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TMI Blog1986 (4) TMI 335X X X X Extracts X X X X X X X X Extracts X X X X ..... ner-firm further challenges the notification dated 1st October, 1978 (annexure D) issued under sub-section (5) of section 8 of the Central Sales Tax Act, 1956 (No. 74 of 1956) on the ground that the said notification is contrary to the provisions of section 8(5) of the 1956 Act. The petitioner-firm also challenges the demand notices, vide annexures B and C by which Rs. 8,515 and Rs. 23,323 towards M.P. sales tax and Central sales tax respectively have been demanded, on the ground that the petitioner-firm has reasonably claimed deduction on account of tax-paid bardana (gunny bags) in the return. It also challenges the notices which were issued by the respondents, vide annexures E and F by which the petitioner was asked to show cause as to why its registration certificate should not be cancelled. 4.. The case of the petitioner is that it is a registered dealer under the Act as well as under the Central Sales Tax Act, 1956. It carries on the business of manufacturing and also sale of lime which is sold in jute (gunny) bag and polythene bag packing for cheap and convenient transportation of lime. 5.. The petitioner-firm purchases bardana, i.e., packing material, from registered dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation clause appended to section 2(o) of the Act. The assessment could be on the basis of its construction. It is not a case that the amendment introduced suffers from any vices, and on this count, it deserves to be declared ultra vires. 13. Therefore, the contention of the assessee-firm that the amendment as has been made to section 2(o) of the Act, i.e., its explanation clause, is discriminatory in nature inasmuch as it subjects the tax-paid packing material to sales tax and as such it is contrary to the scheme of the Sales Tax Act, has no substance. 14.. The whole scheme of section 2(o) of the Act and its explanation clause is that, it is a single point tax but not a multi-point tax. The explanation added to section 2(o) of the Act entails taxation on packing material (bardana) on which tax has not been paid at the time of purchase. Therefore, where on packing material, sales tax is paid and the packing material is not sold separately but the goods are sold in packing material and the packing material has not lost its original identity transforming in enhancing the price of the goods by virtue of the use of the packing material, then the formula for assessment would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of any particular provision as apparent from the scheme of the Act, with the assistance of such external aids as are permissible under the law." Therefore, though the taxing statute has to be construed strictly, yet, none the less, it must be borne in mind that the construction does not suffer from any vices of rigid rule of interpretation; on the other hand, the statute after taking assistance of such internal and external aid of the relevant provisions of the Act could be harmoniously interpreted as in the instant case, in the light of the relevant provisions of the Act, i.e., sections 2(rr), 2(r), 2(t) and the principal provision of section 2(o) of the Act. Then, the position emerges from the explanation appended to section 2(o) is that the amendment is nothing but an attempt to rationalise the rate of tax with a view to mitigate the difficulty of the trading community. 18.. In Kukreja Udyog v. Commissioner of Sales Tax (printed infra) [1985] 18 VKN 475 the Division Bench of this Court held that the goods sold duly packed will also amount to sale of the packing material even in the absence of implied or express contract for the same. But the price or cost or value of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court on 23rd March, 1987: See [1987] 65 STC FRSC 6. under section 2(r)(ii) of the Act of Rs. 1,88,071 in respect of the cost of the taxpaid goods including Rs. 74,506 being the cost of the packing material. The remaining amount claimed as deduction represented the cost of the tax-paid raw material. At the time of assessment, the petitioner, realising that it had wrongly claimed a deduction in respect of tax-paid raw material, voluntarily submitted computation of its sales and purchases along with an explanation for the excess claim of deduction in the quarterly returns and paid a further sum of Rs. 3,891 which it was required to pay by way of tax, which, according to this computation, it was further required to pay. In this computation, the petitioner had maintained its claim of deduction in respect of the tax-paid packing material worth Rs. 74,506 under section 2(r)(ii) of the Act. The assessing authority enhanced the gross turnover from Rs. 12,92,343 to Rs. 12,93,000 and, after giving statutory deduction of inter-State sales under section 2(r)(ii) of the Act, determined the taxable turnover at Rs. 11,34,923 and assessed the tax on this sum at 10 per cent vide its order ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erpretation of these provisions that the decision of the question at hand depends. These provisions are set out hereinbelow: 112.. In this Act, unless there is anything repugnant in the subject or context,- * * * (o) 'sale price' means the amount payable to a dealer as valuable consideration for the sale of any goods less any sum allowed as cash discount according to ordinary trade practice but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before delivery thereof other than the cost of freight or delivery or the cost of installation when such cost is separately charged and the expression purchase price shall be construed accordingly; Explanation.-Where goods are sold together with packing material or container, then notwithstanding anything contained in this Act the sale price of such goods shall be inclusive of the price or the cost or value of such packing material or container, whether such price or cost or value is charged separately or not, as if such packing material or container were the parts of the goods sold. (r) 'taxable turnover' in relation to any period means that part of a dealer's turnover for such p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al is a part of the goods sold, which, in the instant case, are the footwears, and the sale price of those goods for the purpose of sales tax by virtue of the definition under the Act, is inclusive of the price of the packing material, the price or the cost or the value of such packing material is a permissible deduction under section 2(r)(ii). To hold otherwise, in our opinion, would render the explanation to section 2(o) of the Act otiose. The definition of sale price has been provided for the purpose or determination of tax and, therefore, it has to be given an effect as to and, as such, any interpretation, which renders any part of the definition nugatory, would be against the canon of interpretation and the purpose with which the definition has been provided in the Act. It was argued on behalf of the State that unless there is an express or implied agreement for the sale of the packing material, the cost of the packing material is not deductible under section 2(r)(ii) of the Act. The emphasis was on the expression "where goods are sold together with packing material" used in the explanation. On the interpretation of this expression, it was argued that this contemplates an ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial is not included. As a sequal to the foregoing discussion, it has to be held that the petitioner is entitled to the deduction of Rs. 74,506, which are the cost of the packing material, under section 2(r)(ii) of the Act. Question No. (1) formulated by us is answered accordingly. 5.. We now turn to the 2nd question. The only argument advanced was that no specific notice was given to the petitioner to show cause why the penalty should not be imposed and, therefore, the imposition of the penalty is bad. Section 43(1) of the Act reads as under: "If the Commissioner or the appellate authority in the course of any proceedings under this Act is satisfied that the dealer has concealed his turnover or the aggregate amount of purchase prices in respect of any goods or has furnished inaccurate particulars of such sales or purchases, as the case may be, or furnished a false return, the Commissioner or the appellate authority as the case may be, after giving the dealer a reasonable opportunity of being heard, may direct that the dealer shall, in addition to the tax payable by him, pay by way of penalty a sum, which shall not be less than 20 per cent but shall not exceed one and one ..... X X X X Extracts X X X X X X X X Extracts X X X X
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