- (1.) R. K. GULATI, J. This writ petition is directed against two assessment orders one made under the provisions of the U. P. Trade Tax Act and the other under the Central Sales Tax Act, both these assessment orders are in respect of assessment year 1990-91, copies of which have been filed as annexures 6 and 7 to the writ petition.
(2.) IN the year in dispute, the petitioner was engaged in the manufacture and sale of sugar. Under the impugned assessment orders, the turnover representing the value of gunny bags (packing material) in which the sugar manufactured by the petitioner was sold has been assessed to tax. The assessment orders are assailed on diverse grounds. The case of the petitioner is that sugar was exempt from payment of sales tax and it was a declared commodity under the provisions of the Additional Duties of Excise (Goods of Special Importance) Act, 1957. The additional excise duty is levied and collected, according to the rates specified in the Schedule. Further no quantity of sugar can be sold without obtaining a release order from the Directorate of Sugar, Ministry of Food and Civil Supplies, Government of India and the price of levy sugar is fixed by the Central Government by means of Sugar Price Determination Orders issued for such year under section 23 (3) of the Essential Commodities Act, 1955. It is averred that only price of sugar was charged in effecting the sales. The contention of the petitioner is that the value of the gunny bags sold along with the sugar which was exempt from sales/trade tax, was not liable to tax, inasmuch as the petitioner had not charged anything for the gunny bags. It was stated that in the sale of sugar, the gunny bags are necessary concomitants and the transfer in the gunny bags in favour of the purchaser of the contents is incidental or unavoidable and that such a transaction would be a composite and integrated sale of the gunny bags and the contents and the one is not divisible from the other and the transaction is understood by the seller and the purchaser, as the sale of the contents in those gunny bags. In other words, the gunny bags did not form part of the contract of sale and its value could not be brought to tax, nor the transactions could be termed as a sale within the meaning of the U. P. Trade Tax Act and the Central Sales Tax Act, and therefore, the impugned assessments were not liable to be sustained. The maintaining of separate registers for gunny bags was only intended to facilitate computation of excise duty upon sugar, as the same is an excisable commodity, inasmuch as maintaining of such details cannot be treated to be separate transactions liable to tax under the U. P. Trade Tax Act or under the Central Sales Tax Act, and the view to the contrary taken by the assessing authority was patently illegal and, therefore, bad in law. Yet another contention of the petitioner was that at no time the sugar is kept loose and it is always packed in gunny bags before it is stored or is offered for sale, otherwise quality, grade and colour deteriorates. It is always sold in packed condition, and there was no contract either express or implied for the sale of gunny bags, when the petitioner sold the sugar manufactured by it. The respondents have filed their counter-affidavit at the admission stage, and the rejection of the writ petition is sought both on merits as well on the ground that the writ petition was not maintainable inasmuch as, the petitioner has an effective statutory alternative remedy of appeal against the impugned assessment orders under section 9 of the U. P. Trade Tax Act, 1948 and further in second appeal before the Trade Tax Tribunal under section 10 of that Act and thereafter by way of revision to this Court under section 11 of the said Act. The contention of the learned counsel for the respondent is that there is a complete machinery provided both under the U. P. Trade Tax Act and under the Central Sales Tax Act against the assessment orders where the petitioner can seek redressal of its grievances, if any. It was urged that the petitioner has been subjected to tax under the impugned assessment orders in view of the findings of fact recorded therein. The case of the respondent is that there was an implied contract for the sale of gunny bags, inasmuch as the petitioner had imported gunny bags from the outside State to the value of Rs. 19,83,055 which were utilised for packing of the sugar and a composite price was charged for the sugar and the gunny bags in effecting the sale transactions.
(3.) IN Hyderabad Deccan Cigarette Factory v. State of Andhra Pradesh [1966] 17 STC 624 (SC) the facts were that by a notification issued by the Andhra Pradesh State Government, sale or purchase of tobacco and all its products were exempted from sales tax. The revenue sought to assess the assessee in that case, the manufacturer of and dealer in cigarettes, on the turnover in respect of packing materials consisting of cardboard and dealwood. The case taken up by the assessee was that packing materials were not liable to tax. The Supreme Court in deciding the issue held as under " In order to constitute a sale it was necessary that there should be an agreement between the parties for the purpose of transferring title to goods, that it should be supported by money consideration and that as a result of the transaction property should actually pass in the goods. Unless all these elements are present there could be no sale. What the sales tax authorities had to do was to ask and answer the question whether the parties, having regard to the circumstances of the case, intended to sell or buy the packing materials or whether the subject-matter of the contracts of sale was only cigarettes, and packing materials did not form part of the bargain at all, but were used by the sellers as a convenient and cheap vehicle of transport. " A similar question came up for consideration before the Supreme Court in Commissioner of Taxes, Assam v. Prabhat Marketing Co. Ltd. [1967] 19 STC 84. The assessee in that case sold hydrogenated oil which was exempt from sales tax under the Assam Sales Tax Act, 1947. The question for consideration was whether the value of the containers in which hydrogenated oil was sold, could be brought to tax. The Supreme Court observed that the value of the containers was assessable to sales tax under the Assam Sales Tax Act if there was an express or implied agreement for the sale of such containers and the mere fact that the price of the containers was not separately fixed was of no consequence to the assessment of sales tax. The question as to whether there was an agreement to sell packing material is a pure question of fact depending upon the circumstances found in each case.;