The sale of packing materials, like HDPE bags, can be treated as a separate transaction from the sale of the product if distinct agreements and classifications are established, impacting tax assessment.

JUDGMENT :

M. S. Sonak, J.

1. The learned counsel for the parties submit that a common order can dispose of these three References, since the issue involved is the same. However, they point out that the References pertain to different years and therefore, were instituted separately. Sales Tax Reference (“STR”) No. 20 of 2010 is taken as the lead Reference.

2. The STR No. 20 of 2010 arises out of the Judgment and Order dated 11 October 2002 in Appeal No. 170 of 1997, made by the Maharashtra Sales Tax Tribunal (“the Tribunal”). The Reference Application No. 2 of 2003 was disposed of by the Special Bench by Judgment and Order dated 19 November 2005, referring the following questions to this Court for its decision:

(i) “Whether on the facts and in the circumstances of the case and on true and correct interpretation of Section 15A of the Bombay Sales Tax, 1959, the Tribunal was justified in law in holding that section 15A is not a changing section and does not create any levy but merely declares the rate of tax?

(ii) Whether on the facts and true interpretation of the case and on true interpretation of this contract for sale of packed cement, whether the Tribunal was justified in holding that there is an express and independent contract for sale of HDPE bags in which cement was sold?”

3. The Respondent M/s. Associated Cement Company Limited (“ACCL”) is a manufacturer of cement, with factories located across the country, including at Chandrapur in the state of Maharashtra. For the period 01 April 1991 to 31 March 1992, ACCL was assessed by the Assistant Commissioner of Sales Tax, Churchgate Division, Mumbai, vide order dated 31 March 1995. In this order, the Assessing Authority held that ACCL had not effected the separate activity of reselling of packing material but had used the entire packing material in the process of manufacture of cement. On this ground, the Assessing Authority disallowed the ACCL’s claim of resales.

4. ACCL appealed against the order dated 31 March 1995 to the Deputy Commissioner of Sales Tax (Appeals), Mumbai. This Appeal was allowed, and the ACCL was granted a refund of Rs. 11,39,288/- on account of the claim of resale of the HDPE bags in which the manufactured cement was sold. The Deputy Commissioner’s (Appeals) order was revised by the Additional Commissioner of Sales Tax, Mumbai Zone, vide order dated 31 March 1997. The relief granted by the Deputy Commissioner (Appeals) on account of the resale claim concerning HDPE bags was withdrawn. Certain other benefits given by the First Appellate Authority were also withdrawn, and consequently, a demand of Rs. 1,81,26,495/- was made against ACCL.

5. Aggrieved by the revisional order dated 31 March 1997, ACCL instituted Appeal No. 170 of 1997 before the Tribunal. The Second Bench of the Tribunal referred the matter to the Special Bench to consider whether ACCL was entitled to a resale claim in respect of packing material, i.e., HDPE bags, which were used to pack the cement manufactured by ACCL. The Special Bench, by the order dated 11 October 2002, allowed the Appeal, set aside the revisional order dated 31 March 1997 and held ACCL to be entitled to a resale claim of HDPE bags.

6. Aggrieved by the above order, the Revenue applied for reference vide Reference Application No.2 of 2003. The Reference Application No.2 of 2003 was disposed of by the Special Bench vide order dated 19 November 2005, referring the above two questions for the decision of this