LexVASAVADATTA CEMENTS ETC. versus STATE OF KARNATAKA AND ANOTHER
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\ \ ' ) • VASAVADATTA CEMENTS ETC. v. STATE OF KARNATAKA AND ANOTHER JANUARY 18, 1996 [S.C. AGRAWAL AND G.B. PATIANAIK, JJ.] Sales Tax-Section 5(3-D) of Kamataka Sales Tax Act 1957-Cement sold in Containers-Packing material exigible to tOJ.-Provisions similar to Sec- A B tion 6-C of the Andhra Pradesh General Sales Tax Act 1957-!nterpreta- tion-Sales Tax liability in such cases depends upon the facts of each case C and intention of the pmties. The appellants are the manufacturers of cement and they supply cement either packed in plastic bags/gunny bags or loose to bulk con- sumers. They enjoyed the deduction in respect of packing charges from the taxable turnover. After the introduction of Sub-section (3-D) in Section 5 D of the Karnataka.Sales Tax Act 1957, packing material was made exigible to tax. Appellants challenged the constitutional validity of the said Sub-Sec- tion by filling Writ petitions in the Karnataka High Court. The High Court E dismissed the Writ petitions on the ground that the question raised is covered by the decision in Ranganath Associates v. State of Kamataka, JLR (1990) KAR 82 after taking note of the decision of the Supreme Court in Rajshee/ and Ors. v. State of Andhra Pradesh, (1989) 74 STC 379. Hence this appeal. F Appellants contended that Section 5 (3-D) of the Karnataka Sales Tax Act 1957 is similar to Section 6-C of the Andhra Pradesh General Sales Tax Act 1957. Constitntional validity of Section 6-C was upheld by the Supreme Court in Rajsheel case, and that Karnataka High Court while deciding Ranganath Associates case, completely departed from the law laid G down by the Supreme Court in Rajsheel case. They also contended that in Rajsheel case, this court held that the question as to the liability for sales tax would depend on the actual ingredients of the contract and intention of the parties which has to be determined in each case. Allowing the appeal, this Court 749 H 750 SUPREME COURT REPORTS [1996] 1 S.C.R. A HELD: 1.1 The High Court was in error in construing the provisions or Section 5 (3-D) of Karnataka Sales Tax Act to hold that the legislature has thought it fit and convenient to treat the sale of goods contained in a container as an integrated, single transaction or sale of the goods and that it makes it unnecessary to analyse the components or a particular sale and B enter upon investigation to find out the real price at which the packing material is purported to have been sold, and separate it from the computa- tion of the turnover regarding the particular goods which was packed in the packing materials or housed in the container. [757-E-F) Jamana Flour & Oil Mill (Pvt.) Ltd. v. State of Bilzar, [1987) 2 SCR C 1048, referred to. 1.2 The observations majle by this court in Rajsheel case are equally applicable to the present case involving construction of Section 5 (3-D) or the Karnataka sales tax Act, 1957. The liability for sale tax on the gunny- bags used for packing the cement sold by the appellants has to be con- D sidered having regard to the facts of each case after determining what are the ingredients of the contract and the intention of the parties in accord- ance with the decision of this court in Rajsheel case. [759-D] Union of India v. Bombay Tyre lntemational Ltd., [1984) 1 SCR 347, E referred to. CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2084 of 1996 Etc. From the Judgment and Order dated 7.12.90 of the Karnataka High F Court in W.P. No. 20736 of 1986. G Harish N. Salve, C.K. Shashi and Kailash Vasdev for the Appellants. T. Vishwanath Iyer, M. Veerappa and K.H. Nobin Singh for the Respondents. The Judgment of the Court was delivered by S.C. AGRAWAL, J. Special leave granted in both the special leave petitions. H Both these appeals are directed against the judgment of the Kar- ( ( . \ \ . ' VASAVADATIACEMENTSv. STATE(S.C.AGRAWAL,J.) 751 nataka High Court dated December 7, 1990 in Writ Petitions (Writ Peli- A tions Nos. 20736 and 21195 of 1986) filed by the appellants wherein they had assailed the constitutional validity of Section 5(3-D) of the Karnataka Sales Tax Act, 1957 (hereinafter referred to as 'the Act'). By the impugned orders the said Writ Petitions of the appellants have been dismissed by the High Court on the ground that the question raised is covered by the decision in Ranganatha Associates v. State of Kamataka, !LR 1990 Kar. 82. B The appellants are manufactur
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