1972 (11) TMI 86 - HC - VAT and Sales Tax

Summary

Issues:
1. Liability to pay sales tax on packing charges separately shown in bills for the sale of cement.
2. Interpretation of rule 9(f)(ii) of the Kerala General Sales Tax Rules, 1963.
3. Applicability of previous court decisions on similar cases.
4. Whether the cost of packing materials should be included in charges for packing and delivery.
5. Effect of the Cement Control Order, 1967 on the case.

Analysis:

1. The main issue in this case is whether the petitioner, a dealer under the Kerala General Sales Tax Act, is liable to pay sales tax on the amount of packing charges separately shown in the bills for the sale of cement. The petitioner claimed exemption under rule 9(f)(ii) of the Kerala General Sales Tax Rules, which provides for including charges for packing and delivery when specified and charged for separately. The Sales Tax Officer initially negatived the claim based on a Supreme Court decision, which was later found to be inapplicable.

2. The court analyzed whether the entire amount of the packing charges claimed by the assessee can be exempted under rule 9(f)(ii) of the Rules. It was crucial to determine whether what was sold was a packet of cement or cement with packing materials. The court considered previous court decisions on similar cases to ascertain the correct interpretation of the rule in question.

3. The court delved into the interpretation of the term "charges for packing and delivery" and whether it should include the cost of packing materials. It referenced a Madras High Court decision and a subsequent ruling that clarified the inclusion of the cost of material used for packing in the charges for packing. The court ultimately agreed with the latter view, stating that the cost of packing materials should be considered in such charges.

4. The impact of the Cement Control Order, 1967 was also examined in the case. The court noted that the price for cement was fixed separately, and any charges for packing or containers should be added to this price. Since the transaction involved the sale of cement along with packing material (gunny bags), the court concluded that the entire amount should be exempted under the relevant rule.

5. Consequently, the court set aside the assessment orders imposing sales tax on the charges for packing, ruling that such imposition was not justified. The court allowed the petition and ordered the deletion of the tax amounts related to charges for packing from the total tax determined for the respective years, with no costs awarded.

This comprehensive analysis outlines the key issues and the court's detailed reasoning in the judgment, addressing the liability for sales tax on packing charges and the interpretation of relevant rules and precedents.