LexSTATE OF TAMIL NADU ETC. versus CEMENT DISTRIBUTORS PRIVATE LTD. ETC. ETC.
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A B c D E F G ' H 1019 STATE OF TAMIL NADU ETC. v. CEMENT DISTRIBUTORS PRIVATE LTD. ETC. ETC. November 22, 1972 [K. S. HEGDE, P. JAGANMOHAN REDDY AND H. R. KHANNA, JJ.J 'Sale' Cement supplied in gunny bags-Price of gc:1111y bags fi.red under control order.-Supply of gunny bags l1'1zether a sale taxable under Madras General Sales Tax Act 1959. Madras General Sales Tax Act 1959, Rules made under-Rule 6(/) (ii) as it stood up to Sept. 27, 1963 providing for exemption in respect of 'charges for packing atJd delh·ery and other such like serviccs'-Price of gunny bags \1'hetlter conies under exemption. In appeal by the State of Tamil Nadu against the judgment of the Madras High Court on the questions (i} whether the producers who st1ppli.cd the Ceme,nt to the State Trading Corporation or its agent in gunny bags in pursuance of the directions given by the Government are liable to pay sales-tax on the turnover relating to the price of the gunny bags, and (ii) whether the words 'charges for packing and delivery and other such like services' in r. 6(f)(ii) of the rules under the Madras General Sales Tax 1959 as it stood upto September 1963 had the effect of granting exemption in respect o'f price of packing materi:1ls. HELD : (i) From the relevant control o~dcrs it \Vas clear that the Government of India was purporting to fix th~ price of the gunny bags in which the producers were required to supply cement to the State Trad- ing Corporation. When the price was wholly controllccl the supply of the gunny bags could not be considered as 'sales'. This position \\'a<.; concludeJ by the decisions of this Court in New India Sugar /'.fills Ltd. and Chittar Mal Narain Das. Accordingly the price of gunny hags could not be included in the taxable tnrnover. [1021 CJ New India Sugar Mills Ltd. v. Co1111nissirJ11t?r of 8ales Tax, Bihar 14, S.T.C. 316; and Chittar Mal Narain Das v. Co111111'ssioner of Sale• Tax, U.P. 26, S.T.C. 344; applied. ' (ii) The charges for packing exempted under Ruic 6(f) as' it stood up to September 1963 included both the price of the packing material as well as the l~!Jour charges relating to the packing. The words "and other ~uch like services' i~ sub-cl. (ii) of th~ rule referred to the word 'delivery' 1mmedzately preceding those words. fhe subsequent charges effected in the rule merely clarified the intention of th~ rule making authority. There- fore the contention df the appellant that the rule as it sood till September 1963, merely provided for exemption of service charges for packing and not the cost of the packing material must be rejected. [1023 FJ State of Madras and Ors. v. Damodaran Chettiar & Co. 18, S.T.C. 451 disapproved. Stare of Madras, In re : 7, S.T.C. 355, approved and applied. CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 2184- 2195 of 1969, 498 to 502 of 1970 & 884 to 885 of 1971. 1020 SUPREME COURT REPORTS [1973] 2 S.C.R, Cid Appeals /\los. 2184-2195 of 1969 and 498 to 502 of 1970. Appeals by certificate from the judgment and order dated March 25. 1969 of the Madras High Court in W.P. Nos. 4161- 4164 & 4246-4249 oi 1965 and Writ Petitions Nos. 198 & 199 and T. C. Nos. 227 and 228 of 1967 and Cil'il Appeals Nos. 884 to 885 of 1971. A11peJls by certificate from the judgment and order dated i\l•:rch 2. 1970 of the Madras High Court in Tax Case Nos. 21 anJ 22 cf 1970. S. T. Desai. A. V. Rangam, K. Venkataswami and A. Subhas- hini for the appellants (in C. As. Nos. 2184-2195/69). c,, 1•1111/ Sll'amindadha11, A. V. Rangam, K. Venkataswami and A. Subhashini for the appellants (in C. As. Nos. 498 to 502/70). A. V. Rangam and A. Subhashini for the appellants. (in C. As. No~. 884-885/71). F. S. Nariman, Addi. Solicitor-General of India, D. S. Dang, H. K. Puri, S. K. Dhingra and Krishna Sen for the respondents (in C. A. Nos. 2184-2195/69), Respondent No. 2 (in C.A. Nos. 498-500) and Respondent (in C.A. Nos. 501-502): The Judgment of the Court was delivered by HEGDE, J. These appeals by certificate can be disposed of by one judgment. They raise common questions of law. The material facts are not in dispute. In Civil Appeals Nos. 498,499 to 502 of 1970, the principal question of law that arises for decioion is whether the producers who supplied the cement to the State Trad- ing Corporation or its agents in gunny bags in pursuance of the directions given by the Goverriment are liable to !)ay sales-tax on the
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