Tripuraenterprises vs. State

Facts

The petitioner, M/s. Tripura Enterprisers, challenged an order of the Sales Tax Appellate Tribunal dated November 7, 2006. The dispute arose from the assessment for the year 1993-94 under the Orissa Sales Tax Act, 1947. The Assessing Officer (AO) held that the petitioner was liable to pay sales tax at 12% on the sale price of tin containers (amounting to Rs.2,49,876/-) used for selling tax-exempt edible oil. The AO's reasoning was based on the fact that the sale price of the tins was not separately disclosed or taxed, relying on Supreme Court decisions. The Assistant Commissioner of Sales Tax (ACST) initially allowed the petitioner's appeal, holding the levy unsustainable. However, the Tribunal reversed the ACST's order, stating that the merged consideration for the tins did not make their sale an integral part of the oil sale.

Held

The Court held that the Assessing Officer (AO) erroneously presumed the sale of tin containers and required the petitioner to pay tax thereon, especially since the AO himself noted that the sale price of the containers was not separately found in the invoices. The Court found that the fourth proviso to Section 5(1) of the Orissa Sales Tax Act, 1947, was squarely applicable. This proviso states that the sale of containers of taxable goods, when sold with such goods but not charged separately, shall be subject to tax at the same rate as the goods contained therein. As the oil was exempt from sales tax, the containers in which it was sold should also be taxed at the same rate, which is nil. The Court distinguished the Tribunal's reliance on Raj Sheel v. State of Andhra Pradesh and Commissioner of Sales Tax v. Prabhat Marketing Co. Ltd., noting that these decisions were reiterated and supported the petitioner's case in Premier Breweries (supra). Therefore, Question No. 1 was answered in the negative, holding that the tin containers are exempt from sales tax. Question No. 2 was answered in favour of the assessee, confirming the applicability of the fourth proviso to Section 5(1) to the sale of tins containing exempt oil. Question No. 3 was answered by holding that a nil rate of tax would apply to the sale of tin containers. The impugned order of the Tribunal was set aside, and the revision petition was allowed.

Key Issues

1. Whether, in the facts and circumstances, the sale of oil exempted under the Orissa Sales Tax Act, along with its container (tin) which is not separately charged, is exigible to sales tax under the fourth proviso to Section 5(1) of the said Act? 2. Whether, in the facts and circumstances, the provisions of the fourth proviso to Section 5(1) of the Orissa Sales Tax Act are applicable to the sale of containers of exempted goods under Section 6 of the said Act when sold with such exempted goods but not charged separately? 3. What will be the rate of tax in respect of the container when sold with exempted goods under Section 6 of the OST Act? Petitioner's arguments: The petitioner contended that the fourth proviso to Section 5(1) of the OST Act mandates that the sale of containers of taxable goods, when sold with such goods but not charged separately, shall be subject to tax at the same rate as the goods contained therein. Since the oil sold was exempt from sales tax, the tax on the tin containers should also be nil. The petitioner relied on the decisions in Universal Agencies v. State of Tamil Nadu, T. Natarajan & Brothers v. State of Tamil Nadu, and Premier Breweries v. State of Kerala. Revenue's arguments: The judgment does not record specific arguments made by the revenue or State.