1975 (8) TMI 106 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Implied contract of sale of containers.
2. Evidence supporting the sale of containers.
3. Status of the petitioner as a "dealer" under the Kerala General Sales Tax Act, 1963.
4. Petitioner's role as an agent of the Government.

Detailed Analysis:

1. Implied Contract of Sale of Containers:
The primary issue was whether there was an implied contract of sale of the gunny bags used as containers for wheat and rice sold by the petitioner. The court referred to several precedents, including *Government of Andhra Pradesh v. Guntur Tobaccos Ltd.* and *Hyderabad Deccan Cigarette Factory v. State of Andhra Pradesh*, which established that sales tax on containers could only be levied if there was an express or implied agreement to sell the containers. The court emphasized that the value of the containers compared to the contents was crucial in determining if an implied sale could be inferred. In this case, the value of the gunny bags was less than 1/80 of the value of the contents, making it insignificant. Therefore, no implied agreement of sale could be inferred.

2. Evidence Supporting the Sale of Containers:
The court examined whether the Tribunal's decision that there was a sale of containers was supported by any evidence or material. The court noted that the petitioner sold the goods in the same condition as received from the Food Corporation of India, without charging extra for the gunny bags. The court found no evidence to suggest that the price of the containers was included in the price of the foodgrains. The Tribunal's reliance on a subsequent Government order authorizing the Food Corporation of India to collect tax on packing materials was deemed unwarranted. The court concluded that the containers were used merely as a convenient and cheap vehicle for transporting the foodgrains, and no sale of the containers could be implied.

3. Status of the Petitioner as a "Dealer":
This issue was not pressed for decision in light of the court's previous ruling in *Deputy Commissioner v. Sreedhara Shenoy*. The court did not delve into this matter further.

4. Petitioner's Role as an Agent of the Government:
Similar to the third issue, this was not pressed for decision. The court focused on the remaining issues which were more pertinent to the case at hand.

Conclusion:
The court set aside the order of assessment passed by the sales tax authorities in respect of the gunny bags valued at Rs. 2,59,079. The court held that there was no implied agreement for the sale of the gunny bags, as their value was insignificant compared to the value of the foodgrains contained in them. The petition was allowed with costs.