1997 (12) TMI 614 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality and validity of the assessment order.
2. Applicability of Explanation 2 of section 2(34) of the Assam General Sales Tax Act, 1993.
3. Inclusion of the value of containers in the sale price.
4. Levy of interest under section 22 of the Act.
5. Burden of proof on the assessee.

Detailed Analysis:

1. Legality and Validity of the Assessment Order:
The writ petition challenges the assessment order dated September 19, 1995, under the Assam General Sales Tax Act, 1993. The petitioner, a registered dealer, submitted an annual return showing total sales of Rs. 6,70,33,455.46, claiming exemption under section 9 of the Act. The assessing officer determined the total sale of containers and levied taxes accordingly. The petitioner disputed the liability to pay tax on containers, arguing that the packing materials were essential and customary for the sale of goods and were transferred without consideration. The revisional authority upheld the assessment.

2. Applicability of Explanation 2 of Section 2(34) of the Assam General Sales Tax Act, 1993:
Explanation 2 of section 2(34) states that when goods are sold packed in containers, and such containers are essential or customary for the sale of goods, the value of such containers shall be included in the purchase or sale price of the goods. The court noted that this legal fiction must be given full effect to attain the purpose for which it was created. The petitioner's argument that the containers were not charged any price was deemed untenable, as the weight of the sealed commodity includes the weight of the containers.

3. Inclusion of the Value of Containers in the Sale Price:
The court emphasized that the value of containers used as packing materials must be included in the sale price of the goods. The assessing authority determined the value of the containers to the best of its judgment and levied taxes accordingly. The court rejected the petitioner's contention that the containers were not charged any price, stating that the burden of proof lies on the assessee to establish that no value was charged for the containers.

4. Levy of Interest under Section 22 of the Act:
The revisional authority upheld the levy of interest under section 22 of the Act for the failure to deposit tax within the specified time. The court noted that the liability to pay interest arises by operation of law when the full amount of tax is not paid within the stipulated period.

5. Burden of Proof on the Assessee:
The court held that the burden of proof lies on the assessee to establish that no value was charged for the containers used as packing materials. The assessee failed to produce any materials before the taxing authority to support their contention. The court stated that in cases of doubt, the benefit goes to the State, representing public interest.

Conclusion:
The court dismissed the writ petition, finding no merit in the petitioner's arguments. The interim direction dated March 10, 1997, was dissolved, and the writ petition was dismissed. The court affirmed that the legislative mandate must be given full effect, and the legal fiction introduced by Explanation 2 of section 2(34) should be carried to its logical conclusion. The decision in Raj Sheel and Vasavadatta Cements was found not applicable to the petitioner's case.