IMPORTANT POINT
High Court was wrong in construing provisions of Section 5(3-D) of the Karnataka Sales Tax Act, 1957 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 of sale of the goods and that it makes if unnecessary to analyse the component of a particular sale and 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 computation of the turnover regarding the particular goods which was packed in the packing materials or housed in the container.

JUDGMENT

S.C. Agrawal, J.-Special leave granted in both the special leave petitions.

2. Both these appeals are directed against the judgment of the Karnataka High Court dated December 7, 1990 in Writ Petitions (Writ Petition 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 Karnataka.1

3. The appellants are manufactures of cement the price of which is controlled by the Cement Control Order, 1967 issued by the Central Government in exercise of the powers conferred by Section 18-G and Section 25 of the Industries (Development and Regulation) Act, 1951. The appellants supply the cement packed either in gunny bags or in plastic bags. They also sell the same loose to bulk consumers. Till April 1, 1986 the appellants were enjoying deduction in respect of packing charges from the taxable turn-over. After the introduction of sub-section (3-D) in Section 5 of the Act the packing material was brought within the purview of the Act and made exigible to tax. Section 5(3-D) of the Act provides as under :

"Section 5. Levy of Tax on Sale or Purchase of Goods.

(3-D). Notwithstanding anything contained in the Act where goods sold or purchased are contained in containers or are packed in any packiing materials liable to tax under this Act, the rate of tax and the point of levy applicable to turn-over or such containers or packing materials, as the case may be, shall whether the containers or the packing materials have already been subjected to tax under this Act or not or whether the price of the containers or the packing materials is charged separately or not, be the same as those applicable to goods contained or packed:

Provided that no tax under this sub-section shall be leviable if the sale or purchase of goods contained in such containers or packed in such packing materials is exempt from tax under this Act."

4. The said provision in Section 5(3-D) is comparable to similar provision contained in Section 6-C of the Andhra Pradesh General Sales Tax Act, 1957, which provides as follows :

"Section 6-C. Notwithstanding anything in Sections 5 and 6-A, where goods packed in any materials are sold or purchased, the materials in which the goods are so packed shall be deemed to have been sold or purchased along with the goods and the tax shall be leviable on such sale or purchase of the materials at the rate of tax, if any, as applicable to the sale, or, as the case may be, purchase of goods themselves."

In Raj Sheel & Ors. v. State of Andhra Pradesh & Ors2, this Court has upheld the constitutional validity of the said provisions contained in Section 6-C of the Andhra Pradesh General Sales Tax Act, 1957, and, in that context, this Court has laid down :

"It is commonly accepted that a transaction of sale may consist of a sale of the product and a separate sale of the container housing the product with respective sale considerations for the product and the container separately; or it may consist of a sale of the product and a sale of the container but both sales being conceived of as integrated components of a single sale transaction; or, what may yet be 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 question of fact as to what are the nature and ingredients of the sale. It is not right in law to pick on one ingredients only to the exclusion of the others and deduce from it the character of the transaction. For example, the circumstance that the price of the product and the price of the container are shown separately may be evidence that two separate transactions are envisaged, but