Giri and Company Vs. Commercial Tax Officer - Court Judgment

Excerpt:
1. we are concerned in this case only with the assessment for the year 1990-91. but, we are told that on the same issue other assessments of the petitioner for several other years are pending before various other authorities, awaiting decision in this case. the assessees are dealers in ghee, butter, vanaspathi and edible oil. they reported a total and taxable turnover of rs. 76,84,537.90 and rs. 9,88,263 respectively for the year 1990-91 under the tamil nadu general sales tax act, 1959. they claimed exemption on second sales of edible oils, etc., to the tune of rs. 66,96,274.90. the assessing authority found that the sale of empty tins to the extent of rs. 55,058 was not eligible for exemption, because the empty tins had not suffered tax earlier. the sale of empty tins for the period april 1, 1990 to may 6, 1990, namely, rs. 6,910 was taxed at 8 per cent and the sale for the period may 7, 1990 to march 31, 1991 was taxed at 5 per cent. the objections of the assessee were : "with reference to your proposal to charge for the sale of empty tins at 8 per cent till may 6, 1990 and 5 per cent from may 7, 1990, we desire to file our reply as under : we buy edible oils, etc., with empty tins as containers. all these tins have suffered single point tax already as the cost of oils are inclusive of the value of tin containers. our suppliers are all registered dealers. consequently, the empty tins whenever sold by us from out of such purchases are only other than taxable sales. hence, it is eligible for second sales exemption." the objections were rejected, because they sold oil separately and tins separately at times and by virtue of section 3(7) of the tamil nadu general sales tax act, 1959, the exemption claimed was not allowable.the assessing officer explained that when butter was purchased in tins and sold along with tins, exemption was allowed for tins also, by virtue of section 3(8) of the tamil nadu general sales tax act, 1959.2. on first appeal the appellate assistant commissioner confirmed the order of the assessing officer, by stating : "even it could be considered that the value of tins is included in the price of oil which suffered tax, the same cannot be taken as a tax levied on tins for the purposes of sales tax laws. even if any doubt existed earlier, the same is now settled by the introduction of section 3(7), which says that the value of the containers is to be included in the sale price of the commodities." the claim of the assessee that some of the suppliers of oil could have purchased tins from trading sources, after payment of tax, was not substantiated with any evidence or proof.3. on second appeal, the sales tax appellate tribunal confirmed the orders of the appellate assistant commissioner and the assessing officer. hence, the revision petition.4. before us, mr. c. natarajan, learned senior counsel, reiterates the same points and buttresses his arguments by citing [1998] 108 stc 598 (so (premier breweries v. state of kerala). in that case, the appellant sold liquor packed in cardboard cartons. it claimed that it had charged its customers separately for the liquor and the cartons, and that, therefore, the turnover of the cartons could not be included in the turnover of the liquor which was taxable at 50 per cent, but that the turnover of the cartons had to be taxed separately at the rate of 8 per cent as provided in entry 97 of the first schedule to the kerala general sales tax act, 1963. the high court rejected the claim. on appeal to the supreme court, it was held, affirming the decision of the high court, that the turnover of the cartons had to be included in the turnover of the liquor and taxed at the same rate as was applicable to liquor. but, the following observations of the supreme court certainly supports the revenue : "moreover, the packing materials as such are not being taxed under sub-section (5) of section 5 of the act. the subject-matter of tax are the goods packed in the containers. in calculating the turnover of the goods, packing materials will have to be taken into account. the packing materials will be taxed at the same rate and at the same point as the goods contained in the packing material. this is because the goods are sold packed in containers and are charged accordingly. this is a rule of computation of the turnover of the goods. if no tax is ultimately found leviable on the goods then no tax can be levied on the containers in which the goods are contained." 5. the full bench of this special tribunal had occasion to consider section 3(7) vis-a-vis section 7-a of the tamil nadu general sales tax act, 1959 in t.c. (r) no. 3095 of 1997 reported as apollo saline pharmaceuticals (p) limited v. state of tamil nadu [2000] 120 stc 493 (tntst) dated september 8, 1999. one of the questions posed for consideration was : "even the preamble portion of section 7-a(l) is not satisfied because 'no circumstances' have been brought to the notice of the court in which 'no tax is payable under section 3, 4 or 5' in respect of the goods purchased (empty bottles). on the other hand, says the learned counsel that subsection (7) of section 3 specifically provides for levying of tax on containers or packing materials at the same rate as applicable to the goods themselves." it was argued that the packing materials are taxed by virtue of section 3(7) and therefore, the purchase of empty bottles for use in the preparation of "i.v. fluids" would not attract section 7-a of the tamil nadu general sales tax act, 1959. we rejected the contention and observed : "we have already pointed out that section 3(7) only ensures the levy of tax on the containers or packing materials at the same rate at which the goods themselves are sold because the subject-matter of levy was the contents which formed part of the containers. in fact, the supreme court in premier breweries v. state of kerala [1998] 108 stc 598 has made it clear that section 3(7) is a levy on the goods themselves and not on the containers. according to the supreme court, the containers being part of the goods, without which the goods cannot be marketed, both the articles attract the same duty. this being the position, the purchase of empty bottles cannot be allowed to escape tax at the purchase point, merely because the seller of empty bottles are not liable to pay tax on the sale. in this view of the matter, we have no hesitation in holding that purchase tax under section 7-a is attracted in this case, notwithstanding the fact that section 3(7) imposes a tax on the sale of the i.v. fluid which cannot be sold without the containers and therefore, the containers are also subjected to tax at the sale point." 6. it follows therefore that vice versa, the sale of empty tins would attract tax unless there is concrete proof that such tins had independently suffered tax earlier at the time of sale to the assessee.consequently, we approve the orders of the lower authorities that the sale of empty tins to the extent of rs. 55,058 is exigible to tax and the claim of second sales exemption was rightly rejected.and this tribunal doth further order that this order on being produced be punctually observed and carried into execution by all concerned.issued under my hand and the seal of this tribunal on the 18th day of july, 2000.

Judgment:
1. We are concerned in this case only with the assessment for the year 1990-91. But, we are told that on the same issue other assessments of the petitioner for several other years are pending before various other authorities, awaiting decision in this case. The assessees are dealers in ghee, butter, vanaspathi and edible oil. They reported a total and taxable turnover of Rs. 76,84,537.90 and Rs. 9,88,263 respectively for the year 1990-91 under the Tamil Nadu General Sales Tax Act, 1959. They claimed exemption on second sales of edible oils, etc., to the tune of Rs. 66,96,274.90. The assessing authority found that the sale of empty tins to the extent of Rs. 55,058 was not eligible for exemption, because the empty tins had not suffered tax earlier. The sale of empty tins for the period April 1, 1990 to May 6, 1990, namely, Rs. 6,910 was taxed at 8 per cent and the sale for the period May 7, 1990 to March 31, 1991 was taxed at 5 per cent. The objections of the assessee were : "With reference to your proposal to charge for the sale of empty tins at 8 per cent till May 6, 1990 and 5 per cent from May 7, 1990, we desire to file our reply as under : We buy edible oils, etc., with empty tins as containers. All these tins have suffered single point tax already as the cost of oils are inclusive of the value of tin containers. Our suppliers are all registered dealers. Consequently, the empty tins whenever sold by us from out of such purchases are only other than taxable sales. Hence, it is eligible for second sales exemption." The objections were rejected, because they sold oil separately and tins separately at times and by virtue of Section 3(7) of the Tamil Nadu General Sales Tax Act, 1959, the exemption claimed was not allowable.

The assessing officer explained that when butter was purchased in tins and sold along with tins, exemption was allowed for tins also, by virtue of Section 3(8) of the Tamil Nadu General Sales Tax Act, 1959.

2. On first appeal the Appellate Assistant Commissioner confirmed the order of the assessing officer, by stating : "Even it could be considered that the value of tins is included in the price of oil which suffered tax, the same cannot be taken as a tax levied on tins for the purposes of sales tax laws. Even if any doubt existed earlier, the same is now settled by the introduction of Section 3(7), which says that the value of the containers is to be included in the sale price of the commodities." The claim of the assessee that some of the suppliers of oil could have purchased tins from trading sources, after payment of tax, was not substantiated with any evidence or proof.

3. On second appeal, the Sales Tax Appellate Tribunal confirmed the orders of the Appellate Assistant Commissioner and the assessing officer. Hence, the revision petition.

4. Before us, Mr. C. Natarajan, learned Senior Counsel, reiterates the same points and buttresses his arguments by citing [1998] 108 STC 598 (SO (Premier Breweries v. State of Kerala). In that case, the appellant sold liquor packed in cardboard cartons. It claimed that it had charged its customers separately for the liquor and the cartons, and that, therefore, the turnover of the cartons could not be included in the turnover of the liquor which was taxable at 50 per cent, but that the turnover of the cartons had to be taxed separately at the rate of 8 per cent as provided in entry 97 of the First Schedule to the Kerala General Sales Tax Act, 1963. The High Court rejected the claim. On appeal to the Supreme Court, it was held, affirming the decision of the High Court, that the turnover of the cartons had to be included in the turnover of the liquor and taxed at the same rate as was applicable to liquor. But, the following observations of the Supreme Court certainly supports the Revenue : "Moreover, the packing materials as such are not being taxed under Sub-section (5) of Section 5 of the Act. The subject-matter of tax are the goods packed in the containers. In calculating the turnover of the goods, packing materials will have to be taken into account.

The packing materials will be taxed at the same rate and at the same point as the goods contained in the packing material. This is because the goods are sold packed in containers and are charged accordingly. This is a rule of computation of the turnover of the goods. If no tax is ultimately found leviable on the goods then no tax can be levied on the containers in which the goods are contained." 5. The Full Bench of this Special Tribunal had occasion to consider Section 3(7) vis-a-vis Section 7-A of the Tamil Nadu General Sales Tax Act, 1959 in T.C. (R) No. 3095 of 1997 Reported as Apollo Saline Pharmaceuticals (P) Limited v. State of Tamil Nadu [2000] 120 STC 493 (TNTST) dated September 8, 1999. One of the questions posed for consideration was : "Even the preamble portion of Section 7-A(l) is not satisfied because 'no circumstances' have been brought to the notice of the court in which 'no tax is payable under Section 3, 4 or 5' in respect of the goods purchased (empty bottles). On the other hand, says the learned counsel that subsection (7) of Section 3 specifically provides for levying of tax on containers or packing materials at the same rate as applicable to the goods themselves." It was argued that the packing materials are taxed by virtue of Section 3(7) and therefore, the purchase of empty bottles for use in the preparation of "I.V. fluids" would not attract Section 7-A of the Tamil Nadu General Sales Tax Act, 1959. We rejected the contention and observed : "We have already pointed out that Section 3(7) only ensures the levy of tax on the containers or packing materials at the same rate at which the goods themselves are sold because the subject-matter of levy was the contents which formed part of the containers. In fact, the Supreme Court in Premier Breweries v. State of Kerala [1998] 108 STC 598 has made it clear that Section 3(7) is a levy on the goods themselves and not on the containers. According to the Supreme Court, the containers being part of the goods, without which the goods cannot be marketed, both the articles attract the same duty.

This being the position, the purchase of empty bottles cannot be allowed to escape tax at the purchase point, merely because the seller of empty bottles are not liable to pay tax on the sale. In this view of the matter, we have no hesitation in holding that purchase tax under Section 7-A is attracted in this case, notwithstanding the fact that Section 3(7) imposes a tax on the sale of the I.V. fluid which cannot be sold without the containers and therefore, the containers are also subjected to tax at the sale point." 6. It follows therefore that vice versa, the sale of empty tins would attract tax unless there is concrete proof that such tins had independently suffered tax earlier at the time of sale to the assessee.

Consequently, we approve the orders of the lower authorities that the sale of empty tins to the extent of Rs. 55,058 is exigible to tax and the claim of second sales exemption was rightly rejected.

And this Tribunal doth further order that this order on being produced be punctually observed and carried into execution by all concerned.

Issued under my hand and the seal of this Tribunal on the 18th day of July, 2000.