N. M. KASLIWAL, J. - (1.) THE Board of Revenue by order dated October 31, 1977, has referred the following question of law for the opinion of this Court : " On the facts and circumstances of the case what should be the rate of tax on sealed tins which are sold filled with vanaspati and for which separate charges are made in the bills ?"
(2.) BRIEF facts leading to this reference are that Shri Suraj Bhan Bhargava, Assistant Commercial Taxes Officer, made an inspection of the premises of M/s. Ramnagar Cane and Sugar Company Ltd. , Jaipur (hereinafter referred to as "the assessee"), on November 11, 1971. On inspection it was found that tins of vanaspati ghee of 16. 5 kg. sold prior to October, 1971, the price of tins was not realised separately and sales tax used to be realised at the rate of vanaspati ghee itself. However, after October, 1971, the assessee started showing the price of the tins separately and charged sales tax at the rate of 3 per cent. The sales tax on vanaspati ghee was at the rate of 10 per cent. The Commercial Taxes Officer issued a notice to show cause to the assessee as to why sales tax at the rate of 10 per cent may not be charged on the sale of tins also and why a penalty should not be imposed for evading tax at the rate of 7 per cent. The assessee in reply to the show cause notice submitted that he had realised the tax in accordance with law. It was submitted that under proviso (v) to section 5 of the Rajasthan Sales Tax Act, 1954 (hereinafter referred to as "the Act"), the sales tax was payable at the rate which was applicable to packing material, when such packing material is separately charged. The rate of 10 per cent applicable to the sale of vanaspati ghee could only be charged on the sale of tins when not separately charged for but not in a case where price of the packing material was separately charged. It was submitted by the assessee that there could be 3 types of transactions. In the first kind of transaction, the purchasers used to supply the tins and the assessee used to sell vanaspati ghee and in that case 10 per cent sales tax used to be charged on the sale of vanaspati ghee. In the second case, the purchasers used to purchase vanaspati ghee in a sealed tins and in that case the consolidated price of ghee and tin used to be charged and in that case also 10 per cent sales tax was charged on the total sale. In the third case, the purchaser used to ask the assessee to charge the price of ghee and tins separately and in such a case the assessee used to charge the price separately and in that case the sales tax was also realised separately according to the respective rates of ghee and tins. It was thus submitted by the assessee that the transactions in question, which related to the period from September 1, 1971, to October 31, 1971, fell under the third category and in these circumstances he had rightly charged sales tax at the rate of 3 per cent on the sale of tins. The Commercial Taxes Officer did not consider the explanation of the assessee to be correct inasmuch as it was found that the assessee was not dealing in the business of sale of empty tins. It was held by the Commercial Taxes Officer that the main business of the assessee was to sell vanaspati ghee and to sell the same by filling in tins. It was also held that after the inspection of the assessee made by the Assistant Commercial Taxes Officer, the assessee had again started realising sales tax at 10 per cent on the sale of vanaspati ghee as well as the tins. The Commercial Taxes Officer as such by order dated January 24, 1972, held that the assessee had deposited Rs. 157. 85 less at the rate of 7 per cent on the sale of tins amounting to Rs. 2,254. 50. The penalty of Rs. 157. 85 was also imposed on the assessee. The assessee, aggrieved against the order of the Commercial Taxes Officer filed an appeal before the Deputy Commissioner (Appeals-I), Commercial Taxes, Jaipur. It was argued on behalf of the assessee that imposition of tax at 10 per cent on sales of empty tins was not justified as he had charged 3 per cent in view of entry No. IV of Notification dated March 27, 1971. It was also submitted that the sale of tins had been shown separately according to proviso (v) of section 5 of the Act when the cost of packing material was charged separately and he was authorised to charge tax at 3 per cent on the sale of empty tins. It was also argued on behalf of the assessee that he was manufacturing tins also and the inference drawn in this regard by the assessing authority was wrong. The assessee had applied on August 16, 1971, for entering tin plates in its registration certificate as raw material to be used by him. The impugned assessment was done after August 16, 1971 as the period of assessment was September, 1, 1971, to October 31, 1971, and as such he was entitled to get an advantage of the notification dated March 27, 1971. The learned Deputy Commissioner held that although the appellant-assessee had applied for getting tin plates entered in his registration certificate but no evidence had been produced to show that he actually purchased tin plates and manufactured empty tins. It was further observed by the Deputy Commissioner that if this was so why the assessee reverted back to charging 10 per cent on the combined sale of the empty tins and the vanaspati ghee sold by him after the inspection of the Assistant Commercial Taxes Officer. It was thus clear that the assessee was not manufacturing empty tins and cannot, therefore, get the benefit of the Notification dated March 27, 1971. In this view of the matter the appeal of the assessee on this score was dismissed. The assessee then filed a revision before the Board of Revenue. The Division Bench of the Board of Revenue heard the matter and similar arguments were raised before the Board of Revenue as were raised before the Deputy Commissioner and the assessing authority. The Board of Revenue held that the concessional rate of 3 per cent could only be available to the assessee if the tin containers had been sold separately to the customer and not after the same were filled with vegetable oil and sold along with vegetable oil contained therein. It was held by the Board of Revenue that in the present case, it was not disputed that vegetable oil was sold in the tin containers. The firm had shown sale of the tin containers and the vegetable oil separately, but this has been done in the same bill. This lends support to the inference that vegetable oil was sold in the tin containers and which have been subjected to sales tax at the rate applicable to the vegetable oil and not separately at the rate applicable to the tin containers and the view taken by the Commercial Taxes Officer and the Deputy Commissioner was correct in considering the rate chargeable at 10 per cent and not at 3 per cent. The Board of Revenue held that the penalty under section 16 (i) of the Act was wrongly imposed and as such remitted the penalty. The revision petition was thus partly allowed by order dated October 21, 1976.
(3.) THE assessee then submitted an application under section 15 of the Act for referring the question of law for the opinion of this Court and the Board of Revenue by order dated October 31, 1977, has referred the question mentioned above for the opinion of this Court. In order to appreciate the controversy raised in the present case it would be proper to quote proviso (v) of section 5 of the Act. Proviso (v) of section 5 of the Act reads as under : " Section 5. Rate of tax.- (1) THE tax payable by a dealer under this Act shall be at such single point in the series of sales by successive dealers as may be prescribed and shall be levied at such rate (not exceeding sixty per cent) on the taxable turnover, as may be notified by the State Government in the Official Gazette. (v) Provided also that when any goods are sold, packed in any materials, the tax shall be leviable on the sale of such packing materials (when not separately charged for) at the same rate (if any) as is applicable to the sale of the goods themselves. " It may also be mentioned that by Notification No. F. 5 (21)FD (T)/71-3 dated March 27, 1971, a rate of 3 per cent was made leviable on the sale of empty tins. The assessee had started preparing the bills in the following manner, a copy of bill dated October 16, 1971 (annexure 4), is reproduced for illustration : R. S. T. No. 232/90 C. S. T. No. 14/central/11/jp RAMNUGGER CANE & SUGAR CO. LTD. (VANASPATI DIVISION) Vanaspati Soap & Allied Products, 164/181 Industrial Area, Jaipur-6. Bill No. 71-72/r/72 Dated 16-10-1971. M/s. Sethi Ludha Ram Relumal Subzi Mandi, Kota. C. S. T. No. 159 R. S. T. No. 23667 ------------------------------------------------------------------------ G. R. No. 21367 Dated : 14-10-1971 Documents through Bharat Goods Transport Co. Truck No. RJR 7311.------------------------------------------------------------------------ Quantity Particulars Rate Amount 100 Tins 'maharaja' brand Vanaspati each containing 16. 5 Kg. nett. 72. 40 7,240. 00 Excise duty as per G. P. I. No. 106 384. 50 --------- Total 7,624. 50 Sales tax 10% 762. 45 --------- Total 8,386. 95 Cost of 100 empty tin containers as per VDP 450. 00 Sales tax 3% 13. 50 --------- Total 8,850. 45 Vide Challan No. 107 dt. 14-10-71 Less freight 61. 00 --------- Grand Total 8,789. 45 ========= ------------------------------------------------------------------------ E & O E For Ramnugger Cane & Sugar Co. Ltd. , Sd/- M. P. Kedia.------------------------------------------------------------------------ It was contended by Mr. Khetan, learned counsel for the assessee, that the rate of sales tax 10 per cent was leviable on the sale of vanaspati and not on the sale of tins. Under the proviso (v) of section 5 (1) of the Act it was clearly mentioned that when any goods are sold, packed in any materials, the tax shall be leviable on the sale of such packing materials as is applicable to the sale of the goods themselves, when not separately charged for. It was submitted that in the present case, the assessee had clearly charged for the packing materials, i. e. , empty tin containers, separately and in this view of the matter the assessee had rightly charged sales tax at 3 per cent on the cost of empty tins. ;