R.N.MISRA, J. -
(1.) THE following common question under section 24 (1) of the Orissa Sales Tax Act (briefly REFERRED TO as the Act) has been REFERRED TO this court for determination :
" Whether, in the facts and circumstances of the case, it can be construed that there was a sale of gunny bags liable to payment of sales tax ?"
(2.) THE three separate assessees at whose instance the references have been made carried on business of purchase and milling of paddy and thereafter sold the paddy (sic) at different places under directions of Government. While assessment proceedings were taken separately of these dealers, the assessing officer came to find that these dealers had not paid tax under the Act in respect of alleged sale of gunny bags. In S. J. C. 204 of 1970, the relevant assessment year is 1965-66; in S. J. Cs. 205 to 207 of 1970, we are concerned with quarters ending September and December, 1964, and March, 1965; and in S. J. Cs. 240 and 241 of 1970, the relevant period is quarters ending June, 1964, and March, 1965. On the basis of estimate representing the sale price of gunny bags, assessment was made and extra tax was demanded.
The assessees in their respective appeals to the first appellate authority contended that there was no agreement for sale of gunny bags, the estimate adopted was arbitrary and without any basis and at any rate in respect of gunny bags, there was no liability of tax. The first appellate authority negatived the contentions of the assessees and upheld the assessments. Thereupon each of the assessees appealed to the Tribunal. The Sales Tax Tribunal disposed of many of these appeals by a common judgment as in its view common questions of fact and law fell to be determined therein. As far as relevant for the present question, the Tribunal held :
". . . . . . . A copy of the bill which was produced by the appellant Laxmi Rice Mill (assessee in S. J. Cs. 205 to 207 of 1970) before the first appellate authority (REFERRED TO in his order), shows one head towards cost of rice and one head towards cost of gunny bags. Evidently that was under the contract either explicit or implied. Rather the contract was over a particular quality of gunny bags. Clause 3 (2) of the Orissa Rice (Maximum Prices) Order of 1964 reads as follows : 'the maximum price shall apply both to raw and boiled rice. They are inclusive of the cost of gunny and sales tax or purchase tax payable up to the previous stage. ' It is clear from the expression underlined that the cost of gunny bags has not been lost sight of. Added to it, the assessees have charged separately for sewing and bagging. One of the bills produced before me by the learned Advocate for the appellant, Laxmi Rice Mill, is as follows : 'bill Levy No. 22 dated 12th November, 1965. Prime cost per quintal, 225. 18 Kg. of mill boiled rice in supply at the rate of Rs. 59. 50 per quintal. . . . Rs. 13,396. 42. Incidental charges including sewing, packing, etc. , for 225. 18 Kg. of rice at the rate of 0. 48 per quintal. . . . . . . Rs. 108. 07. ' This bill shows that incidental charges have been charged separately. Sewing and bagging presupposes supply of gunny bags and that read with total amount including price of gunny as mentioned in Orissa Rice (Maximum Prices) Order of 1964, quoted above, hardly leaves any scope for the contention that gunny bags have not been paid for or that there was no agreement to sell gunnies as such or that gunny bags have only passed as mere containers and no price has been charged for the same. This also answers the second question raised by the learned Advocte for the appellants that gunnies have merely passed as containers without express agreement for sale and, therefore, are (sic) liable to tax as decided in Hyderabad Deccan Cigarette Factory v. The State of Andhra Pradesh ( 17 S. T. C. 624 (S. C.)), where packing materials of cigarette were held to be not taxable. That case can be well-distinguished from the facts of this case. Their Lordships say, it is a question of fact not to be decided on surmises or fictions. If the paddy or rice would have been supplied in cheap baskets which have no value, the matter would have been supplied in cheap baskets which have no value, the matter would have stood in a different footing. But here it was clearly stipulated to be supplied in gunny bags of a particular quality for which price is paid no matter if included in the price for a fixed quantity of paddy or rice. . . . . "
Ultimately, the Tribunal upheld the assessments and dismissed the appeals.
(3.) AT the outset, learned standing counsel contended that the question REFERRED TO this court is one of pure fact and as such the references were incompetent and we should decline to answer the question. Indisputably, questions of fact are not referable and even if a question of fact is REFERRED TO us, we have no jurisdiction to entertain such reference. Strong reliance is placed by the learned standing counsel for the revenue on the decision of the Supreme Court in the case of Sree Meenakshi Mills Ltd. v. Income-tax Commissioner ( 31 I. T. R. 28 (S. C.); A. I. R. 1957 S. C. 49.), where dealing with a reference made under secion 66 of the Indian Income-tax Act of 1922, the court said :
". . . . . . The point for decision is whether there arises out of the order of the Tribunal any question which can be the subject of reference under section 66 (1) of the Act. Under that section, it is only a question of law that can be referred for decision of the court, and it is impossible to argue that the conclusion of the Tribunal is anything but one of fact. It has been held on the corresponding provisions in the English Income Tax statutes that a finding on a question of fact is open to attack as erroneous in law only if it is not supported by any evidence, or if it is unreasonable and perverse, but that where there is evidence to consider, the decision of the Tribunal is final even though the court might not, on the materials, have come to the same conclusion if it had the power to substitute its own judgment. "
After discussing series of high authorities, the court concluded in paragraph 24 of its judgment thus :
" We have discussed the authorities at great length, as some of the observations contained therein appear, at first sight, to render plausible the contention of the appellant, and it seems desirable that the true meaning of those observations should be clarified, lest error and misconception should embarrass and fog the administration of law. The position that emerges on the authorities may thus be summed up : (1) When the point for determination is a pure question of law such as construction of a statute or document of title, the decision of the Tribunal is open to reference to the court under section 66 (1 ). (2) When the point for determination is a mixed question of law and fact, while the finding of the Tribunal on the facts found is final, its decision as to the legal effect of those findings is a question of law which can be reviewed by the court. (3) A finding on a question of fact is open to attach under section 66 (1) as erroneous in law when there is no evidence to support it or if it is perverse. (4) When the finding is one of fact, the fact that it is itself an inference from other basic facts will not alter its character as one of fact. "
Support for the preliminary objection is sought to be derived by learned standing counsel from the observation of the Supreme Court in the case of Hyderabad Deccan Cigarette Factory v. The State of Andhra Pradesh ( 17 S. T. C. 624 (S. C.) ). At page 630 of the Reports, the court said :
" A perusal of the orders of the various authorities and the High Court shows that a simple question of fact has been sidetracked by copious citations. Whether there was an agreement to sell the packing materials is a pure question of fact and that question cannot be decided on fictions or surmises. That is what has happened in this case. The Commercial Tax Officer invoked a fiction; the Assistant Commissioner of Commercial Taxes relied upon the doctrine of 'finished product'; the Appellate Tribunal relied upon surmises; and the High Court, on the principle of implied agreement. But, none has tackled the real question. The burden lies upon the Commercial Tax Officer to prove that a turnover is liable to tax. No doubt he can ask the assessee to produce the relevant material; and if he does not produce the same, he may draw adverse inference against him. But, he must decide the crucial question whether the packing materials were subject of the agreement of sale, express or implied. To ascertain the said fact he can rely upon oral statements, accounts and other documents, personal enquiry and other relevant circumstances such as the nature and the purpose of the packing materials used. "
The result of the analysis so ably indicated in Sree Meenakshi Mills' case ( 31 I. T. R. 28 (S. C.); A. I. R. 1957 S. C. 49.) cannot at all be doubted. The observations made in the tobacco case, REFERRED TO above, however, cannot be taken to support the learned standing counsel on the preliminary question. In fact the Supreme Court after laying down the test in the following terms,
" The learned Judges, though they differed on the facts, accepted the principle that to attract sales tax the packing material or the container, as the case may be, should have been the subject-matter of an agreement to selli. . . . . "
remanded the matter to the High Court for a finding. As it appears the question of fact to be found was not one of pure fact but was a mixed question of fact and law. Whether a particular transaction amounted to a sale exigible to tax would admittedly be a mixed question of law and fact : see K. B. A. Alladin v. Income-tax Commissioner, Andhra Pradesh ( 68 I. T. R. 573 (S. C.); A. I. R. 1968 S. C. 788.); Hooghly Trust v. Income-tax Commissioner West Bengal ( 73 I. T. R. 685 (S. C.); A. I. R. 1969 S. C. 946.); Income-tax Commissioner, West Bengal v. Rajasthan Mines ( 78 I. T. R. 45 (S. C.); A. I. R. 1970 S. C. 1560. ).;