2016 (4) TMI 137 - HC - VAT and Sales Tax

Imposition of tax - Packing material used for packing the clothes - Held that - relying on the decision of co-ordinate Bench of this Court in the case Commercial Taxes Officer, Anti Evasion, Bhilwara Vs. M/s Suzuki Textiles Ltd., Village Gudda, Post Office- Mandal, District Bhilwara, S.B. Civil (Sales Tax) and Assistant Commissioner, Commercial Taxes Department Vs. Teletube Electronic Ltd. 2002 (4) TMI 929 - RAJASTHAN HIGH COURT , the tax not imposable on packing material used for packing the clothes. - Decided against the revenue

Summary

Issues:
Imposition of tax on packing material used for clothes.

Analysis:
The High Court dealt with Sales Tax Revision Petitions filed by the petitioner-Revenue against an order passed by the Rajasthan Tax Board, Ajmer, dismissing appeals regarding the imposition of tax on packing material used for clothes. The court referred to a previous judgment stating that the tax on packing material depends on the tax rate of the goods sold. If no tax is payable on the goods, then no tax shall be charged on the packing material. The court emphasized that packed goods are to be taxed as composite units, including turnover of packages and containers. In this case, the court concluded that the packing material used for clothes should not be subject to tax, leading to the dismissal of the appeals.

The controversy surrounding the imposition of tax on packing material was found to be covered by a decision of a co-ordinate Bench of the High Court in a previous case. The court mentioned that unless it is established that the sale of packing material occurred independently of the principal material, no tax can be levied. The court highlighted the importance of proving the transfer of property in the packing material for consideration related to the principal commodity. It was emphasized that the sale of packing material independent of the principal commodity must be proven to apply tax rates under the relevant provisions. As the tax in the present case was levied without establishing the sale of packing material independently, the revision petitions were dismissed in line with the previous judgments.

After hearing both parties' counsels and reviewing the judgments cited, the court found that the revision petitions were to be disposed of in accordance with the decisions in the previous cases. The court agreed with the parties and disposed of all revision petitions in the same terms, emphasizing that no costs were to be incurred. The court directed the order to be sent to the Rajasthan Tax Board and the concerned parties promptly.