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TMI Blog1956 (2) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... 963 gunny bags of the grain shop at Rs. 1-4-0 per bag and on 92,095 gunny bags containing sugar at Rs. 1-10-6 per bag making a total of Rs. 1,86,146-3-6 for the period 1st April, 1952, to 31st July, 1952, when sugar was exempt from sales tax. For the period 1st August, 1952, to 31st March, 1953, sales tax was leviable on sugar also and therefore the only items taxed which are disputed are steam and empty gunny bags of the grain shop, grain being exempt during that period. It may be pointed out that in the aforesaid order the Sales Tax Officer specifically computed the cost of sugar for the period 1st April, 1952, to 31st July, 1952, by deducting the cost of bags from the cost of sugar sold in bags and thus arrived at the net turnover of actual sugar exempted form sales tax. Similarly, the actual turnover of molasses and grain which were also exempted for that period was computed. In so far as the assessment for 1953-54 is concerned, there was no exemption either on sugar or on molasses; the only disputable item is that of steam valued at Rs. 83,417-2-0. It may be observed that the Sales Tax Officer, after making the assessments for 1952-53 and 1953-54, re-opened assessments alr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal to the Deputy Commissioner of Sale Tax before whom it was urged (i) that unlike in the case of Varasuki and Co. v. Province of Madras [1951] 2 S.T.C. 1; A.I.R. 1951 Mad. 254. , where it was held that the gunny bags were bought and sold, there was no proof that these were bought and sold in this case; (ii) that the petitioner has not collected sales tax; (iii) that the petitioner sold sugar at the scheduled rates fixed by the Government which does not include the cost of gunny bags, as such it cannot be assumed that the petitioner sold gunny bags for any valuable consideration; and (iv) that the imposition of tax on steam sold to the Government Alcohol Factory is incorrect because it was sold without profit. All these contentions were rejected by the Deputy Commissioner, who particularly observed that with regard to the gunny bags, it was admitted that the cost thereof was debited to the manufacturing ex- penses and the invoice shows that sugar was sold in bags of 2 maunds F.O.R. Shakkarnagar at Rs. 81-13-0. From these facts, he came to the conclusion that the turnover and the cost of gunny bags should be subjected to sales tax. Against this order the petitioner went up in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ass and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale." The difference between these two definitions is obvious in that for purposes of Sales Tax Act stocks and shares, growing crops, grass etc., are excluded though for purposes of Sale of Goods Act they have been included. Ignoring those specifically excluded or included things, "goods" both for purposes of the Sales of Goods Act as well as for the Sales Tax Act generally mean all or every kind of movable property. Section 22 of the Indian Penal Code defines movable property as intended to include corporeal property of every description, except land and things attached to the earth or permanently fastened to anything which is attached to the earth. The question in this case is what is meant by movable property and whether steam can properly be termed goods. Learned advocate for the petitioner contends on the basis of the decision in Rash Behari Shaw v. Emperor[1936] 41 Cal. W.N. 225., where the Calcutta High Court had doubted whether electricity would come within the definition of goods under the Sale of Goods Act, that it is doubtful whether steam can be sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is not really relevant for our purpose to determine this question. The word "goods" is one which has an indefinite meaning and various statutes have defined it as including or excluding something or things which may or may not be included in or excluded from its generic meaning. We may with Lord Sumner in the case of The Noordam (No. 2)[1920] A.C. 904 at p. 909. say that "the content of the word 'goods' differs greatly according to the context in which it is found and the instrument in which it occurs." This observation of Lord Sumner was specifically referred to and adopted by Sankey, J., as he then was, in R. v. Dickinson[1920] 3 K.B. 552 at pp. 555-556. in these words, "When the word stands alone without definition its meaning must be ascertained, as was said by Lord Sumner in The Noordam (No. 2)[1920] A.C. 904 at p. 909. by 'the character and scope' of the enactment in which the word is used." We must therefore try to ascertain the meaning of goods generally and to determine whether steam could properly be included in it. Generally speaking, all things containing matter in the scientific and physical sense are goods; and in economic parlance anything material or immaterial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded from the purview of the Bihar Sales Tax Act where the definition of the word "goods" is analogous to the one given in the Hyderabad General Sales Tax Act. Gas has been held to be movable property for the purposes of theft in several English cases and in that of the Privy Council in Erie County Natural Gas Co.[1911] A.C. 105., to which we have already adverted, it has been treated as goods. If gas is "goods" there is no reason why steam should not be considered as goods. Steam is certainly a tangible property as it is visible, it has weight and it can be felt at any rate to the detriment of the person venturing to feel it. Once steam is declared to be "goods" any sale of it within the meaning of the Hyderabad General Sales Tax Act would be subject to sales tax unless it is exempt. As we have observed in the case of Sharfaji Rao v. Commissioner of Sales Tax[1953] 4 S.T.C. 6., since the object of the Hyderabad General Sales Tax Act is to levy sales tax on all goods generally other than those specified in the exempted list, the assessee must show that he comes within the exempted list or has been exempted by the Government under section 7 of the Sales Tax Act. It is further contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s purpose, provides that subject to such conditions and restrictions, if any, prescribed in this behalf, "the amount for which goods are sold shall include any sums charged for anything done by the dealer in respect of the goods sold at the time of or before the delivery thereof." The cumulative effect of these provisions is that every person who is engaged in trade or business and who transfers any kind of movable property to another for cash or for deferred payment or for other valuable consideration is liable to be taxed on his turnover, which will include any sums charged for anything done by the dealer in respect of the goods sold at the time of or before the delivery thereof subject of course to any exemptions. That gunny bags are goods cannot be denied nor can it be denied that the assessee had transferred the property in these goods in the course of his trade or business for valuable consideration. In our view, the contention that the bags were supplied free of cost is untenable, because obviously even on the showing of the assessee in his balance sheet, the cost of the gunny bags was included in the manufacturing cost of sugar and it cannot therefore be said that they ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of goods for the purposes of item No. 54 of List II, Schedule 7, of the Constitution empowering a State to levy taxes on such materials, and this Bench held that where materials are so inseparably integrated with the contract of labour and work as to lose their identity and become inextricably identified with the service, there is no sale of such materials. In our view, the contention based upon these cases cannot be availed of by the assessee because gunny bags cannot be said to have been so inseparably integrated with sugar that they have lost their identity or have become part of the exempted goods. The invoices themselves clearly disclose sale of bags of sugar, each bag containing 2 3/4 maunds. The contract of sale is, there- fore, of sugar plus bags for a composite price and the turnover on bags becomes leviable to sales tax. In this view we are supported by the other High Courts. In the cases of Mohanlal Jogani Rice Atta Mills v. State of Assam[1953] 4 S.T.C. 129., Varasuki Co. v. Province of Madras[1951] 2 S.T.C. 1. , Indian Leaf Tobacco Development Co., Ltd. v. State of Madras [1954] 5 S.T.C. 354. and A.S. Krishna Co., Ltd., Guntur v. state of Andhra [1956] 7 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale to the Government in the course of its business or trade and it would have been perfectly legitimate for it to have collected sales tax from the Government. The activity of the company in manufacturing steam and supplying it to the Government cannot be said to be done without any profit-making motive or with a philanthropic view. It is quite likely that the company did not make and profit but as we have observed that is not the criterion as long as the supply of steam was in course of its business or trade. The further point pressed by the assessee is that under rule 8(g) (ii) charges for packing materials are exempt from the turnover. This contention is equally unfounded. Exemption under rule 8(g)(ii) is in the following terms: "All amounts falling under the following two heads, when specified and charged for by the dealer, casual trader or the agent of a non- resident, as the case may be, separately without including them in the price of the goods sold: (i) freight; (ii) charges for packing, delivery and other such like services." It is clear from the above rule that the exemption contemplated is with respect to the service and not in respect of materials used in the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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