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TMI Blog1998 (5) TMI 394X X X X Extracts X X X X X X X X Extracts X X X X ..... estion that has arisen is whether on the implied sale of packing material tax could be imposed and recovered when the dealer was exempted from the payment of tax by the Incentive Scheme. 5.. The same question arose with respect to the assessment year 1989-90. The respondent-Assistant Commissioner, Commercial Taxes-assessing authority (AA) assessed and recovered tax on the sale of packing material. The AA's order was upheld in turn by both, appellate authorities, viz., the Deputy Commissioner (Appeals) and the Rajasthan Tax Board (then known as "the Rajasthan Sales Tax Tribunal"). The latter's judgment dated March 20, 1995 (Appeal No. 574/94/ Sirohi) was challenged by way of an application for revision before the Rajasthan High Court which came to be transferred to this Tribunal in terms of the provisions of the Rajasthan Taxation Tribunal Act, 1995 and is still pending. 6.. In the meanwhile for the period in question, i.e., 1991-92, for which the original assessment was done on July 12, 1994 the AA issued a notice dated June 7, 1996 to the dealer in the form prescribed for escaped assessment asking that cause be shown by June 19, 1996 why the sale of packing material be not tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he packing material was not separately charged for; that its cost was an insignificant part of the total cost of the goods; that by its very nature the goods could not have been sold without being so packed; that the sale value of the packing material must be taken to be "zero"; that to grant or refuse exemption was the province of the Screening Committee and the AA by his impugned action has sought to frustrate the Incentive Scheme and has acted illegally without jurisdiction; that the ex parte order violated the principles of natural justice inasmuch as adequate opportunity for hearing had been denied. 10.. The respondent-AA in his reply refutes die contentions of the dealer and reliance is placed on this Tribunal's decision* of October 13, 1997 in S.B. Sales Tax Revision No. 272 of 1996, Shree Minerals v. Assistant Commissioner, *Reported in [1999] 112 STC 130. Commercial Taxes, Jodhpur to support the contention that packing material was taxable. A preliminary objection has also been taken that the dealer has separately exhausted alternative remedies without success and a separate revision application is also pending before this Tribunal and as such this application was not ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid to be pending here. The appellate authorities' view being known the fate that awaits the dealer if it were to fast exhaust alternative remedies in the instant case too is a foregone conclusion and in the circumstances seeking to invoke the jurisdiction of this Tribunal directly is only reasonable and is clearly permissible. Availing of alternative remedies pending the adjudication of the same point at issue in the other case by this Tribunal would be an infructuous exercise. Needless to say, the decision of the Tribunal in this case would also settle the controversy if on the same point in the other case too. Having heard the learned counsel for the parties on merits and considered the material on record the relevant provisions of the law, the Incentive Scheme, and other notifications are best get out at this stage. 13.. Section 8(5), CST Act under which the Incentive Scheme has been notified reads: (5) Notwithstanding anything contained in this section, the State Government may if it is satisfied that it is necessary so to do in the public interest, by notification in the Official Gazette, and subject to such conditions as may be specified therein, direct,- (a) that no t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in so far as relevant reads: "4. Exemption from tax on sales.-(a) An industrial unit, which is granted eligibility certificate under this notification shall be exempted from payment of tax on sales made in the course of inter-State trade or commerce of the goods manufactured by it. The quantum of sales tax exemption and the period of eligibility of exemption will be as per annexure....... 'C'" (Emphasis added.) 17.. Section 2(h), CST Act defines "sale price" to mean: "the amounts payable to a dealer as consideration for the sale of any goods, less any sum allowed as cash discount according to the practice normally prevailing in the trade but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof other than the cost of freight or delivery or the cost of installation in cases where such cost is separately charged;" (Emphasis added.) 18.. The term "turnover-used in relation to any dealer liable to tax under the CST Act has been defined by section 20), CST Act to mean: "the aggregate of the sale prices received and receivable by him in respect of sales of any goods in the course of inter-State trade o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a dealer liable to pay tax under the sales tax law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law. (2A) Notwithstanding anything contained in sub-section (1A) of section 6 or in sub-section (1) or clause (b) of sub-section (2) of this section, the tax payable under this Act by a dealer on his turnover in so far as the turnover or any part thereof relates to the sale of any goods, the sale or, as the case may be, purchase of which is, under the sales tax law of the appropriate State, exempt from tax generally or subject to tax generally at a rate which is lower than four per cent whether called a tax or fee or by any other name), shall be nil or, as the case may be, shall be calculated at the lower rate. Explanation.-For the purposes of this sub-section a sale or purchase of any goods shall not be deemed to be exempt from tax generally under the sales tax law of the appropriate State, if under that law the sale or purchase of such goods is exempt only in specified circumstances or under specified conditions or the tax is levied on the sale or purchase of such goods at specified stages or otherwise than with reference to the turn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding that unless a separate price has been charged for the containers the value of the containers is not assessable to sales tax. It was submitted that the parties may have intended in the circumstances to sell the hydrogenated oil apart from the containers; and the mere fact that the price of the containers was not separately fixed would make no difference to the assessment of sales tax. In our opinion, the argument put forward on behalf" of the appellant is well-founded and must be accepted as correct............." (Emphasis added.) 24.. The Supreme Court at page 87 of the same report held: "We accordingly set aside the judgment of the High Court and direct that the answer to the second question should be that the value of containers hydrogenated oil is assessable to sales tax under the Act if there is an express Here italicised. or implied agreement for the sale of such containers. These appeals are accordingly, allowed........." (Emphasis* added.) 25.. In Jamana Flour Oil Mill (P.) Ltd. v. State of Bihar [1987] 65 STC 462, the Supreme Court had before it a matter under the Bihar Sales Tax Act in which the question arose whether the price of the containers (gunny bags ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntract for packing the silica sand in sound gunny bags and hence, had held that there was an implied agreement for sending silica in gunny bags though these could be sent loose in wagons. The short question, as framed by the Supreme Court keeping section 2(h), CST Act Here italicised. in view was, whether the price was charged for anything done in respect of the goods at the time of or before the delivery thereof In view of the fact that the price of goods and packing charges were separately charged, the High Court concluded that the packing charges could not be included in the sale price paid by the purchasers to the dealer. This was held by the Supreme Court to be incorrect in view of the principles laid down in Prabhat Marketing Co.'s case [1967] 19 STC 84 (SC) and in Jamana Flour Oil Mill's case [1987] 65 STC 462 (SC) and the fact that, in the case before the Supreme Court, packing in the gunny bags was done by the dealer in respect of the goods at the time of or before the delivery. 27.. Therefore, it can be said that the turnover in packing materials is assessable to tax under the CST Act provided an agreement express or implied to sell it exists as a fact by virtue of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... packing material. Obviously, in view of the foregoing it cannot and that is precisely what was held by this Tribunal in S.B. Sales Tax Revision No. 272 of 1996* Shree Minerals v. Assistant Commissioner, Commercial Taxes decided on October 13, 1997. 33.. This view of the matter is further buttressed by the provisions of the Incentive Scheme itself. The dealer is in the business of pulverising and grinding of all kinds of minerals and chemicals, i.e., all kinds of pulverised and ground minerals and chemicals arc the goods manufactured by the dealer. The dealer is not in the business of manufacturing, in addition, of packing material. The Incentive Scheme provides incentives by way of tax exemption to industrial units manufacturing goods within the State for sale in the course of inter-State trade or commerce. Therefore, the dealer in the instant case is eligible to avail of exemption and the Incentive Scheme only on the turnover in pulverised and ground minerals and chemicals and not on the turnover of packing material. This is made explicit, as has been seen. by the amendment made with effect from March 27, 1995 in the Incentive Scheme extending benefits to the packing material us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emption from the levy of Central sales tax can become available. Where the exemption from taxation is conferred by conditions or in certain circumstances, there is no exemption from tax generally". This rule applies with full force to the notification of May 28, 1969 as amended from time to time issued by the State Government under the RST Act which as 4 been seen is contingent on a dual condition being satisfied. Sub-section (1), sub-section (2) and sub-section (2A) of the CST Act talk of "dealer". A "dealer" his been defined by section 2(b), CST Act to mean any person who carries on (whether regularly or otherwise) the business of buying, selling, etc., that is to say it brings within the ambit of the term dealer even persons other than registered dealers. The exemption granted by notification dated May 28, 1969 issued under the RST Act as amended from time to time is available only to a registered dealer and that too with the goods for which exemption is granted to be recorded in the R.C. The exemption is therefore available only in specified circumstances under specified conditions. 35.. It should be obvious that in a case such as the one in hand where the dealer charged an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... never be a question of there being within a State a series of sales in the course of inter-State trade or commerce and therefore the question of the old second-hand packing material having suffered tax under the CST Act in Rajasthan prior to their purchase by the dealer does not arise. The tax if suffered earlier under the CST Act would have been in some other State and if taxed in Rajasthan could have been only under the 1954 RST Act and their sale in the course of interState trade or commerce would in the absence of an exemption under the CST Act be exigible to tax tinder the CST Act in Rajasthan. 38.. It is a fact that in the absence of a substantive provision in the CST Act for the levy of interest no interest could have been levied as done by the AA. The law is very clear after the Supreme Court's ruling in the India Carbon Ltd. case [1997] 106 STC 460 (SC). 39.. As regards the contention that adequate opportunity for being heard was not provided to the dealer, the notice having been served and in the event of non-appearance of the dealer or his representative on the date appointed in the notice the AA was well within his right to proceed to frame an ex parts order and he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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