1973 (10) TMI 51 - HC - VAT and Sales Tax

Summary

Issues:
Assessment of estimated turnover of containers - legality of assessment under Kerala General Sales Tax Act, 1963.

Analysis:
The judgment pertains to tax revisions arising from the order of the Kerala Sales Tax Appellate Tribunal regarding the assessment of the estimated turnover of containers in Appeals Nos. 228/68, 1085/69, and 1149/69. The appellants, M/s. A Srinivasa Pai, were involved in dealing with ration foodgrains, sugar, provisions, etc. The core issue in these appeals was whether the assessment of the estimated turnover of containers was lawful. The Sales Tax Appellate Tribunal decided against the assessee, stating that there was an implied agreement for the sale of containers in the case of gunny bags and tea-chests, but not for F.A.C.T. manure bags due to their lack of resale value. The State contended that containers maintain their identity and value when foodgrains are sold in them, making them subject to sales tax under the Kerala General Sales Tax Act, 1963.

The principles derived from various decisions, including Government of Andhra Pradesh v. Guntur Tobaccos Ltd., emphasize that the value of containers is assessable for sales tax if there is an express or implied agreement for their sale. The intention of the parties to sell or buy the packing materials is crucial, and the value of containers cannot be disregarded merely because their price is not separately fixed. The judgment discusses cases such as Hyderabad Deccan Cigarette Factory v. State of Andhra Pradesh, Commissioner of Taxes v. Prabhat Marketing Co., and Razack & Co. v. State of Madras to illustrate the legal principles governing the assessment of container turnover for sales tax purposes.

In analyzing the specific cases cited, the judgment distinguishes situations where containers are integral to the product, as seen in Government of Andhra Pradesh v. Guntur Tobaccos Ltd., from instances where containers are separate commercial commodities with substantial resale value. The court highlights the importance of assessing whether there was an agreement to sell the containers along with the contents and emphasizes that the value of containers must be considered in determining the overall turnover subject to sales tax.

The judgment concludes that containers like gunny bags and tea-chests, being independent commercial commodities with resale value, are not devoid of significance in the sale of foodgrains. The court references past decisions to support the inference that the value of containers is included in the overall sale price of the contents, making them liable for sales tax. Based on these considerations, the Tribunal's assessment in favor of gunny bags and tea-chests but against F.A.C.T. manure bags is upheld, leading to the dismissal of the tax revision cases without costs.