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IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
P. Sam Koshy, Narsing Rao Nandikonda, JJ
STATE REP. BEFORE STAT STATE OF A.P. HYD. – Appellant
Versus
M/S. PRIYADARSHINI CEMENTS LTD. NALGONDA DIST. – Respondent
TAX REVISION CASE No.229 of 2008|TAX REVISION CASE No.29 of 2009|TAX REVISION CASE No.40 of 2009|TAX REVISION CASE No.42 of 2009|TAX REVISION CASE No.43 of 2009|TAX REVISION CASE No.46 of 2009|TAX REVISION CASE No.68 of 2009|TAX REVISION CASE No.110 of 2009

Advocates:
For the Appellants/Petitioners: Karthik Ramana Puttamreddy, Swaroop Oorilla
For the Respondents: Karthik Ramana Puttamreddy, Swaroop Oorilla

HDPE bags used for packing cement, when separately invoiced and identifiable, constitute an independent subject of sale rather than part of an integrated composite sale, rendering them separately taxable unless otherwise established by specific contractual agreement.

Headnote:(A) Andhra Pradesh Goods and Service Tax Act, 1957 - Section 6C - Sale of packing material in composite transactions - Principle of separate taxation for HDPE bags used in cement packaging. HDPE bags used for packing cement are entities distinct from the contents and if separately charged/invoiced, merit separate assessment, provided there is an implied or express agreement for sale.

(B) Appellate Scope - Judicial Precedents - Determination of factual contention regarding agreement to sell packing materials. Each case of composite sales must be examined on its own facts to discern if there was an actual agreement for separate sale of the container versus the content.

Facts of the case:
The assessee firms were assessed for sales tax, where the tax authorities sought to treat HDPE bags used for packing cement as part of a composite sale taxable at the higher rate specified for cement under Section 6C of the APGST Act. The assessees contended that these bags were independently identifiable, separately priced, and subjected to second sales, hence exempt from tax.

Findings of Court:
The court held that where HDPE bags are used for transport and are capable of reuse, and where the invoices reflect separate pricing, the packing constitutes a separate sale subject to its own tax rate, not necessarily the rate of the contents.

Issues: Whether HDPE bags used for packing cement are subject to separate taxation from cement or form part of a composite sale at the cement rate under Section 6C of the APGST Act.

Ratio Decidendi: Following Raj Sheel and Others (1989), the Court held that the classification of packing material as a separate commodity depends on its independent identity, usage for transport, and intent evidenced by separate pricing; therefore, secondary sales of such packaging are liable to exemption if tax has previously been paid.

Result: Revision cases of the assessees partially allowed; State Revision Case dismissed.

Table of Content
1. consolidation of related tax revision cases for determination of common questions of law. (Para 1 , 2 , 3)
2. the primary issue is the taxability of packing materials (hdpe bags) as either independent commodities or composite parts of cement sales. (Para 4 , 5 , 6 , 7 , 8 , 9)
3. competing arguments regarding whether separate pricing in invoices creates an implied agreement for the sale of packing material. (Para 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22)
4. judicial precedent establishes that packing materials are taxable separately if they have independent identity and there exists a separate agreement for their sale. (Para 23 , 24 , 25 , 26 , 27 , 28)
5. final ruling favoring separate tax treatment for packaging while rejecting extraneous claims lacking evidentiary support. (Para 29 , 30 , 31)

COMMON ORDER: (per the Hon’ble Sri Justice P.Sam Koshy)

Heard Mr. Karthik Ramana Puttamreddy, learned counsel for the petitioner in Tax Revision Case Nos.29, 40, 42, 43, 46, 68 & 110 of 2009 and for the respondent in Tax Revision Case No.229 of 2008; and Mr. Swaroop Oorilla, learned Standing Counsel for Commercial Tax appearing on behalf of the petitioner - State in Tax Revision Case No.229 of 2008 and for the respondent in Tax Revision Case Nos.29, 40, 42, 43, 46, 68 & 110 of 2009.

2. These are eight Tax Revision Cases filed under Section 22(1) read with Rule 10 of the Andhra Pradesh Goods and Service Tax Rules (hereinafter referred to as ‘APGST Rules’) under the Andhra Pradesh Goods and Service Tax Act, 1957 (hereinafter referred to as ‘APGST Act’) challenging the orders passed by the Sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad (hereinafter referred to as the ‘STAT’). The details of each of the case; like the assessment year, whether the Revision is filed by the State or the petitioner / assessee, and the Tax Appeal number along with dates in each of the cases are reproduced hereunder:

Sl. No.	TREVC. No.	ASSESSMENT YEAR	TREVC FILED BY THE ASSESSEE OR STATE	IMPUGNED ORDER UNDER CHALLENGE
1.	229 of 2008	1992-93	State	T.A.No.1033 of 2004 Decided on 23.06.2008
2.	29 of 2009	1993-94	Assessee (M/s. Priyadarshini Cement Ltd)	T.A.No.1205 of 2001 Decided on 29.08.2009
3.	40 of 2009	1993-94	Assessee (M/s. Raasi Cement Ltd)	T.A.No.8 of 2002 Decided on 23.10.2008
4.	42 of 2009	1993-94	Assessee (M/s. Raasi Cement Ltd)	T.A.No.10 of 2002 Decided on 23.10.2008
5.	43 of 2009	1991-92	Assessee (M/s. Raasi Cement Ltd)	T.A.No.1332 of 2001 Decided on 05.09.2008
6.	46 of 2009	1991-92	Assessee (M/s. Raasi Cement Ltd)	T.A.No.7 of 2002 Decided on 23.10.2008
7.	68 of 2009	1992-93	Assessee (M/s. Raasi Cement Ltd)	T.A.No.9 of 2002 Decided on 23.10.2008
8.	110 of 2009	1992-93	Assessee (M/s. Raasi Cement Ltd)	T.A.No.1333 of 2001 Decided on 05.09.2008

3. In all these cases since the point of contention is same, they have been taken up and heard together and are decided by this Common Order.

4. The question of law which was primarily raised by the petitioner / assessee as also by the Revenue in their respective cases that they have filed is “whether the HDPE bags used for packing cement should be taxed separately at a lower rate or together with cement at a higher rate under Section 6C of the APGST Act?”

5. In addition, there appears to be certain additional questions also raised in these Tax Revision Cases, which are:-

a) Whether the diesel issued to the transporters on returnable basis and which was not returned constitutes taxable sale?

b) Whether tax could be levied on the undocumented fly ash used by the assessee in the manufacturing process?

c) Whether tax on freight relating to purchase of iron ore could be levied?

6. For convenience, we first intend to take up the first question of law which is running through in all these Tax Revision Cases including the Tax Revision Case which has been filed by the State i.e. “whether the HDPE bags used for packing cement should be taxed separately at a lower

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2025 Supreme(Online)(Tel) 67312

HDPE bags used for packing cement, when separately invoiced and identifiable, constitute an independent subject of sale rather than part of an integrated composite sale, rendering them separately taxable unless otherwise established by specific contractual agreement.

Cases Referred (1)