1991 (4) TMI 369 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of entry 12 of Schedule II, Part A of the Gujarat Sales Tax Act, 1969 regarding the tax liability on sales of wooden pallets.

Analysis:
The case involved a dispute regarding the tax liability on sales of wooden pallets under entry 12 of Schedule II, Part A or under residuary entry 13 of Schedule III of the Gujarat Sales Tax Act, 1969. The Sales Tax Officer initially assessed the tax under entry 12, but the Assistant Commissioner revised it under entry 13 based on a determination by the Deputy Commissioner. The Tribunal, after examining the manufacturing process and use of the wooden pallets, concluded that they should be taxed under entry 12, particularly considering a government notification specifying certain items as packing materials under that entry. The State of Gujarat challenged this decision, leading to a reference to the High Court.

The High Court analyzed the relevant provisions of entry 12 of Schedule II, Part A, and the notification issued by the State Government specifying packing materials. It was noted that wooden pallets were not explicitly mentioned in entry 12 but were included in the notification as wooden frames. The Court examined the physical characteristics and use of wooden pallets, concluding that they indeed qualified as wooden frames under the specified packing materials in entry 12.

The Court further delved into the concept of packing materials, emphasizing that not all wooden frames would fall under entry 12 but only those intended for packing purposes. By applying a test of accepted use by buyers, it was established that the wooden pallets in question were commonly used for packing cement bags compactly for transportation and sale. Definitions of "packing" from dictionaries were cited to support the interpretation that items facilitating the compact bundling of goods qualify as packing materials.

Based on the analysis, the High Court upheld the Tribunal's decision, ruling in favor of the assessee that the sales of wooden pallets should be taxed under entry 12 of Schedule II, Part A. The Court answered the reference question in the affirmative, rejecting the department's contention. Costs were not awarded in the reference.

In conclusion, the judgment clarified the tax liability on sales of wooden pallets under the specific entry of the Gujarat Sales Tax Act, highlighting the interpretation of packing materials and the application of relevant provisions and notifications in determining the tax treatment of the goods in question.