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2019 (6) TMI 314 - HC - VAT / Sales TaxLevy of tax on the packing material of sugar - Section 4B of the 1948 Act - HELD THAT - The assessee claimed that the gunny bags purchased by the appellant sugar mill and used as packing material for sugar, there was no tax applicable as the assessee sells sugar and not gunny bags. It was urged that no separate price was charged for the packing material which is essential for selling and stocking sugar. In Raj Sheel and others Vs. State of A.P. and others 1989 (5) TMI 292 - SUPREME COURT , the Apex Court held that where sale is a composite transaction of sale of goods only, component sale of packing material cannot be treated separately for determining turn over. In a case where the packing material is an independent commodity and the packing material as well as the contents are sold independently, the packing material is liable to tax on its own footing. Whether in the facts and in the circumstances of the case, the order levying tax under section 4B on gunny bags being an essential packing material for sugar passed by respondent No.4 as upheld by the VAT Tribunal which were purchased from outside the State of Punjab and have already suffered tax is correct in law in view of the various pronouncements in this behalf? - HELD THAT - In the absence of any categorical record based finding regarding the terms of agreement relating to price of the gunny bags viz-a-viz the price charged for sugar sold, for which the Tribunal is the final fact finding authority, it is considered appropriate to remand this issue to the Tribunal to decide afresh after considering the case law on the point and also in the background of the factual matrix involved in the case - the issue is remitted to the Tribunal to decide the same afresh in accordance with law. Whether in the facts and in the circumstances of the case, VAT Tribunal, Punjab, Chandigarh has erred in law in upholding the order of the Assessing Officer dated 17.10.2003 passed in reassessment proceedings levying purchase tax on Sugarcane @ 8.8% for the period from 25.1.2000 to 31.3.2000 without there being any notification of the rate of tax which levied instead of the rate of 2.2% earlier levied in the original order of assessment dated 14.3.2003 on the basis of notification dated 28.8.1998? - HELD THAT - The Assessing Officer charged purchase tax at the rate of 8.8% for the period from 25.01.2000 to 31.03.2000 during the year 1999-2000 which had been assailed by the appellant-assessee. It was claimed that rate of purchase tax on sugarcane for the aforesaid period should be 2.2% on the basis of notification dated August 28, 1998. The claim of the assessee was rejected by the assessing authority and the appellate authority i.e. Deputy Excise and Taxation Commissioner (Appeals), DETC (A) . In the absence of the learned counsel for the appellant to show that any final decision had been taken by the Government with regard to charging of purchase tax at the rate of 2.2% for the period from 25.01.2000 to 21.03.2001, the assessee cannot derive any benefit from the proceedings dated 9th September, 2005 on the issues of Co-operative Sugar Mills as recorded in Annexure A.8 - we are not convinced that for the period 25.01.2000 to 31.03.2000, the rate of purchase tax was to be 2.2% instead of 8.8% - question is answered against the assessee-appellant. Appeal disposed off.
Issues Involved:
1. Legal sustainability of the orders. 2. Error in upholding the Assessing Officer's order by the VAT Tribunal. 3. Limitation in passing the assessment order. 4. Levy of tax on gunny bags as packing material for sugar. 5. Levy of tax on consumable stores used in manufacturing. 6. Levy of purchase tax on State Advised Price instead of SMP. 7. Levy of purchase tax on sugarcane at 8.8% instead of 2.2%. Issue-Wise Detailed Analysis: 1. Legal Sustainability of the Orders: The court acknowledged that Question No. (i) is legal and formal. The orders in question, Annexures A.1, A.2, and A.3, were challenged for their legal sustainability. 2. Error in Upholding the Assessing Officer's Order: The appellant argued that the VAT Tribunal erred in upholding the Assessing Officer's order, which was also upheld by the Deputy Excise and Taxation Commissioner (Appeals). The court noted that this issue was covered against the assessee by a previous judgment in M/s A.B. Sugars Limited vs. State of Punjab, VATAP No. 176 of 2013, and thus answered it accordingly. 3. Limitation in Passing the Assessment Order: The appellant contended that the assessment order was not passed within the prescribed limitation period. However, this issue was not pressed by the appellant's counsel during the hearing. 4. Levy of Tax on Gunny Bags as Packing Material for Sugar: The appellant argued that gunny bags used as packing material for sugar should not be taxed separately as they are essential for selling and stocking sugar. The court referred to the Apex Court's decision in Raj Sheel and others vs. State of A.P. and others, (1989) 3 SCC 262, which stated that the sale of packing material cannot be treated separately if it is an integral part of the sale of goods. The court remanded this issue to the Tribunal to decide afresh after considering the case law and the factual matrix involved. 5. Levy of Tax on Consumable Stores Used in Manufacturing: The court noted that Question No. (v) does not arise for consideration in this case. 6. Levy of Purchase Tax on State Advised Price Instead of SMP: The appellant argued that the purchase tax should be levied on the State Advised Price instead of the Statutory Minimum Price (SMP). This issue was also covered against the assessee by the judgment in M/s A.B. Sugars Limited's case and was answered accordingly. 7. Levy of Purchase Tax on Sugarcane at 8.8% Instead of 2.2%: The appellant contended that the rate of purchase tax on sugarcane for the period from 25.01.2000 to 31.03.2000 should be 2.2% based on a notification dated 28.08.1998. The court found that the rate of 8.8% was correctly applied based on the Punjab General Sales Tax (Second Amendment) Ordinance 2000 and the subsequent Amendment Act, 2000. The appellant failed to show any final decision by the Government to charge a lower rate of 2.2% for the specified period. Thus, this issue was answered against the assessee. Conclusion: The appeals were disposed of with the court remanding the issue of tax on gunny bags to the Tribunal for fresh consideration, while other issues were decided against the appellant based on existing judgments and legal provisions.
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