Madras High Court
State Of Tamil Nadu vs Sri Narayana Oil Mills on 31 July, 1995
JUDGMENT Abdul Hadi, J.
1. This tax case under section 38 of the Tamil Nadu General Sales Tax Act, 1959, is filed by the Revenue. The respondent-assessee remains unrepresented. The question is, whether the purchase tax under section 7-A of the Tamil Nadu General Sales Tax Act (hereinafter referred to as "the Act"), could be levied on the value of the gunny bags purchased from unregistered dealers and used as container for selling oil-cake outside the State after the said oil-cake along with the containers-gunny bags were consigned outside the State.
2. The Tribunal set aside the order of the assessing officer and the concurring order of the Appellate Assistant Commissioner, holding thus :
"There is no basis to levy tax under section 7-A on the purchase value of gunny bags alone as the sale of gunnies cannot be separated from the sale of oil-cake."
Learned counsel for the Revenue, pointed out that the Tribunal erred in law by stating generally, as if it is a normal rule, that the sale of gunnies cannot be separated from the sale of oil-cake. She further substantiated by stating, whether the sale of gunnies can be or cannot be separated from the sale of oil-caske, depends on facts, and without any evidence or material, the Tribunal cannot, as a blanket rule, observe that the sale of gunnies cannot be separated from the sale of oil-cake. She further pointed out that in reply to the pre-assessment notice regarding the abovesaid purchase turnover of Rs. 31,196 all that the assessee said was only the following :
"There is no separate transaction for gunnies. Packing charges involve the use of the materials. Therefore, there is no scope or basis to segregate gunnies by value and treat them as assessable turnover."
3. In other words, according to the learned counsel, the assessee has not even chosen to say in the abovesaid reply that the value of gunny bags was included in the sale price of oil-cake. So, according to her, it could be inferred that the said value of gunny bags was not included in the sale price of oil-cake. If that is so, according to her, when those gunny bags, purchased from unregistered dealers, were made use of for packing oil-cake and the oil-cake along with the container-gunny bags were consigned outside the State, purchase tax is leviable even on the abovesaid value of gunny bags. She also pointed out that even with reference to the oil-cake, purchase tax alone was levied under section 7-A of the Act. The purchase turnover of oil-cake was Rs. 79,265. The said oil-cake of the value of Rs. 79,265 was consigned with the gunny bags to outside the State and disposed of there. She also pointed out that in relation to the abovesaid purchase turnover relating to oil-cake, the value of gunny bags used to pack the said oil-cake is a substantial figure, namely, Rs. 31,196. She further pointed out that the oil-cake as such could not be consigned outside the State without any container. According to her, there was at least an implied agreement of sale of gunny bags also outside the State and therefore, the Tribunal erred in law in having set aside the levy of purchase tax on the abovesaid purchase turnover of Rs. 31,196.
4. We see great force in the arguments of the learned counsel for the Revenue. One crucial factor is that the value of the container, namely, gunny bags, is substantial in relation to the value of the content, namely, oil-cake. Nearly half of the value of the contents is that of the container. Normally in such cases it could be implied that there is a sale transaction in relation to the container, cannot be accepted. Further, the assessee has not taken the stand that the value of the container, namely, gunny bags, was included in the sale price of oil-cake. It is for the assessee to prove that the value of gunny bags was included in the sale price of oil-cake. If that is not proved by the assessee, necessarily it should be inferred that there was an implied sale of gunny bags also. No doubt in the decision in A. Prakasam Pillai and Sons v. State of Tamil Nadu [1993] 91 STC 95 (Mad.); 1992 (2) MTCR 117, it has been held that there was no sale of container when jaggery was sold in the container since the value of the container was of insignificant value. That is not so in the present case. As we have already pointed out, the value of container was not of insignificant value.
5. So, the net result is we have to hold that without any evidence the Tribunal has held that the sale of gunnies in the present case cannot be separated from the sale of oil-cake. Therefore, we set aside the order of the Tribunal in so far as the abovesaid turnover of Rs. 31,196 is concerned and confirm the order of the assessing officer and the Appellate Assistant Commissioner in relation thereto. There will be no order as to costs.
6. Petition allowed.