TMI Blog2015 (4) TMI 1090X X X X Extracts X X X X X X X X Extracts X X X X ..... f cost considering the significant cost of the bag. Therefore, from the contents of the invoice, the contention of the appellant that there is a separate and distinct sale of cement and packing material appears to be correct. As there is no rebuttable evidence to rebut the presumption, which can be drawn, on the basis of the invoice which constituted an inclusive piece of evidence. Therefore, on facts that the appellant is able to establish that the sale is not an integrated sale but, the sale of cement and packing material is distinct and separate. So, when there is an agreement to sell separately the packing material and the goods packed or filled, the appellant can successfully contend that the sale of cement and the sale of packing material are different and distinct. Therefore, the impugned order is set aside. - Decided in favour of appellant - Special Appeal No. 9 of 2001 - - - Dated:- 17-4-2015 - Bhanu K. C. and Seetharama Murti M., JJ. For the Appellant : S. Ravi, Senior Counsel for G. Narendra Chetty For the respondent : The Special Government Pleader for Taxes JUDGMENT This appeal under Section 23(1) of the Andhra Pradesh General Sales Tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the ADC, the CTO had given effect to the orders of the ADC and had passed consequential orders dated 22.04.1999. The respondent, having examined the CTO's original order and the ADC's order, was of the view that the order of the ADC is not in accordance with law. He had, therefore, entertained a revision suo motu in exercise of the powers vested in him under Section 20(1) of the Act and had issued a show cause notice proposing to revise the order of the ADC in regard to the turnover of ₹ 4,80,86,526/-. After giving an opportunity to the appellant to file objections and make submissions, the respondent had passed the impugned orders confirming the proposal in the show cause notice. The respondent had finally held that the appellant had failed to prove that there is a separate sale of packing material and that therefore, there is only one integrated sale i.e., sale of cement with bags and hence, the entire amount collected by the appellant company in its invoice is to be taxed at the rate applicable to the cement. Accordingly, the respondent had set aside the orders of the ADC and had restored the original order of the CTO. Therefore, the aggrieved appellant is befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of packing material has to be exempted and the first sale of packing material has to be taxed at the rate of tax applicable to the packing material (gunnies)/HDPE bags. However, the tax was levied on first and second sales of packing materials on the rate applicable to the contents i.e., cement. The ADC had rightly allowed the appeal by correctly appreciating the facts and following the correct principles of law. In appellant's own cases for earlier assessment years, the Sales Tax Appellate Tribunal had upheld the contentions of the appellant on similar issues based on similar facts and had remanded the matters to the CTO; and, after such remand, the CTO had granted relief to the appellant and the said orders have become final. The respondent did not grant set off of tax paid on HDPE bags as per the terms of G.O. Mos. No. 374 dated 26.04.1987. The recitals in the sale invoices are evidence of nature of transaction. Hence, packing material is not liable to tax at the rate of the content i.e., cement. It is pertinent to note that there is an amendment to entry 18 of Schedule I with effect from 01.08.1996. Though the said amendment is operative from 01.08.1996 the legislature it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... norms. Looking at the nature of article sold i.e., the cement, there is no option either for the seller or the purchaser but to sell or purchase cement except in packed condition. The Rules and the BIS do not allow the sale of cement contrary to the Rules and Standards. Considering that the commodity sold is cement, it cannot be accepted that there are two different and distinct sales of cement and bags. 6. (a) In support of his submissions, the learned Special Government Pleader had placed strong reliance on the following decisions: (i) Bengal Electric Lamp Works Ltd., v. State of Gujarat STC 1991-83-309; (ii) Dalmia Cement (Bharat) Limited v. State of Tamil Nadu STC 1991-83-442; and (iii) Annapurna Insecticides Industries v. Commissioner of Commercial Taxes. STC 1992-87-206. 6. (b) On the other hand, the learned Senior Counsel for the appellant had placed reliance on the following decisions:- 1. Raj Sheel and Others v. State of A.P. and others (1989) 74 STC 379 (SC) 2. Priyadarshini Cements v. State of A.P (1996) 22 APSTJ 141 (STAT) 3. Commissioner of Taxes, Assam v. Prabhat Marketing Co., Ltd., (1967) 19 STC 84 (SC) 4. Jamana Flour and Oil Mill (P) Ltd., v. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following decisions. 8. (b) In Raj Sheel v. State of Andhra Pradesh (4 supra) the Supreme Court having regard to the facts of the case had held as follows:- It is, therefore, perfectly plain that the issue as to whether the packing material has been sold or merely transferred without consideration depends on the contract between the parties. The fact that the packing is of insignificant value in relation to the value of the contents may imply that there was no intention to sell the packing, but where any packing material is of significant value it may imply an intention to sell the packing material. In a case where the packing material is an independent commodity and the packing material as well as the contents are sold independently, the packing material is liable to tax on its own footing. Whether a transaction for sale of packing material is an independent transaction will depend upon several factors, some of them being:- 1. The packing material is a commodity having its own identity and is separately classified in the Schedule; 2. There is no change, chemical or physical, in the packing either at the time of packing or at the time of using the content; 3. The pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the Tribunal, this Court had held as follows:- 'We are unable to hold that the Tribunal has decided the question of law erroneously. The TRC is devoid of merits and it is accordingly dismissed.' It is pertinent to note that the Tribunal in that case followed the decision in Raj Sheel case (4 Supra). In Hyderabad Deccan Cigarette Factory v. The State of Andhra Pradesh 1966 (Vol. XVII) STC page 624 the facts of the case show that there was no express contract of sale of packing material between assessee and its consumers. Therefore, the question that fell for consideration was - 'whether the packing materials were the subject of the agreement of sale, express or implied'. The Hon'ble Supreme Court having regard to the facts and the legal position obtaining held as follows:- In the result, the order of the High Court is set aside. The High Court may consider afresh the question whether the packing materials were the subject-matter of the agreements to sell, having regard to the relevant material and in the light of the observations made in the judgment. If in its opinion the necessary material is not on record, it can get a finding from the Sales Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court of Madras while answering the question - whether the gunny bags, in which sugar - a controlled commodity - is packed and sold is assessable to sales tax, by including it in the turnover of the assessee, when especially sugar is exempt from tax had held as follows:- On the face of the rationale or reasoning, as projected in the decisions referred to above, it goes without saying that in the instant case also, gunny bags, in which sugar - an exempted commodity - is packed and sold cannot at all be said to be exempt from tax on the ground that the contents of the container are exempt from tax. It is not out of place to state that in Raj Sheel case (4 supra) the Supreme Court upheld the validity of Section 6-C which was inserted by Act 11 of 1984 and had held that the said provision was only clarificatory in nature and observed that the question whether there was actual sale of containers or not is a question of fact to be determined on the facts of each case. Further, in Raasi Cement Ltd., v. The Commercial Tax Officer, Miryalaguda 1997 APSTJ (Vol. 24) page 100 the constitutional validity of Section 6-C after its amendment as amended by Act 22 of 1995 with effect from 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sale of cement and packing material are distinct sales. The invoice on a perusal would lay bare that the cement was sold in quantities of metric tonnes and that the rate of cement and the cost of packing material are separately shown. Therefore, the invoice produced clearly establishes that there is a separate sale of packing material and that there is no integrated sale of cement with HDPE bags/packing material and that the appellant had not provided the bag free of cost considering the significant cost of the bag. Therefore, from the contents of the invoice, the contention of the appellant that there is a separate and distinct sale of cement and packing material appears to be correct. Then the next question is - 'Whether the invoice can be construed as a contract. This question need not detain us for long. In Commissioner of Sales Tax, M.P v. Gill and Company Ltd., Ujjain (13 supra) and in Government of Madras v. Simpson and Co., Ltd., (11 supra) it was held that in the absence of any other material, recitals in invoices will furnish good proof of the intention of the parties relating to the terms of the agreement and that by themselves, they will be inclusive piece of ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the Rules and the specifications of Bureau of Standards of India mandate that cement should be sold in packed condition and that, therefore, the contention of the dealer/appellant that there is no integrated sale of the cement and the HDPE bags/packing material cannot be accepted. In regard to these contentions, suffice if it is observed that such a contention cannot be countenanced more particularly in view of the amendment to entry 18 of First Schedule of the Act which came into effect with effect from 01.08.1996 and which reads as under:- S. No. Description of goods Point of levy Rate of tax Effective from 18. *Cement (1018) (a) Where the sale price of cement includes the value of packing material. At the point of first sale in the State. 16 paise in the ₹ 20 01.08.1996 (b) Where the packing material and cement are sold separately and/or the sale price of cement does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore the contention of the respondent that a different view in the present case based on similar facts is possible cannot be accepted. 9. Having regard to the findings coupled with reasons, we answer point No. 1 accordingly holding that the appellant had established that the sale of cement and the HDPE bags/containers is not an integrated sale and that the sale of cement and HDPE bags/packing material i.e., the containers are distinct and separate sales and that there was a contract for such separate sales of cement and the bags/packing material. As a sequel to the said finding, we hold that the appeal is having merit and, therefore, deserves to be allowed and that the impugned order of the Commissioner, which is contrary to facts and legal position obtaining at the relevant time, is liable to be set aside. Points are accordingly answered. 10. Accordingly, the Special Appeal is allowed and the order impugned of the respondent is set aside and the order of the ADC and the consequential orders of the CTO, which were passed pursuant to the orders of the ADC, are restored. Miscellaneous petitions, if any, pending in this appeal shall stand closed. - - TaxTMI - TMIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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