1957 (11) TMI 15 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the supply of gunny bags containing wheat atta to depot-holders under instructions of Government is a sale under the East Punjab General Sales Tax Act, 1948.
2. Whether the price of gunny bags applied as packing material to non-taxable commodities should be included in the taxable turnover of the dealer.
3. Whether the ex parte rejection of a revision petition under section 21(3) of the East Punjab General Sales Tax Act, 1948, is an adverse order.

Detailed Analysis:

1. Whether the supply of gunny bags containing wheat atta to depot-holders under instructions of Government is a sale under the East Punjab General Sales Tax Act, 1948.
The Court examined the legislative definition of "sale" under the East Punjab General Sales Tax Act, 1948, which includes "any transfer of property in goods for cash or deferred payment or other valuable consideration." The Court emphasized that the legislative definition takes precedence over other definitions. It was noted that the petitioners purchased bags from the Government at a fixed price and sold them to depot-holders at the same price, thus involving a transfer of property for a price. The Court concluded that the transaction met the requirements of a sale under the Act, as it involved both the transfer of property and payment of price. Therefore, the supply of gunny bags containing wheat atta to depot-holders under Government instructions constitutes a sale.

2. Whether the price of gunny bags applied as packing material to non-taxable commodities should be included in the taxable turnover of the dealer.
The Court noted that the petitioners sold flour for one price and the bags for another, with the bags remaining tangible personal property after being filled and resold. The title in the bags passed to the depot-holders along with the merchandise. The Court cited precedents where sales tax was levied on bags and packing materials used for non-taxable commodities. Thus, it was held that the price of gunny bags used as packing material should be included in the taxable turnover of the dealer.

3. Whether the ex parte rejection of a revision petition under section 21(3) of the East Punjab General Sales Tax Act, 1948, is an adverse order.
The Court interpreted sub-sections (3) and (4) of section 21, which allow the Financial Commissioner to entertain revision petitions suo moto or at the instance of a party. The Court clarified that the Financial Commissioner is not obligated to hear the party unless an adverse order is proposed. An adverse order is defined as one that is "opposite, hurtful, unfavourable" or "prejudicial." Since the ex parte rejection did not place the petitioners in a worse position, it was not considered an adverse order. Therefore, the ex parte rejection of the revision petition was not an adverse order.

Conclusion:
1. The supply of gunny bags containing wheat atta to depot-holders under Government instructions is a sale under the East Punjab General Sales Tax Act, 1948.
2. The price of gunny bags applied as packing material to non-taxable commodities should be included in the taxable turnover of the dealer.
3. The ex parte rejection of a revision petition under section 21(3) of the East Punjab General Sales Tax Act, 1948, is not an adverse order.

Costs:
The petitioner was ordered to pay costs to the Government, assessed at Rs. 200.

Agreement:
DULAT, J. concurred with the judgment.

Reference Answered Accordingly.