Case: Commissioner of Sales Tax, U.P Vs. G. G. Industries, Agra

M/s. G.G. Industries, Belanganj, Agra, hereinafter referred to as the assessee, is a firm which carries on, inter alia, the business of manufacture and sale of confectionery such as chocolates, lollipops,etc. For the assessment yearthe Sales Tax Officer overruled the contention of the assessee that sales of confectionery were exempt on payment of fee at the rate annas four per Rs. 100 as cooked food for which an exemption had been obtained by payment of the maximum fee of Rs. 500. He held :"This confectionery is sold in packings of tin and cardboard which are closed by the use of cellophane paper to protect the contents from being affected by atmospheric conditions. The pieces of confectionery, in most of the cases, bear mark of the firm engraved on it. It was contended by the firm that merely wrapping the cardboard packages by paper does not make them sealed containers. The idea behind putting a seal on the coverings, to my mind, is that a protection shall be afforded from adulteration by dealers at subsequent stages. It is to ensure that only the goods manufactured by the assessees reach the customer as their produce. No adulteration is made in between by the middlemen. This aim is fully met when the pieces of confectionery bear the seal of the firm engraved on each item and they packed in packages of cardboard or tin covered by cellophane paper. All this practically amounts to sealed containers ....."The assessee appealed to the Judge (Appeals) Sales Tax who rejected the contention of the assessee that confectionery was not sold by them in sealed containers. The assessees representative produced before him lollipops in a closed packet of cardboard and lemondrops contained in a bag of cellophane paper for his examination. He observed :"The packet is wrapped in a cover of cellophane paper and label of the manufacturer is pasted on one side of it and not at the ends. The packet is closely sealed and the contents cannot be taken out unless the covering paper is torn and removed."He held :"If the packets were securely closed and gave an appearance of a sealed container they should not be taken out of that category merely because the label was pasted a little below the ends on one side ....... In my mind the closing of the ends of a packet securely by paste or gum does amount to sealing the packet though no stamp of any kind may be affixed on it."Regarding lemondrops he held that they were sold in bags of cellophane paper which were not sealed containers, but as no separate accounts were available he thought it proper to treat the sale of the entire confectionery as sale in sealed containers.3. The assessee then filed a revision. The Judge (Revisions), Sales Tax, dismissed the revision. He held :"The intention of the Legislature was that it was enough if the container was sealed with label. The container may also be of any kind. In the present case the confectionery was packed in a container of cardboard. The packets were securely closed and the contents could be taken out unless the container was torn. Having regard to the conditions of the packets I am still of the same opinion which I took previously that the confectionery was sold in sealed containers. The expression sealed container should not be given a narrow or restricted meaning. The intention of the Legislature was to give exemption to confectionery sold loose and not to confectionery sold in a securely closed and labelled packet of cardboard".The Judge (Revisions), Sales Tax, then, at the instance of the assessee, referred in question which we have already set out. The High Court answered the question in favour of the assessee. The Commissioner of Sales Tax, U.P., having obtained leave from this Court, the appeal is now before us.

Court's reasoning:
We are of the opinion that his contention must be accepted. Clause (2) of the notification deals with the trade of selling cooked food including sweetmeats and other confectionery. There are four ways of selling confectionery : (1) in sealed tins; (2) in sealed cardboxes or bottles; (3) incardboxes or bottles; and (4) loose. According to the learned counsel for the respondent the only category which does not enjoy the exemption given by the notification is the first category, i.e., sale in sealed tins. But it is difficult to appreciate why the authority issuing the notification should distinguish between category one and category two. In the case of a sealed tin it has to be cut; in the case of a sealed cardbox the covering has to be torn. A sealed tin may or may not be hermetically sealed. Therefore, the fact that a sealed tin may be airtight and a sealed cardbox is never really airtight does not assist us in deciding thethe cardbox is wrapped in paper or other covering, cellophane paper is sometimes added and then labels pasted. Ordinarily no seal of wax is applied. We have already reproduced the description of the packet produced as a sample before the Judge (Appeals) Sales Tax. It seems to us that this packet would fall within the expression "sealed container" occurring in the notification. It may be, as observed by the High Court, that the idea underlying the notification was to benefit small dealers, but with respect, small dealers may also sell confectionery in sealed containers. It may be that the idea underlying the exemption was, at least, partly administrative. It is difficult to check small sales made loose or in unsealed small packets. Be that as it may, in the context it is difficult to give to the expression "sealed container" a meaning different from the ordinary dictionary meaning.