LexRAJ STEEL & ORS. ETC. ETC. versus STATE OF A.P. & ANR. ETC. ETC.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
~
RAJ STEEL & ORS. ETC. ETC.
A
v.
STATE OF A.P. & ANR. ETC. ETC.
MAY 16, 1989
{
[R.S. PATHAK, CJ. AND M.H. KANIA, J.]
B
Andhra Pradesh General Sales Tax Act, 1957/Andhra Pradesh
General Sales Tax Rules. Sections 2, 5, 6 and First Schedule Item 157/
~r,
Rule 6--Assessees-Manufacturers of beer/cement-Goods-Beer sold
in botiles packed in cartons and cement in gunny bags-Assessment w
sales tax made on the turnover of packing material-Whether valid.
c
y
The appellants in some -Of the appeals are manufacturers of or
dealers in beer ,,the appellants in the other appeals are manufacturers of
or dealers in cement.
The appellants filed writ petitions in the Andhra Pradesh High
D
Conrt challenging the assessment made under the Andhra Pradesh
General Sales Tax Act, 1957 on the turnover of packing material emp-
Joyed either by way of bottles for containing beer or by way of gunny
_)..
bags for packing cement. The appellants challenged the application of
such rate in assessments made in relation fo the period before 8 July,
1983. The appellants also challenged the application of that rate pro-
E
posed pursuant to s. 6C in show cause notices issued by the concerned
authority. Section 6C was inserted in the Act with effect from 8 July,
1983.
-~
The High Court while dismissing the writ petitions, proceeded on
the basis that, having regard to the nature of the goods and to the trade
F
practice in respect of beer and cement, the containers were necessary
concomitants in the transactions, and the transfer of property in the
containers was incidental or unavoidable, that the sale transactions had
to be regarded as composite and integrated sales of the containers and
their contents and what was really sold was the bottled beer or the
cement packed in gunny bags. The learned Jndges expressed the view
G
--{
that the consideration paid by the purchaser to the dealer consisted not
only of the price of the contents, namely, beer or cement, but also
included the price of the containers, that is, the bottles and the cartons
in the case of beer and gunnies in the case of cement.
While allowing the appeals and , remanding the cases to the High
H
305
306
SUPREME COURT REPORTS
[1989] 3 S.C.R.
A
Court, and in the case of the writ petitions, while directing the assessing
'Y
authority to determine the matters after allowing the dealers to show
B
c
D
cause, this Court,
HELD: (I) A transaction of sale may consist of a sale of the pro-
duct and a separate sale of the container housing the product with
respective sale considerations for the product and the container sepa-
rately; or it may consist of a sale of the product and a sale of the
container but'both Sales being conceived ofas integrated components ofa
single sale transaction;-or what may yet be of a third case, it may consist
of a sale of the product with the transfer of the container without any
sale consideration therefor. The question in every case will be a ques-
tion of fact as to the nature and ingredients of the sale. It is not right in
law to pick on one ingredient only to the exclusion of the others and
deduce from it the character of the transaction. In every case, the
assessing authority is obliged to ascertain the true nature and character
of the transaction upon a consideration of all the facts and circum-
stances pertaining to the transaction. [310C-E; H; 311A]
Hyderabad Deccan Cigarette Factory v. The State of A.P., [1966]
17 STC 624, referred to.
(2) There can be as many different kinds of transactions as the
circumstances of the case may require either by reason of prevailing
E
trade practice or market conditions or personal convenience, and as
human ingenuity may devise for bonafide reducing the burden of tax.
Whether a transaction for sale of packing material is an independent
transaction will depend upon several factors. [312E]
F
G
(3) The issue as to whether the packing material has been sold or
merely transferred without consideration depends on the contract bet-
ween the parties. The fact that the packing is of insignificant value in
relation to the value of the contents may imply that there was no inten-
tion to sell the packing, but where any packing material is of significant
value it may imply an intention to sell the packing material. In a case
where the packing material is an independent commodity and the pack-
ing material as well as the contents are sold independently. The sale of
Excerpt shown. Read the full judgment & AI analysis in Lexace.