1971 (7) TMI 152 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of rules regarding the inclusion of packing charges in assessable turnover.
2. Whether charges for packing materials should be excluded from assessable turnover.
3. Effect of out-of-State purchases on assessable turnover.

Analysis:
The judgment dealt with four writ petitions concerning the assessment of packing charges in the assessable turnover of cement dealers. The assessing officer had issued notices to include the cost of packing material in the turnover for various assessment years. The petitioners contended that the cost of packing material and labor was excluded under the rules in force. The court noted the relevant rule, which allowed for the deduction of charges for packing from the total turnover of a dealer. The petitioners argued that the charges for packing should be excluded as they were separately shown in the sale bills, relying on a previous court decision. The government pleader, however, argued that such charges should not be excluded as they were essential pre-sale services, citing a Supreme Court decision regarding liquor.

The court further analyzed the distinction between products that require packing as part of the sale process and those that do not. It held that in the case of cement, where packing was done as per the buyer's request and separately charged, such charges should be excluded from the assessable turnover. The court disagreed with the government pleader's argument that out-of-State purchases of packing material implied resale, emphasizing that such purchases were made for the purpose of selling the cement in packed form to customers.

The judgment concluded by allowing three writ petitions and quashing the order that included packing charges in the assessable turnover in the fourth petition. The court held that the charges for packing materials should be excluded from the assessable turnover based on the specific circumstances of the case and the interpretation of relevant rules and precedents.