1960 (9) TMI 89 - HC - VAT and Sales Tax

Issues Involved:
1. Liability of the petitioner for sales tax on hessian cloth and iron hoops.
2. Validity of the decision in Jaikishan Gopikishan v. Commissioner of Sales Tax in light of Supreme Court decisions.
3. Nature of the contract between the petitioner and his customers (works contract vs. sale of goods).
4. Availability of alternative remedies for the petitioner.
5. Applicability of Supreme Court decisions to the present case.

Detailed Analysis:

1. Liability of the petitioner for sales tax on hessian cloth and iron hoops:
The petitioner, a proprietor of a cotton pressing concern, was assessed for sales tax on the value of hessian cloth and iron hoops used in the baling process. The Sales Tax Officer determined the value by adding a ten percent margin profit to the purchase price of these materials. The assessment was based on the precedent set by the Division Bench in Jaikishan Gopikishan v. Commissioner of Sales Tax, which held that the transfer of property in hessian cloth and iron hoops for consideration constituted a sale, making the petitioner liable for sales tax.

2. Validity of the decision in Jaikishan Gopikishan v. Commissioner of Sales Tax in light of Supreme Court decisions:
The petitioner argued that the decision in Jaikishan Gopikishan was contrary to later Supreme Court decisions in State of Madras v. Gannon Dunkerley and Co. and Banarsi Das v. State of Madhya Pradesh. These Supreme Court cases clarified that a works contract could not be taxed as a sale unless there was an express or implied agreement for the sale of the materials used. The High Court needed to reassess whether the precedent set by Jaikishan Gopikishan was weakened or destroyed by these Supreme Court rulings.

3. Nature of the contract between the petitioner and his customers (works contract vs. sale of goods):
The petitioner contended that his contracts with customers were works contracts, involving pressing and baling cotton, and not sales of hessian cloth and iron hoops. The Supreme Court decisions emphasized that for a transaction to be considered a sale, there must be an agreement to transfer property in goods for consideration. The High Court examined whether the consolidated charge for pressing and packing implied an agreement for the sale of packing materials.

4. Availability of alternative remedies for the petitioner:
The Advocate-General argued that the petitioner had alternative remedies available, such as an appeal and revision under sections 22 and 22-A of the Central Provinces and Berar Sales Tax Act, 1947. The petitioner had, in fact, filed an appeal against the assessment order, which was pending. The High Court agreed that the existence of alternative remedies was a valid ground for rejecting the petition.

5. Applicability of Supreme Court decisions to the present case:
The High Court analyzed the Supreme Court decisions to determine their applicability. The Supreme Court had held that a works contract could be taxed as a sale only if there was an agreement to sell the materials used. The High Court concluded that the decision in Jaikishan Gopikishan did not contradict the principles laid down by the Supreme Court. It found that the contract for pressing and packing cotton was divisible into two parts: one for labor (pressing) and one for materials (packing), implying a sale of packing materials.

Conclusion:
The High Court dismissed the petition, finding that the decision in Jaikishan Gopikishan was consistent with Supreme Court rulings. The appellate authority was tasked with determining whether there was a sale of packing materials based on the principles established. The petitioner's liability for sales tax on hessian cloth and iron hoops was upheld, and no costs were awarded. The outstanding security deposit was ordered to be refunded to the petitioner.

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