Question : Whether sale of Cement and Cement bag are taxable separately, when it is established that Sale of Cement and Cement Bag are separate transactions ?
Answer :sale of Cement and Cement bag are taxable separately if it is established that sale of cement and bags are separate transaction.
A reading of the invoice would clearly show that the sale of cement and packing material is not an integrated sale and the sale of cement and the sale of packing material is distinct sale. The invoice on a perusal would lay bare that the cement was sold in quantities of metric tonnes and the rate of cement and the cost of packing material are separately shown. Therefore, the invoice produced clearly establishes that there is a separate sale of packing material and there is no integrated sale of cement with HDPE bags/packing material. The assessee had not provided the bag free of cost considering the significant cost of the bag. Therefore, from the contents of the invoice, the contention of the assessee that there is a separate and distinct sale of cement and packing material appears to be correct.
Question :whether the invoice can be construed as a contract ?
Answer Yes, There is no rebuttable evidence to rebut the presumption, which can be drawn, on the basis of the invoice which constituted an inclusive piece of evidence. Therefore, on facts the assessee is able to establish that the sale is not an integrated sale, but the sale of cement and packing material is distinct and separate. Therefore, when there is an agreement to sell separately the packing material and the goods packed or filled, the assessee can successfully contend that the sale of cement and the sale of packing material is different and distinct.
HIGH COURT OF ANDHRA PRADESH
Andhra Cements Co. Ltd.
Commissioner of Commercial Taxes
SPECIAL APPEAL NO. 9 OF 2001
APRIL 17, 2015
Section 6-C of the Andhra Pradesh General Sales Tax Act, 1957 – Levy of tax – On Packing material – Assessment year 1991-92 – Assessee was engaged in business of manufacture and sale of cement – Assessing Authority assessed assessee for assessment year 1991-92 and by invoking provisions of section 6-C levied tax on sale of packing material, i.e., HDPE bags, in which cement was packed at rate of 14.5 per cent, which was applicable to sale of cement – Assessee had established that sale of cement and HDPE bags was not an integrated sale – Sale of cement and HDPE bags was distinct and separate sale – There was a contract for such separate sale of cement and bags – Whether sale of packing material/HDPE bags should be subjected to tax at rate applicable to it – Held, yes [Paras 9 and 10] [In favour of assessee]
Circulars & Notifications: G.O. MOS. No. 374, dated 26-4-1987