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TMI Blog1956 (12) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... hoops within the meaning of the Sales Tax Act. This contention was rejected by the assessing authority. It, however, found favour with the appellate Judge in an appeal preferred by the assessee. The assessing authority then went up in revision before the Commissioner of Sales Tax. The learned Commissioner agreeing with the view of the assessing authority held that "the business of the factory being of rendering services of ginning and pressing of cotton bales only, and supply of loha-patti and bardana, the price of which has been included by the assessee in the pressing charges charged from his customers, is a sale as defined under section 2(0) of the Sales Tax Act." The Commissioner has now made this reference at the instance of the assessee. He has submitted as many as six questions for decision. But all of them overlap and the only question that emerges for consideration is whether the owner of a ginning and pressing factory is liable to pay sales tax on the value of gunny cloth and iron hoops used in the baling process, when he charges his constituent a consolidated rate for pressing as well as for the iron hoops and the hessian coverings. 2.. The question has to be answered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered with hessian cloth and secured by iron hoops were delivered to them on payment of the consolidated charge. If then, as the Commissioner of Sales Tax has found that the price charged by the firm covers both the labour involved in the pressing and baling and the value of the hessian cloth and iron hoops, the transfer of property in the cloth and the hoops is clearly for consideration. That being so, the assessee is liable to pay tax on the value of the hessian cloth and the hoops supplied by him to his customers. 3.. The matter is plain enough. But Mr. Waghmare, learned counsel for the assessee, relying on Poppatlal Shah v. The State of Madras[1953] 4 S.T.C. 188; A.I.R. 1953 S.C. 274., Sales Tax Officer, Pilibhit v. Budh Prakash Jai Prakash [1954] 5 S.T.C. 193; A.I.R. 1954 S.C. 459. and Gannon Dunkerley Co. Ltd. v. State of Madras[1954] 5 S.T.C. 216; A.I.R. 1954 Mad. 1130. urged that the assessee firm was not doing the business of selling or supplying any hessian cloth and iron hoops; that there was no contract between the firm and its constituents as to the price of the gunny cloth and the iron hoops; that the contract between the parties was one of work and labour; and tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an integral part of the building constructed by them under the contract. The Madras view was, however, not accepted by this Court in the case of Pandit Banarsi Das v. State of Madhya Pradesh [1955] 6 S.T.C. 93. where the learned Chief Justice made the following observations at pages 105-106: "The Madras decision, with all due respects, seems to suggest that the expression 'sale of goods' received its full and final meaning by 1935 through legislation and decided cases. The cases cited there do not refer to taxation but deal with other matters. So also the statutes. That building contracts are entire, that property in the building materials passes when they are part of immovable property and that payment is in a lump sum and not separately for the materials may be matters of consequence in some contexts. But there is always a sale if goods are transferred to another and paid for by him. It cannot be gainsaid that there is payment for materials, though the payment is not made separately but as part of a larger amount. Building materials are goods is clear from The Deputy Federal Commissioner of Taxation v. Stronach [1936] 55 C.L.R. 305. and M.R. Hornibrook (Pty.) Ltd. v. Federal Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent was rejected following the decision in the case of Banarsi Das(2) and it was observed that "if the contract of dyeing yarn involves therein the transfer of property in dye-stuff and the price thereof is included in the price paid for the finished work there is no reason why the law cannot isolate the transaction of sale involved from other matters and tax it." The instant case is much stronger. In Babulal's case(3), the yarn, the dye-stuff and the chemicals became inseparably integrated. But here, there is no such integration even. When the bales are wrapped in gunny coverings and made secure by iron hoops, it cannot be said that the hessian cloth and the hoops get so inextricably mixed up with cotton or with labour and work involved in the baling process that they lose their identity. The hessian and the iron hoops though necessary and convenient for the preservation and the delivery of the cotton bales, remain extraneous and separate marketable materials. Learned counsel for the assessee referred to Nimar Cotton Press v. Sales Tax Officer, Khandwa[1954] 5 S.T.C. 428; A.I.R. 1956 Nag. 27. In that case also the assessee was the owner of a cotton press. But he recovered from his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods, that the contracts entered into by him with his constituents were works contracts and that the gunny cloth and iron hoops became an integral part of the product entrusted to him for baling and pressing. The assessee entered into three kinds of transactions: (i) where he charged an inclusive rate for both the gunny coverings and also the pressing process, (ii) where the gunny cloth and the hoops were supplied by the customers and rebate was granted by the assessee, and (iii) where the price of the goods and the cost of labour involved were separately shown. It was held by the learned Judges of the Andhra High Court that the packing materials were goods and that in the course of carrying on business of baling and pressing fibre, the assessee transferred the property in the goods and, therefore, he was rightly assessed to sales tax. It was further observed that in all the three types of transactions entered into by the assessee a charge for the gunny cloth and the hoops was made. A similar question was considered by the Andhra High Court in A.S. Krishna Co., Ltd. v. The State of Andhra[1956] 7 S.T.C. 26. . In that case the assessee was the owner of a plant for redrying raw tob ..... 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