JAMANA FLOUR & OIL MILL (P) LTD. versus STATE OF BIHAR

Citation: [1987] 2 S.C.R. 1047 · Decided: 16-04-1987 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Dismissed

Judgment (excerpt)

JAMANA FLOUR & OIL MILL (P) LTD. 
A 
v. 
--1 
STATE OF BIHAR 
APRIL 16, 1987 
[R.S. PATHAK, CJ. AND RANGANATH MISRA, J.] 
B 
,.,._ 
Bihar Sales Tax Act, 1959 and Roller Mills Wheat Products (Price 
Control) Order, ·1964--Wheat products sold in gunny-bags-Whether 
gunny bags a different commodity and sale thereof assessable to higher 
-1 
rate of tax-Whether there was contract to sell packing material along 
with the product-Question of fact depending on circumstances of each c 
case. 
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For the year 1964-65, the assessee, a registered dealer, under the 
Bihar Sales Tax Act, 1959 returned a gross turnover of Rs.53,39,981 
which was accepted by the Assessing Officer. He determined the taxable 
turnover at Rs.52, 79,962 representing the sale of wheat products tax-
D 
able at 2%. He found that the dealer has sold gunny bags in which wheat 
products had been packed and determined its turnover at Rs.1,37,150 
and assessed the same at 4'h%. 
The First Appellate Authority on assessee's appeal held that the 
_ .. 
Assessing Officer was not justified in adding back the price of container E 
in the gross turnover. What he should have done is,to tax a portion of 
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the taxable turnover at a different rate or out of the turnover taxable, 
the price. of bags calculated at the rate of 70 paise per 100 kilogram 
' 
should have been deducted and taxed at the rate of 4'/zo/c. The remain-
). 
ing was to be taxed at the rate of 2%. 
' 
In. the revision before the Tribunal.the assessee contended that the F 
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demand of sales-tax payable at different rates on the calculated turn-
over of gunny bags was not at all warranted as no price had be_en 
charged .for the containers. The Tribunal held that the lower Courts 
were justified in levying tax at a different rate on the turnover on 
account of sale of gunny bags in which the wheat products were sold and 
directed that the Assessing Officer sh.ould ascertain from the accounts, 
G 
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the turnover on account of sale of gunny bags as container of wheat 
products during the period under consideration and assess tax thereon 
at the prescribed rate of 4'/z%. The balance turnover shall be assessed at 
2%. In tb~ reference the High Court affirmed this view. 
Dismissing the appeal, 
H 
1047 
I 
1048 
syPREME COURT REPORTS 
[1987] 2 S.C.R. 
A 
HELD: 1. The Control Order contemplates a net weight which 
means that the. weight of the bag is included in the price to be charged 
by the dealer. Under the explanation when packing is done in cloth· 
bags, a higher rate is admissible. The scheme clearly suggests that the 
price .of gunny-bags is inclusive and where cloth-bag Is used, a higher 
B 
price over and above what has been provided for ordinary containers is 
permitted. [l051C-DJ 
Commissioner of Taxes v. Prabhat Marketing Company Ltd., 19 
STC 84, referred to. 
2. The Tribunal rightly came to the conclusion that there was 
C 
implied agreement of sale of the gunny-bags. Admittedly, gunny bags 
are a different commodity and sale thereof is assessable to tax at_M1>%. 
It is not disputed that appellant bought gunny-bags for packing wheat 
products for the purpose of sale. [lOSlCJ 
' 
:I~ The question as to whether there was an agreement to sell 
D 
packing material is a pure question of fact depending upon the circum· 
stances found in each c;.ase. [lOSlG-H] 
E 
F 
G 
·4. · The. Tribunal and. the High Court in the instant case, have 
recorded a clear fmding that there was an implied contract for sale of 
t-
the gunny bags with the products contained therein. [IOSlH] 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 103 
of 1975. 
From the Judgment and Order dated 19.4.1974 of the Patna High 
Court in Taxation Case No. 21of1970. 
S.K. Dhingra and K.B. Rohtagi for the Appellants. 
D.N. Goburdhan and D. Goburdhan for the Respondents. 
The Judgment of the Court was delivered by 
RANGANATH MISRA, J. This appeal is by special leave. Chal-
lenge herein is to the decision of the Patna High Court rendered on a 
reference under Section 33(1) of the Bihar Sales Tax Act, 1959. The 
following. question was referred to the High Court for its opinion, by 
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the.Commercial Taxes Tribunal of Bihar:-
JAMANA FLOUR v. STATE (MISRA, J.) 
1049 
"Whether in the facts and circumstances of the case, the A 
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direction of the Tribunal to ascertain the price of the con-
tainers (gunny bags) of wheat. products sold for an all-
inclusive price under the provisions of the Roller Mills 
Wheat Products (Price Control) Orde

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