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TMI Blog1966 (3) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... o as "the Corporation". The petitioner who sold the cement as the local agent of the Corporation will be referred to as "the dealer". It is undisputed that under the Cement Control Order, 1958, promulgated by the Government of India, under the provisions of section 18(G) of the Industries Development and Regulation Act, 1951, (Act 65 of 1951), the producer was under a duty to sell the entire quantity of cement held in stock by it on the date of the commencement of the Order and also the entire quantity of cement which might be produced during a period of three years from the date of the commencement of that Order, only to the Corporation. The Cement Control Order contains provisions about the price at which the producer shall sell the cement to the Corporation. The Schedule to that Order enumerated those prices. There was an amendment to this Order in the year 1961 intituled the Second Cement Control Amendment Order by which an elucidation was made in regard to the price which could be recovered by the producer for the packed cement and the price which could be recovered for the cement in its loose condition. During the period with which we are concerned in this revision petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d since the dealer sold the cement in packed containers the packing charges did not fall within rule 6(5)(f)(ii) of the Rules. The Deputy Commissioner to whom the dealer appealed, concurred in that view and the Sales Tax Appellate Tribunal to whom there was a further appeal dismissed it. So this revision petition. For the dealer it is contended by Mr. Ullal that the finding recorded by the Commercial Tax Officer and in the two appeals that no service was rendered by the dealer for the consumer, overlooks the provisions of the Cement Control Order and the amendment made to it in the year 1961. It is also urged that the fact that the producer attended to the packing operations for which the Corporation paid the producer did not justify the view that no service was rendered by the dealer who was the agent of the Corporation for the consumer. It is undisputed that before the cement left the factory of the producer and when it was despatched on its sale by the producer to the Corporation, certain quantities of cement were put into containers and packed and for the service rendered by the producer in that way the Corporation incurred an expenditure of Rs. 1,22,988.90. The Commercial Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the producer, was done for the purpose of rendering any service to the consumer such as the service to which rule 6(5)(f)(ii) alludes. We should now discuss the meaning of rule 6(5)(f)(ii) of the Rules. Sub-rule (1) of that rule says that in a case to which subrule (2) does not apply, the total taxable turnover of a dealer is the consideration for the sale and the goods supplied or distributed. To this provision, there is an exception which emerges from subrule (5)(f). That clause says that in computing the taxable turnover, the freight and the charges for packing and delivering and other such like services shall be excluded where such freight and charges are specified and charged for by the dealer separately without including them in the price of the goods sold. What is perfectly manifest is that the freight and the charges to which the sub-clause of that clause refers can be excluded from the taxable turnover only when the two conditions specified in that clause exist. The first is that the amounts, to be deducted, should not be described as part of the price of the goods sold. They should be specified and charged independently to demonstrate that they do not form part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be specified by the Corporation in this behalf from time to time. * * * *" Clause 4 forbids the removal of cement from the premises of the producer without the permission of the Central Government. By clause 5 the producer is enjoined to maintain accounts relating to the production of cement in such form as the Central Government may direct. The controlled price of cement is the subject-matter of clause 6. The relevant part of that clause is that the producer shall sell cement at prices specified in the Schedule. There is an explanation to that clause which reads: "The price fixed in the Schedule is exclusive of- (i) the excise duty payable by the producer in respect of the cement produced by him; and (ii) the cost of packing or of containers, if any." Sub-clause (2) of clause 6 reads: "The price at which the Corporation may sell cement to any person shall be Rs. 117.50 nP. per ton of packed cement free on rail destination railway station exclusive of State and inter-State sales tax." There is a proviso to this sub-clause which is: "Provided further that- * * * * (ii) in respect of unpacked cement the price referred to in this sub-clause shall be reduced by such maximum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roducer, purchased cement which had been packed by the producer, we are clearly of the opinion that this submission is unfounded. Neither the Commercial Tax Officer nor the Deputy Commissioner or the Sales Tax Appellate Tribunal found it possible to say so. Moreover, it is clear from the provisions of the Cement Control Order that the Corporation was at liberty to purchase loose cement or cement in a packed condition, depending upon whether it wished to sell to its consumers either the one or the other. Otherwise, the distinction maintained by the Cement Control Order between the price payable to the Corporation for loose cement as contrasted with that payable for packed cement becomes unmeaning. So, it follows that according to the course of business which was carried on between the producer and the Corporation on the one hand and the Corporation and its consumers on the other, the Corporation would purchase from the producer loose or packed cement according to its requirements. Indeed as pointed out by Mr. Ullal, the learned Advocate for the dealer, the Commercial Tax Officer himself stated this in para. 3 of his order: "The State Trading Corporation acquires either packed cemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement is packed by the producer, as undoubtedly it was done in the case before us during the period with which we are concerned, such packing would be made by the producer at the request of the Corporation in the context of a sale by the Corporation to its own consumers. It would not be reasonable to think that even without there being a consumer to whom the Corporation had agreed to sell the cement, the Corporation would quite unnecessarily require the producer to load the cement into containers and pack them. Likewise, it is obvious that when the producer is asked by the Corporation to despatch cement in a loose condition without packing it in containers, it does so because the consumer to whom the Corporation has agreed to sell or sold the cement wants it in that condition. The many provisions contained in the Cement Control Order such as the power of the Corporation to direct delivery to the person named by the Corporation, the specification of a smaller controlled price for sale to those who want it in a loose condition as contrasted with the higher controlled price fixed by the Order for sale of packed cement, and the fact that the producer sends the cement either in a packe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the Corporation after having made the purchase asks the producer to do the packing for the consumer to whom the Corporation has sold or is about to sell it. That being the position the view taken by the Commercial Tax Officer, the Deputy Commissioner and the Sales Tax Appellate Tribunal that the dealer was not entitled to the deduction claimed by him cannot be supported and is opposed to the plain provisions of the Cement Control Order as it was in force on 17th February, 1961, from which nothing is easier than to understand clearly the course of dealing in regard to the sale of cement by the producer to the Corporation and by the Corporation to its consumers. This, however, was entirely missed by the three tribunals below. Mr. Government Pleader, however, urged that it was not the case of the dealer at any stage that the packing of the cement was done by the producer for the consumer, but that the stand taken by the dealer was that whether or not the packing was done for the consumer, so long as the packing charges were stated and specified separately in the bill as not forming part of the price, the dealer was entitled to a deduction to that extent. In support of this subm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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