Case Note & Summary
The dispute arose under the Central Sales Tax Act, 1956, concerning the concessional rate of tax on inter-State sales to registered dealers. The respondent company, a registered dealer dealing mainly in vegetable products (vanaspati), held a registration certificate under the Central Sales Tax (Registration and Turnover) Rules, 1957. On December 11, 1958, the respondent applied to the Sales Tax Officer to amend its registration certificate to include tin plates or tin sheets, claiming those goods were used for packing its vegetable products for sale. The Sales Tax Officer rejected the application, stating that the goods were declared goods and could only be purchased on the strength of the certificate if resold in the same form. Revisions before the Commissioner of Sales Tax and the Chief Commissioner were dismissed; the Commissioner held that tin plates or tin sheets were not declared goods but could fall under clause (c) of sub-section (3) of Section 8 only if they were containers or materials used for packing, and he concluded they were not containers because they required manufacturing process and not packing material because 'packing' pertained only to solid contents. The respondent's application for reference to the High Court was also rejected as time-barred. The respondent then filed a writ petition under Articles 226 and 227 of the Constitution before the Delhi High Court, which allowed the petition and held that the words of clause (c) were wide enough to cover the goods, as it was enough if the dealer intended to use them for packing even if they had to undergo some change in shape. On appeal by certificate to the Supreme Court, the appellants argued that tin sheets and tin plates were neither containers nor materials intended for packing, because they could not be used until converted into containers, and that 'packing' applied only to solid contents. The respondent contended that the goods fell in the category of materials intended for packing; the High Court had recorded a finding, not questioned before the Supreme Court, that the respondent purchased tin sheets and tin plates to convert them into containers for filling with vegetable oil products for sale. The Supreme Court examined the plain language of clause (c) and held that once the intention of using materials for packing goods for sale was proved, the requirements were satisfied. The fact that cutting and moulding into containers was necessary did not take the materials out of the category; that process only facilitated actual user for packing and did not alter the nature of the materials. The Court further held, referring to Encyclopaedia Britannica, that packing materials are necessary not only for solid articles but also for liquid and semi-liquid goods, and that wrapping or containers are necessary during storage, transport, and sale. Accordingly, the Supreme Court dismissed the appeal with costs, upholding the High Court's judgment and confirming that the respondent was entitled to invoke the benefit of clause (c) of Section 8(3) for the purchase of tin sheets and tin plates intended for packing vegetable products.
Headnote
A) Central Sales Tax - Exemptions and Concessional Rate - Section 8(3)(c) Central Sales Tax Act, 1956 - Materials intended for packing goods for sale include those requiring conversion into containers - The respondent purchased tin sheets and tin plates to convert them into containers for packing vegetable products; the High Court held clause (c) wide enough to cover such goods; Supreme Court affirmed that intention to use for packing suffices and cutting and moulding does not take materials out of the category - Held that tin sheets and tin plates purchased for packing vegetable products qualify for concessional rate under Section 8(3)(c) (Paras 214-215). B) Central Sales Tax - Interpretation of 'Packing' - Section 8(3)(c) Central Sales Tax Act, 1956 - Packing materials necessary for liquid and semi-liquid goods - Revenue contended packing only for solid contents; Commissioner had held tin plates not packing material for vegetable oil; Supreme Court relied on Encyclopaedia Britannica to hold that wrapping or container is necessary during storage, transport, and sale for all goods including liquids and semi-liquids - Held that packing materials are not limited to solid articles (Paras 215). C) Central Sales Tax - Amendment of Registration Certificate - Section 8(3)(c) Central Sales Tax Act, 1956 - Entitlement to include tin sheets/tin plates - The Sales Tax Officer and revisions had rejected the amendment on grounds of declared goods or non-packing material; High Court directed decision in accordance with law; Supreme Court held respondent entitled to benefit and dismissed revenue appeal with costs - Held that the respondent was entitled to invoke clause (c) for the purchase of tin sheets and tin plates intended for packing vegetable products (Paras 214-216).
Issue of Consideration
Whether tin sheets and tin plates are covered by clause (c) of sub-section (3) of Section 8 of the Central Sales Tax Act, 1956 as 'containers or other materials specified in the certificate of registration of the registered dealer purchasing the goods, being containers or materials intended for being used for the packing of goods for sale'
Final Decision
Appeal dismissed with costs; High Court judgment affirmed; respondent entitled to benefit of Section 8(3)(c) for tin sheets/tin plates purchased for packing vegetable products.
Law Points
- Materials intended for packing goods for sale under Section 8(3)(c) include raw materials that require cutting and moulding to become containers
- intention to use for packing is sufficient
- packing materials are necessary for liquid and semi-liquid goods too
- process of conversion does not alter nature of material
- registration certificate amendment permissible for tin sheets used to pack vegetable products
