1966 (10) TMI 136 - SC - Central Excise

Whether the value of containers of hydrogenated oil is assessable to sales tax under the Assam Sales Tax Act, 1947? Held that - Appeal allowed. Set aside the judgment of the High Court and direct that the answer to the question should be that the value of containers of hydrogenated oil is assessable to sales tax under the Act if there is an express or implied agreement for the sale of such containers. These appeals are, accordingly, allowed. At the time of grant of special leave this Court made a condition that the appellant will pay the cost of the respondent in any event.

Summary

Issues:
- Assessment of sales tax on the value of containers of exempted goods under the Assam Sales Tax Act, 1947.

Analysis:
The case involved an appeal from the High Court of Assam and Nagaland regarding the assessment of sales tax on the value of containers of exempted goods under the Assam Sales Tax Act, 1947. The respondent, a registered dealer, was assessed by the Sales Tax Officer for two periods, and the appeals to higher tax authorities were dismissed. The respondent then sought a reference to the High Court on two questions of law, one concerning the delivery of goods to specific entities and the other regarding the assessability of containers of hydrogenated oil to sales tax. The High Court ruled against the assessee on the first question but in favor of the assessee on the second question, stating that the value of containers is not assessable unless a separate price is charged for them. The High Court's decision was based on the absence of evidence showing a separate price for the containers.

The Supreme Court analyzed the arguments presented by the appellant, contending that the High Court's requirement of a separate price for containers to be assessable to sales tax was erroneous. The Court emphasized the essential elements of a sale, including an agreement to transfer title to goods supported by consideration, and the passing of property in the goods. Referring to precedent cases, the Court highlighted that a contract of sale can be express or implied, depending on the parties' intentions regarding the sale of packing materials. The Court cited the importance of determining whether there was an agreement to sell packing material, a factual inquiry based on the circumstances of each case.

The Supreme Court found merit in the appellant's argument and set aside the High Court's judgment. The Court directed that the value of containers of hydrogenated oil is assessable to sales tax under the Act if there is an express or implied agreement for the sale of such containers. The Court emphasized that the determination of an agreement to sell packing material is a factual inquiry and must be addressed in each case. The appeals were allowed, and the appellant was directed to pay the respondent's costs. The appellant undertook not to take further steps to tax the respondent for the containers during the relevant periods covered in the case.

In conclusion, the Supreme Court clarified the criteria for assessing the value of containers of exempted goods for sales tax under the Assam Sales Tax Act, emphasizing the need for an express or implied agreement for the sale of containers to make them assessable. The judgment highlighted the factual nature of determining such agreements and the importance of considering the circumstances of each case.