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TMI Blog1973 (10) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... stant Commissioner in appeal and, finally, by the Sales Tax Appellate Tribunal. The packing materials involved in the appeals were gunny bags, tea-chests and F.A.C.T. manure bags. In respect of the first two, the Tribunal held that there was an implied agreement for the sale of the containers and, as such, the assessment of the estimated turnover of the containers was correct; but in respect of the last one, F.A.C.T. manure bags, the Tribunal held that the manure bags do not have a substantial resale value as the bags had got spoiled on account of the corrosive action of the contents and it is not possible to draw an inference of implied sale of such bags. Therefore, the assessment in respect of the F.A.C.T. manure bags was directed to be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1966] 17 S.T.C. 624 (S.C.)., Commissioner of Taxes, Assam v. Prabhat Marketing Co.[1967] 19 S.T.C. 84 (S.C.). and Razack Co. v. State of Madras[1967] 19 S.T.C. 135 (S.C.). are important. In Government of Andhra Pradesh v. Guntur Tobaccos Ltd.[1965] 16 S.T.C. 240 (S.C.)., the assesseecompany was a dealer carrying on business of re-drying in the company's factory raw tobacco entrusted to it by its customers. The assessee re-dried the tobacco, packed it in packing materials purchased from the market and delivered it to the customers. For re-drying each bale of tobacco, the assessee charged the customers a certain sum but there was no separate charge for the value of the packing materials used. The assessee was assessed to sales tax under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and when the tobacco leaf emerges from the reconditioning chamber, it must be packed in waterproof packing material and stored for the requisite period. Unless the packing is done immediately, the tobacco loses its standardised moisture content, and without the packing, the process is not complete." The conclusion drawn, therefore, was that there was no Intention to sell the packing materials. This case, however, is not applicable to the case on hand. Here, the position is that the packing material or containe is different from the contents, and has to be treated as such. In such a situation, the question to be asked is whether there was an agreement, express or implied, to sell the container along with the contents and, in answering the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , that it should be supported by money consideration and that as a result of the transaction property should actually pass in the goods; (iii) that what the sales tax authorities had to do was to ask and answer the question whether the parties, having regard to the circumstances of the case, intended to sell or buy the packing materials or whether the subject-matter of the contracts of sale was only cigarettes, and packing materials did not form part of the bargain at all, but were used by the sellers as a convenient and cheap vehicle of transport." The order of the High Court was set aside and the case was sent back for a consideration of the question whether the packing materials were the subject-matter of the agreement to sell. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parate prices of chewing tobacco and of the packing materials as required by rule 5(1)(g) of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939. It was held that the appellants were not entitled to claim exclusion from the taxable turnover of the value of the packing material. In the light of the above principles It is impossible to hold that teachests and gunny bags are things of no value or the value they fetch is too insignificant to be taken into consideration. They are independent commercial commodities having substantial resale value and they do not lose their physical or commercial identity when foodgrains are packed in them. The contention is not open to the Commercial Tax Officers (sic) that these packing material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T.C. 898., this court held that packing material used in packing handloom cloth were Incapable of being resold or consumed by their customers. So it was held that the price of the cloth sold Included the cost of Its packing was not based on any evidence, nor was It warranted by the circumstances of the case. The learned judges observed: "We think It absurd to call as 'containers' the materials in which bundles of cloth are packed in the usual course of trade. It is a well-known courtesy observed by the traders that goods purchased are wrapped or packed before they are delivered to the customers and they charge nothing extra for such wrapping or packing-the case of containers made of metal, glass, etc., being quite different." It is on t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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