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PETITIONER: LT. GOVERNOR OF DELHI & ORS.

       Vs.

RESPONDENT: M/S.  GANESH FLOUR MILLS CO.  LTD.

DATE OF JUDGMENT09/01/1973

BENCH: KHANNA, HANS RAJ BENCH: KHANNA, HANS RAJ HEGDE, K.S. REDDY, P. JAGANMOHAN

CITATION:  1973 AIR  705            1973 SCR  (3) 211  1973 SCC  (1) 487

ACT: Central Sales Tax Act 1956-S. 8(3)(c)-Respondent dealing  in vegetable products applied for amendment of the Registration Certificate  to  include Tin plates or tin sheets  used  for packing.  Whether respondent can invoke the benefit  of  the said clause.

HEADNOTE: The  respondent  company is a registered  dealer  under  the Central  Sales Tax Act 1956 and deals mainly with  vegetable products.  It was granted the registration certificate under the  Central  Sales Tax (Registration and  Turnover)  Rules, 1957.   In  1958, the respondent, applied to the  Sales  Tax Officer for amendment of the Registration Certificate so  as to include Tin-plates or Tin-sheets under Sub-section (3) of Section  8  of the Act on the ground that those  goods  were used  by the respondent for packing its  vegetable  products for sale. The application was rejected by the Sales Tax Officer on the ground that the goods in question were "Declared Goods"  and therefore,  their purchase on the strength  of  registration certificate could be allowed only if they were to be  resold in  the  form in which they had been  purchased  A  revision petition  against  the  said  order  was  dismissed  by  the Commissioner  of  Sales  Tax who held  that,  the  goods  in question were not containers and that "Tin Plates", or  "Tin Sheets"  did  not  constitute  packing  material.    Further revision filed before the Chief Commissioner was  dismissed. The respondent thereafter, filed an application for making a reference  to  the High Court, but it was  rejected  by  the Chief  Commissioner on the ground of limitation.   The  res- pondent,  thereafter, moved the High Court for direction  to the  Chief Commissioner to refer the question of law to  the High,  Court.  In addition, the respondent filed a  petition under Art.226 and 227 of the Constitution for a direction to the  appellants to decide the application for  amendment  of the  Registration Certificate in accordance with  law.   The High Court allowed the writ petition and held that the words in  See. 8(3) (c) of the Act were wide enough to  cover  the goods  in question.  On appeal to this Court, the  appellant raised  the  following  question The  "Tin  Sheets  and  Tin

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Plates" are not covered by clause (c) of Sub-section (3)  of Section  8  of the Act, as those  goods  constitute  neither "containers  nor  materials  intended  for  being  used  for packing  of goods for sale." Further as tin sheets  and  tin plates  cannot  he used by the respondent unless  they.  are converted  into. containers, the respondents  cannot  invoke the benefit of S.8(3)(c), of the Act. Dismissing the appeal, HELD:(i)  The  materials referred to in Clause (c)  of  Sec. 8(3) according to its plain language, should be such as  are intended for packing of goods for sale.  Once the  intention of  using  the materials for packing of goods  for  sale  is proved.  the requirements of the Clause would be  satisfied. The fact that tin sheet and tip plates have to be  subjected by  the  respondent to the Process of cutting  and  moulding into tin containers would not take them out of the  category of  materials  intended for being used for  the  packing  of goods ’for sale.  The cutting and moulding is essential  for putting the tin sheets and tin plates into 212 shape  with  a  view to adapt them  for  actual  user.   The process of cutting and moulding does not alter the nature of the  materials  intended for use in packing  the  goods  for sale.  It only facilitates the actual user for packing. [214 FG] (ii) Packing  materials  are necessary not  only  for  solid articles, but also for those in liquid and semi-liquid form. In  a  society  that produces  foodstuffs  and  manufactured articles  in  one.  locality  and use  them  in  another’  a wrapping   or   container  is  necessary   during   storage, transport and sale. [215-B] Encyclopaedia  of  Britannica, Vol. 17 of 1968  Edn.  p.  22 referred to. The  functions of a package are (1) to contain a  convenient sized  unit  or amount of a product; (2) to  protect  it  in transit;  (3) to aid its safe delivery to the  consumer  and (4)  in  some cases, to display the product or  promote  its sale, or to act as a dispenser of it.  The packing  industry has expanded to meet the demands for processed and preserved foods rather than seasonal crops and new materials are being used for containers.  In the present case, as the tin-sheets and tin-plates purchased by the respondent were intended  to be  used  for  packing of vegetable  products  sold  by  the respondent,  it is entitled to invoke the benefit of  Clause (c) of S. 8(3). [215C-D]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  1776  of 1969. Appeal  by certificate from judgment and order date  May  3, 1968  of the High Court of Delhi at New Delhi in Civil  Writ No. 135-D of 1960. S.  K.  Aiyar,  S.  P. Nayar and  R.  N.  Sachthey  for  the appellants. Rameshwar Nath for the respondent. The, Judgment of the Court was delivered by KHANNA,  J. This appeal on certificate by the Lt.   Governor Delhi  and  two others is directed against the  judgment  of Delhi  High  Court whereby it accepted  the  petition  under article  226 and 227 of the Constitution of India  filed  by the respondent company and directed the appellants to decide the  respondent’s application for amendment of  registration certificate in the light of observations made by the court.

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The  respondent  company is a registered  dealer  under  the Central Sales Tax Act, 1956 (hereinafter referred to as  the Act)  and  deals mainly in vegetable  products  (vanaspati). The  respondent was granted registration  certificate  under the  Central  Sales Tax (Registration and  Turnover)  Rules, 1957.   On December 11, 1958 the respondent applied  to  the Sales   Tax  Officer  for  amendment  of  the   registration certificates  so  as to include therein tin  plates  or  tin sheets under sub-section (3) of section 8 of the Act on  the allegation that those goods were used by the respondent  for packing its vegetable products for sale.  The said appli- 213 cation  was rejected by the Sales Tax Officer on the  ground that the goods in question were declared goods and, as such, their  purchase on the strength of registration  certificate could be allowed only if they were to be resold in the  form in  which they had been purchased.  Revision petition  filed by the respondent against the order of the Sales Tax Officer was dismissed by the Commissioner of Sales Tax on the ground that  tin  plates or tin sheets were not  declared.goods  or goods  of special importance.  On the other hand,  according to the Commissioner, those goods could fall in the  category mentioned  in clause (c) of sub-section (3) of section 8  of the  Act provided they were either containers  or  materials used  for  packing  of goods  for  sale.   The  Commissioner further held that the goods in question were not  containers as  they  had to undergo manufacturing process  before  they could  be used as containers.  The goods were also held  not to  fall in the second category of being materials used  for packing  vegetable oil because, according to him,  the  word "packing"  was invariably used for holding  solid  contents. He,  therefore, held that "tin plates" or "tin  sheets"  did not constitute packing material.  Further revision filed  by the  respondent was dismissed by the Chief Commissioner  who agreed with the opinion of the Commissioner.  An application was  thereafter  filed  by  the  respondent  for  making   a reference  to the High Court of the question of law  arising from the order of the Chief Commissioner.  This  application too was rejected by the Chief Commissioner on the ground  of being  barred by time.  The respondent thereafter moved  the High  Court  for a direction to the  Chief  Commissioner  to refer  the question of law formulated by the  respondent  to the High Court.  In addition to that, the respondent filed a petition  under articles 226 and 227 of the Constitution  of India  for  a  direction to the  appellants  to  decide  the respondent’s  application for amendment of the  registration certificate in accordance with law. The writ petition was resisted by the appellants.  The  High Court accepted the writ petition and held that the words  of clause (c) of sub-section (3) of section, 8 of the Act  were wide  enough to cover the goods in question.   According  to the High Court, it was not necessary that those goods should be  capable  of  being  used directly  for  the  purpose  of packing.  It was quite enough if the intention of the dealer was  to  acquire them in order that they might be  used  for packing  of.  goods  for sale even if  in  that  process  of adapting them for such use, they bad to undergo some  change in  shape  or  form.   It  was  further  observed  that  the respondent’s  object was to. convert the tin sheets and  tin Plates into tin containers with a view that the same, might be  filled  with the vegetable oil products to  be  sold  to different parties. Before  proceeding further, we may set out  sub-section  (1) and clause (c) of sub-section (3) of section 8 of the Act 214

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             "(1) Every dealer, who in the course of inter-               State trade or commerce-               (a)   sells to the Government any goods; or               (b)   sells to a registered dealer other  than               the Government goods of a description referred               to in sub-section (3);               shall  be  liable to pay tax  under-this  Act,               which shall be three per cent of his turnover.               (3)   The  goods referred to in clause (b)  of               sub-section               (1)               (b)*      *    *     *               (c)   are   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; Mr.  Aiyar on behalf of the appellants has argued  that  tin sheets and tin plates are not covered by clause (c) of  sub- section  (3)  of section 8 of the Act  reproduced  above  as those,  goods constitute neither. containers nor  "materials intended for being used for packing of goods for sale".  Mr. Ramesliwar Nath on behalf of the respondent has not disputed that tin sheets and tin plates do not constitute containers, but,  according  to  him,  they  fall  in  the  category  of materials  intended for being used for packing of goods  for sale.  There is, in our opinion, considerable force in  this sub-mission  of Mr, Rameshwar Nath.  The materials  referred to  in clause (c) according to its plain language should  be such as are intended for being used for the packing of goods for  sale.   Once the intention of using the  materials  for packing  of goods for sale IS proved, the  requirements.  of the  clause  would be satisfied.  The High Court  has  found that the respondent purchased tin sheets and tin plates from dealers in Bihar and elsewhere with a view to convert  those sheets  and plates into tin containers in order to fill  the same   with  vegetable  oil  products  for  being  sold   to different, parties.  This finding of the High Court has  not been  questioned before us.  It has; however, been urged  on behalf  of the appellants that as tin sheets and tin  plates cannot  be used by the respondent unless they are  converted into containers, the respondent cannot invoke the benefit of clause  (c) of sub-section (3) of section 8 of the Act.   We find it difficult to accept this contention.  The fact  that tin  sheets  and  tin plates have to  be  subjected  by  the respondent  to the process of cutting and moulding into  tin containers  would  not  take them out  of  the  category  of materials intended for being 215 used  for  the packing of goods for sale.. The  cutting  and moulding  is  essential for putting the tin sheets  and  tin plates into shape with a view to adapt them for actual user. The  process  of  cutting and moulding does  not  alter  the nature of the "materials intended for being used for packing of goods for sale"; it only facilitates the actual user  for packing. We are also of the view that packing materials are necessary not only for solid articles but also for those in liquid and semiliquid  form.  According to observations on page  22  of Encylopaedia Britannica, Vol.17, 1968 Edition, in a  society that produces foods-stuffs and manufactured articles in one locality  and uses them in another, a wrapping or  container is  necessary  during  storage, transport,  and  sale.   The functions  of a package are : (1) to contain, a  convenient- sized  unit  or amount of a product; (2) to  protect  it  in

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transit;  (3) to aid its safe delivery to the consumer;  and (4)  in  some cases to display the product and  promote  its sale or to act as a dispenser of it.  Originally  instituted to  produce  simple containers, the,  packing  industry  has expanded  to  meet the demands for processed  and  preserved foods,  rather  than  seasonal  crops,  and  to   distribute increased varieties of manufactured items.  Packing reflects developments in other industries, especially  petrochemicals and   plastic’s,  whereby  new  materials  and  methods   of construction  have  been provided for  containers.   It  has further  been  observed that cans, both tin  and  aluminium, are,  now used for ready-cooked products, brewery  products, soft  drinks,  and  many  oils  and  semisolids.   Where   a reclosable  pack is needed lever-lid or slip-lid  cans  are, used instead of sealed cans. As the tin sheets and tin plates purchased by the respondent were  intended to be used for packing of vegetable  products sold by the respondent, the respondent, in our opinion,  was entitled  to  invoke the benefit of  clause  (c)  reproduced above.   In  the result, the appeal fails and  is  dismissed with costs. S.C.                                     Appeal dismissed. 216