1987 (4) TMI 441 - SC - VAT and Sales Tax

Whether the direction of the Tribunal to ascertain the price of the containers (gunny bags) of wheat products sold for an all-inclusive price under the provisions of the Roller Mills Wheat Products (Price Control) Order, 1964, for taxing the same at a higher rate of 4 per cent is legally valid? Held that - Appeal dismissed. No scope to dispute the assessability of sales tax on the turnover of gunny bags. The scheme clearly suggests that the price of gunny bags is inclusive and where cloth bag is used, a higher price over and above what has been provided for ordinary containers is permitted.

Summary

Issues:
1. Interpretation of the Bihar Sales Tax Act, 1959 regarding the taxation of gunny bags sold along with wheat products.
2. Determination of whether the price of gunny bags should be included in the taxable turnover under the Act.
3. Application of the Roller Mills Wheat Products (Price Control) Order, 1964 to the pricing and taxation of gunny bags.
4. Assessment of sales tax at different rates for the sale of gunny bags and wheat products.

The Supreme Court of India heard an appeal challenging a decision of the Patna High Court under the Bihar Sales Tax Act, 1959. The dispute revolved around the taxation of gunny bags sold with wheat products. The assessing officer had included the price of gunny bags in the taxable turnover, leading to a higher tax rate of 4 1/2 per cent. The first appellate authority disagreed, suggesting that a portion of the turnover should be taxed at a different rate. The Tribunal found that the price of gunny bags was included in the consolidated price charged by the dealer, justifying the levy of tax at different rates. The Tribunal directed the assessing officer to determine the turnover from the sale of gunny bags and assess tax at 4 1/2 per cent, with the remaining turnover taxed at 2 per cent. The Court upheld the Tribunal's decision, emphasizing the implied agreement for the sale of gunny bags along with wheat products.

The Court referred to the Roller Mills Wheat Products (Price Control) Order, 1964, which specified pricing regulations for wheat products, including the cost of containers. The Court agreed with the Tribunal's finding that there was an implied agreement for the sale of gunny bags, which are considered a separate commodity assessable at a higher tax rate. The Court highlighted that the Control Order factored in the weight of the bag in the price to be charged. The judgment cited precedent to emphasize that the intention to sell or buy packing materials is a factual determination based on the circumstances of each case. The Court rejected additional evidence filed by the assessee, affirming the assessability of sales tax on the turnover of gunny bags.

Ultimately, the Court dismissed the appeal, upholding the taxation of gunny bags at a higher rate under the Bihar Sales Tax Act. The parties were directed to bear their own costs, and the appeal was dismissed.