Judgement

RANGANATH MISRA, J. :- This appeal is by special leave. Challenge herein is to the decision of the Patna High Court rendered on a reference under Section 33(1) of the Bihar Sales Tax Act, 1959. The following question was referred to the High Court for its opinion, by the Commercial Taxes Tribunal of Bihar :-

"Whether in the facts and circumstances of the case, the direction of the Tribunal to ascertain the price of the containers (gunny bags) of wheat products sold for an all-inclusive price under the provisions of the Roller Mills Wheat Products (Price Control) Order, 1964, for taxing the same at a higher rate of 41/2% is legally valid?"

For the year 1964-65, the assessee, a registered dealer, under the Bihar Sales Tax Act returned a gross turnover of Rs. 53 39,981/- which was accepted by the assessing officer. He determined the taxable turnover at Rs. 52,79,962/- representing sale of wheat products taxable at 2 per cent. He found that the dealer had sold gunny bags in which wheat products had been packed and determined its turnover at Rs. 1,37,150/- and assessed the same at 4 1/2%.

2. The First Appellate Authority on assessees appeal held :

"The learned Assessing Officer was not justified in adding back the price of container in the gross turnover. What he should have done is to tax a portion of the taxable turnover at a different rate or in other words out of the turnover taxable under the Bihar Sales Tax Act, the price of bags calculated @ Rs. 0.70 paise per hundred kilogram should have been deducted and taxed @ 4 1/2%. The remaining was to be taxed @ 2%.

3. The dealer filed a revision before the Tribunal and contended that the demand of sales tax payable at different rates on the calculated turnover of gunny bags was not at all warranted as no price had been charged for the containers. The Tribunal found :-

"(1) The dealer transferred the property in the gunny bags, the packing material, to the purchasers for price.

(2) The price of the gunny bags was included in the consolidated rates of price charged by the dealer.

(3) There was an implied agreement for the sale of gunny bags between the dealer and the different purchasers to whom the wheat products were supplied.

(4) The transfer of gunny bags was impliedly covered by the contract of sale with regard to the wheat products."

On these findings the Tribunal held :-

"We hold that the learned lower courts were justified in levying tax at a different rate on the turnover on account of sale of gunny bags in which the wheat products were sold."

It further found :-

"The learned Deputy Commissioner has given a direction for determination of the turnover on account of sale of gunny bags. On being asked the applicant accepted that the accounts maintained by him would reveal the exact number of gunny bags used in the transaction of sale under consideration as also the price of the same. Hence we direct in modification of the orders passed by the learned Deputy Commissioner in this behalf that the learned Assessing Officer should ascertain from the accounts, the turnover on account of sale of gunny bags as containers of wheat products during the period under consideration and assess tax thereon at the prescribed rate of 4 1/2%. The balance turnover shall be assessed at 2%".

4. Reliance was placed on the provisions of clause (3) of the Roller Mills Wheat Products (Price Control) Order, 1964. That clause provides :-

"3. Maximum ex-mill prices of wheat products.

"No owner or other person in charge of a roller mill shall sell, or offer for sale, ex-mill any of the wheat products specified in column 1 of Schedule II to this Order-

(a) .............................."

(b) In the State of Maharashtra (excluding Greater Bombay) and in any other State (not being a State specified in sub-clause (a), to which this Order applies, at a price exceeding the price specified against the clause 3 thereof.

Explanation :- The prices referred to in this clause are :

(i) Exclusive of :

(a) & (b) ....................