent transaction will depend on several factors including: (i) The fact that packing material is of insignificant value in relation to the value of the contents may imply that there was no intention to sell the packing material; (ii) The packing material is a commodity having its own identity and is separately classified in the Schedule; (iii) There is no change, chemical or physical, in the packing either at the time of packing or at the time of using the content; (iv) The packing is capable of being reused after the contents have been consumed; (v) The packing is used for convenience of transport and the quantity of the goods as such is not dependent on packing; (vi) The mere fact that the consideration for the packing is merged with the considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... physical change when the HDPE bags are used for packing the cement though the bags bulge when the cement is filled, after removing the cement it comes to its original shape. Further it may be noted that no stitching is done by the appellant as the bags are purchased duly stitched on all four sides with a flap for filling the cement which closes automatically as soon as the bag is filled to its capacity. It has also been pointed out that the appellant had purchased the printed HDPE bags and the same are used as they are for packing the cement. Thus, there is no chemical or physical change in the packing material of HDPE bags. 9.. There is also no dispute that the entire transaction in respect of which the resale has been claimed, the appellant has used HDPE bags. The HDPE bags after removing the cement can be used for any other purpose. Not only that, even these HDPE bags could be reused for packing of the cement, if these bags are properly handled and not allowed to be damaged. It is contended by Shri Ghanekar, learned sales tax practitioner, for the appellant, that even the Central Government has recognized the use of serviceable second hand D. W. heavy cases jute bags for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt while dealing with the claim of resale. However, at this stage it is suffice to say that though it was the case of the appellant-company itself the resale of the polythene bags was claimed therein and the reuse of the same was held impossible. It is needless to say that, as pointed out above, HDPE bags cannot be equated with ordinary gunny bags. There cannot be also a dispute that cement is packed in HDPE bags as convenient mode of transport. It is a common knowledge that the cement can be packed in gunny bags, polythene bags or HDPE bags to save it from being damaged by moisture or water. But the packing of the cement made in HDPE bags shows that there is a conscious choice of packing. Mr. Sonpal also relied on the judgment in the matter of T. V. Sundaram Iyengar Sons v. State of Madras reported in [1975] 35 STC 24 (SC); [1975] 3 SCC 424. He submitted that in this case the question arose before the apex court as to whether the company making supplies of the bus bodies by constructing and fitting them to chassis provided by the customers, is liable to pay sales tax. The apex court held that the transaction relating to the construction of the bus bodies by the assessee o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r at the time of using the contents, (c) the packing is capable of being reused after the contents have been consumed, (d) the packing is used for convenience of transport and the quantity of the goods as such is not dependent on packing, (e) the mere fact that the consideration for the packing is merged with the consideration for the product would not make the sale of packing an integrated part of the sale of the product. He further submitted that all existence of these ingredients are proved by the respondents before the authority and therefore, the Tribunal has rightly relied on the judgment of Raj Sheel [1989] 74 STC 379 (SC). He further submitted that the applicant/Revenue failed to produce any contrary evidence on record to destroy the evidence produced by the respondents before the authority. Therefore, there is no question of re-appreciation of evidence in the present case to find out as to whether the respondents sold the packing material or not? He submitted that the costs of packing material is near about four per cent of the chemicals exported by the respondents which is very significant to hold that the respondents have sold the packing material along with chemicals. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant. This itself shows that the respondents especially purchased the new plastic drums for the purpose of export of chemicals. In any case the seller has to decide which type of packing material is required for safe dispatch of goods sold and supplied so that the purchaser shall not raise any objection about quantity/quality when he gets delivery of the goods. Therefore, the judgment in case of Dhariwal Bottle Trading Company [1995] 99 STC 326 (Bom) cannot be considered for deciding the present case in hand. In the matter of Associated Cement Companies Limited [1993] 90 STC 424 (WBTT), the Tribunal relied on several judgments and called consigned the principles merged (sic) emerging from those decisions. It is clear from paragraph Nos. 36 and 37 of this judgment that whether the transaction for sale of packing material is independent transaction will depend on several factors. Considering those factors, we are of the opinion that the respondents satisfied all those factors at the time of exporting the chemicals out of India. Therefore, this case is not applicable in the facts and circumstances of the present case. In the case of T. V. Sundaram Iyengar [1975] 35 STC 24; ..... X X X X Extracts X X X X X X X X Extracts X X X X
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