1995 (2) TMI 410 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Taxability of the sale turnover of packing materials (containers) under the Tamil Nadu General Sales Tax Rules.
2. Applicability of rule 6(cc)(ii) of the Tamil Nadu General Sales Tax Rules.
3. Relevance of previous judicial decisions on similar matters.

Detailed Analysis:

1. Taxability of the Sale Turnover of Packing Materials (Containers):
The primary issue is whether the sale turnover of packing materials, specifically containers used for petroleum products, is taxable. The assessee, M/s. Universal Agencies, contended that the sale turnover of the containers should not be taxed as the petroleum products are second sales and not taxable under the Tamil Nadu General Sales Tax Rules. The assessing officer, however, included the value of the packing materials in the taxable turnover and assessed it at 4%, a decision upheld by the Appellate Assistant Commissioner and the Tribunal.

2. Applicability of Rule 6(cc)(ii) of the Tamil Nadu General Sales Tax Rules:
The assessee argued that under rule 6(cc)(ii), the sale turnover of the containers is exempt from tax, regardless of whether the sale price of the container is stated separately in the bills. The rule specifies that in determining the taxable turnover, amounts falling under the head charges for packing, whether or not specified and charged separately, are to be deducted if the goods are not liable to tax at the hands of the assessee. The court agreed with the assessee, stating that the petroleum products being second sales are not taxable, and therefore, the sale turnover of the containers should also be exempt under rule 6(cc)(ii).

3. Relevance of Previous Judicial Decisions:
The court examined several previous decisions to determine their applicability to the present case:
- Ramco Cement Distribution Co. (P.) Ltd. v. State of Tamil Nadu [1982] 51 STC 171 (Mad.): This case dealt with the taxability of packing charges under the Cement Control Order. The Supreme Court upheld that packing charges included in the sale price are taxable. However, the court noted that this decision was concerned with rule 6(cc)(1), not rule 6(cc)(ii), and thus not directly applicable to the present case.
- Raj Sheel v. State of Andhra Pradesh [1989] 74 STC 379: This decision emphasized that the taxability of packing materials depends on whether the packing material is sold as an independent commodity. The court noted that this decision did not consider rule 6(cc)(ii) and therefore did not apply to the present case.
- State of Tamil Nadu v. V.V. Vanniaperumal & Co. [1990] 76 STC 203 [FB]: This case involved the sale of composite goods (oil in tins) and held that both the oil and the tins were taxable. The court distinguished this case from the present one, noting that petroleum products are not taxable in the hands of the assessee, making it inapplicable.

Conclusion:
The court concluded that the assessee is entitled to exemption from tax on the sale turnover of the containers under rule 6(cc)(ii) of the Tamil Nadu General Sales Tax Rules. The previous decisions cited by the department were found not applicable to the present case due to differences in the facts and the specific provisions of the rules being interpreted. The order passed by the Tribunal was set aside, and the revision filed by the assessee was allowed. No costs were awarded.

Petition allowed.