1988 (3) TMI 437 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Applicability of special sales tax on the sale of card board boxes.
2. Interpretation of "series of sales" under the Bihar Sales Tax Act.
3. Jurisdiction of the Assistant Commissioner of Commercial Taxes, Giridih.

Issue-wise Detailed Analysis:

1. Applicability of Special Sales Tax on the Sale of Card Board Boxes
The primary issue was whether the sale of card board boxes by the assessee to Indian Explosives Ltd. was subject to special sales tax under Section 5 of the Bihar Sales Tax Act, 1959, read with the notification dated 12th February, 1966. The court examined the definitions and common parlance of "card board" and "card board boxes." It was argued that card board and card board boxes have distinct connotations and should not be treated synonymously. The court agreed, stating that an article of merchandise in taxation statutes must be understood in common parlance. The court emphasized that the dictionary meaning of "carton" includes "a light paste board or card board box," but the card board boxes in question were specifically designed for containing explosives and were not light or flimsy. The court concluded that the card board boxes sold to Indian Explosives Ltd. were not subject to special sales tax under the notification.

2. Interpretation of "Series of Sales" under the Bihar Sales Tax Act
The court considered whether there was a "series of sales" involving the card board boxes, which would justify the imposition of special sales tax. The court referred to the Explosives Rules, 1940 and 1983, which prescribe that containers used for explosives must be destroyed or disposed of after one use and cannot be reused. This statutory prohibition meant that there could not be a multi-point sale or series of sales of the card board boxes after their initial use. The court cited precedents from the Allahabad High Court and the Calcutta High Court, which clarified that "series of sales" includes multi-point sales. The Supreme Court's interpretation in Kanpur Vanaspati Stores v. Commissioner of Sales Tax was also referenced, emphasizing that the series of sales must begin at the first point of sale and continue through successive dealers. Given the statutory mandate for the destruction of the containers, the court held that there was no series of sales in this case.

3. Jurisdiction of the Assistant Commissioner of Commercial Taxes, Giridih
The court did not find it necessary to delve deeply into the jurisdictional issue, as the primary focus was on the applicability of special sales tax and the interpretation of series of sales. However, it was noted that the Assistant Commissioner of Commercial Taxes, Giridih, had reassessed the sales tax for the relevant periods and issued notices to the assessee under Section 18(1) of the Act. The Tribunal had upheld the jurisdiction of the Assistant Commissioner in its appellate order.

Conclusion
The court concluded that the sale of card board boxes by the assessee to Indian Explosives Ltd. was not subject to special sales tax under Section 5 of the Bihar Sales Tax Act, read with the notification dated 12th February, 1966. The court answered the referred question in the negative, ruling in favor of the assessee and against the department. The references were allowed in favor of the assessee, with a consolidated hearing fee assessed at Rs. 1,000.