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2016 DIGILAW 1235 (GUJ)

State of Gujarat v. Hindustan Packaging Co. Ltd

2016-07-04

G.R.UDHWANI, K.S.JHAVERI

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JUDGMENT : K.S. Jhaveri, J. 1. The Gujarat Sales Tax Tribunal, Ahmedabad (for short, "the Tribunal") has referred the following question of law for our consideration: "Whether in the facts and circumstances of the case, the Sales Tax Tribunal was right in law in holding that the sales of "printed laminated paper rolls along with polyethylene strip bobbins" fall within the entry "cardboard boxes and cartons" falling within Entry 12(iv) Schedule II-A of the Gujarat Sales Tax Act, 1969 and was also right in law in holding that the said goods did not fall within the Entry 13 of Schedule III of the Act?" 2. The statement of facts is as follows; "The respondent herein was operating the Unit of Indian Dairy Corporation, which is a Government of India Enterprise. The said Corporation merged into the National Dairy Development Board, which is a body incorporated by an Act of Parliament. Due to "Operation Flood", it was anticipated that there would be an increase in the volume of Milk products. At the relevant time, distribution of milk was done by modern technology of packaging. The packaging work was done at various Dairies set-up in the Co-operative sector. The assessee supplied packaging materials marketed as printed laminated paper rolls for aseptic packaging of milk. The Sales Tax Officer, by assessment order dated 30.03.1988, levied tax for the A.Y. 1983-84 and 1984-85." 3. Being aggrieved by the assessment order, the assessee preferred appeals before the Commissioner of Sales-tax. However, the appeals were rejected, vide order dated 31.08.1988. Thereafter, the assessee preferred second appeals before the Tribunal. The Tribunal allowed both the appeals filed by the assessee vide order dated 26.06.1995. 4. Being dissatisfied with the order passed by the Tribunal, the State filed Reference Application Nos. 07/1997 & 08/1997 before the Tribunal. However, by order dated 10.12.1998, the Tribunal rejected both the Reference Applications filed by the State. 5. Against the said order of the Tribunal, the State preferred Sales Tax Application Nos. 01/1999 and 02/1999 before this Court. Both the applications came to be allowed by this Court by judgment and order dated 05.11.2011 and the Tribunal was directed to refer the question of law to this Court. Hence, this reference. 6. At the outset, learned counsel for the assessee submitted that the issue referred to this Court is settled by the judgment of Delhi High Court in the case of Lt. Hence, this reference. 6. At the outset, learned counsel for the assessee submitted that the issue referred to this Court is settled by the judgment of Delhi High Court in the case of Lt. Governor, Delhi and others v. Messrs. Ganesh Flour Mills Co. Ltd., (1973) 3 SCC 487 . In that case, the respondent-company was a registered dealer under the Central Sales Tax Act, 1956 and dealt mainly in vegetable products. The respondent applied to the S.T.O for amendment of its registration certificate so as to include therein Tin-plates and Tin-sheets, on the ground that those goods were used by the respondent for packing its vegetable products for sale. The application was rejected by the S.T.O on the ground that the purchase of goods in question could not be allowed on the strength of the registration certificate because they could not be resold in the form in which they had been purchased. In revision, the Commissioner of Sales Tax further held that the goods in question were not "containers", as they had to undergo manufacturing process before they could be used as containers. It was held by the Delhi High Court that no doubt, Tin-sheets and Tin-plates do not constitute "containers" but, they fall in the category of "materials intended for being used for packing of goods for sale", as laid down in Section 8(3)(c). Once the intention of using the materials for packing of goods for sale is proved, the requirement of the clause would be satisfied. The fact that Tin-sheets and Tin-plates have to be subjected by the respondent to the process of cutting and moulding into tin containers, would not take them out of the category of materials intended for being used for the packing of goods for sale. The process of cutting and moulding does not alter the nature of the materials intended for being used for packing of goods for sale; it only facilitates the actual user for packing. Packing materials are necessary not only for solid articles but also for those in liquid and semi-liquid form. As the Tin-sheets and Tin-plates were intended to be used for packing of vegetable products, the respondent was entitled to the benefit of clause (c) of Section 8(3). 7. Learned AGP was not in a position to differentiate the aforesaid proposition of law, as may warrant us to take a different view. 8. As the Tin-sheets and Tin-plates were intended to be used for packing of vegetable products, the respondent was entitled to the benefit of clause (c) of Section 8(3). 7. Learned AGP was not in a position to differentiate the aforesaid proposition of law, as may warrant us to take a different view. 8. We concur with the view taken by the Delhi High Court in the aforesaid decision and accordingly, answer the question in the affirmative, i.e. in favour of the assessee and against the Revenue. The reference stands disposed of accordingly.