P. Jaganmohan Reddy, J.
1. This is a petition under Articles 226 and 227 of the Constitution directed against the order of the Commissioner of Sales Tax dated 15th May, 1954, whereby the petitioner was assessed for the years 1950-51, 1951-52, 1952-53 and 1953-54 to sale tax on (a) gunny bags containing sugar, (b) gunny bags containing grain, and (c) stream sold to the Government Alcohol Factory at Bodhan. The petitioner is a limited company manufacturing sugar at Shakkarnagar (Bodhan) and during the course of its business of manufacturing sugar and molasses, it sells the former commodity in gunny bags with an inclusive price fixed from time to time. It is further alleged in the petition that the factory supplied steam in the assessment years through pipes to the Government Alcohol Factory at Bodhan collecting only manufacturing charges without making any profit on this service.
2. The Sales Tax Officer by his order dated 2nd November, 1953, assessed the petitioner for 1952-53 and 1953-54 on 2963 gunny bags of the grain shop at Rs. 1-4-0 per bag and on 92, 095 gunny bags containing sugar at Rs. 1-10-6 per bag making a total of Rs. 1, 86, 146-3-6 for the period 1st April, 1952, to 31st July, 1952, when sugar was exempt from sales tax. For the period 1st August, 1952, to 31st of March, 1953, sales tax was leviable on sugar also and therefore the only items taxed which are disputed are steam and empty gunny bags of the grain shop, grain being exempt during that period. It may be pointed out that in the aforesaid order the Sales Tax Officer specifically computed the cost of sugar for the period 1st April, 1952, to 31st July, 1952, by deducting the cost of bags from the cost of sugar sold in bags and thus arrived at the net turnover of actual sugar exempted from sales tax. Similarly, the actual turnover of molasses and grain which were also exempted for that period was computed. In so far as the assessment for 1953-54 is concerned, there was no exemption either on sugar or on molasses; the only disputable item is that of steam valued at Rs. 83, 417-2-0.It may be observed that the Sales Tax Officer, after making the assessments for 1952-53 and 1953-54, re-opened assessments already made for 1950-51 and 1951-52 in accordance with the procedure prescribed under rule 33 of the Sales Tax Rules made under section 26F of the Hyderabad General Sales Tax Act and assessed the petitioner for 1950-51 on Rs. 49, 565 being the cost of steam, on Rs. 23, 710 being the cost of 18, 968 empty gunny bags of grain shop at Rs. 1-4-0 per bag, on Rs. 3, 81, 819-14-9 for 1, 89, 775 empty sugar bags at Rs. 2-5-3 per bag and for 1951-52 on Rs. 68, 971-4-0 for steam, on Rs. 23, 360 for 18, 688 bags of grain shop at Rs. 1-4-0 per bag and on Rs. 5, 53, 425-10-6 for 2, 00, 106 empty gunny bags of sugar at Rs. 2-12-3.
3. The assessee raised several contentions before the Sales Tax Officer relating to the aforesaid assessments and re-assessments which appear from his order of 2nd November, 1953, and that of 12th November, 1953, respectively. The several contentions raised before the Sales Tax Officer were that as the empty gunny bags of the grain shop were only used for refilling, no tax can be levied, that as sale is defined under the Act as the aggregate amount for which the goods are bought or sold, the bags which formed part of the transaction of sale of sugar cannot be said to be transferred and the transfer of property in the goods is both that of sugar and the bags, that he is not a dealer in gunny bags and that steam which is a derivative of coal is exempt from tax by reason of coal being exempt from tax.
4. These several contentions were rejected by the Sales Tax Officer who held that sugar and bags are two distinct entities and that when a dealer sells sugar in bags, there was transfer of property in each of them separately; that it was immaterial whether the dealer makes a profit or loss in a transaction as the tax is on turnover and the only consideration that can be taken into account is whether there is a sale or not. With respect to steam he was of the opinion that it cannot be considered a derivative of coal and since it is not an exempted item either under Schedule I or under a notification issued under section 7, the contention of the assessee was rejected. In so far as the empty gunny bags of the grain shop were concerned, he rejected the contention of the assessee as it was not a fact that these were utilises for refilling. Against the orders of 2nd November, 1953, and 12th November, 1953, with respect to the four taxable periods, the assessee went up in appeal to the Deputy Commissioner of Sales Tax before who it was urges (i) that unlike in the case of Varasuki and Co. v. Province of Madras : AIR1951Mad254 , where it was held that the gunny bags were bought and sold, there was no proof that these were bought and sold in this case; (ii) that the petitioner has not collected sales tax; (iii) that the petitioner sold sugar at the scheduled rates fixed by the Government which does not include the cost of gunny bags, as such it cannot be assumed that the petitioner sold gunny bags for any valuable consideration; and (iv) that the imposition of tax on steam sold to the Government Alcohol Factory in incorrect because it was sold without profit. All these contentions were rejected by the Deputy Commissioner, who particularly observed that with regard to the gunny bags, it was admitted that the cost thereof was debited to the manufacturing expenses and the invoice shows that sugar was sold in bags of 2 3/4 maunds F.O.R. Shakkarnagar at Rs. 81-13-0. From these facts, he came to the conclusion that the turnover and the cost of gunny bags should be subjected to sales tax. Against this order the petitioner went up in revision to the Commissioner under section 15 of the Hyderabad General Sales Tax Act before whom the two points that were urged were (a) that the levy of sales tax on gunny bags is not correct as these were given free of cost to the purchasers of sugar and (b) sales tax on steam is not leviable as only manufacturing charges were given by the Government. With respect to the first point, the Commissioner held that the bills produced by the learned Advocate revealed that the petitioner had sold gunny bags though it did not appear as a direct charges and that rule 8(g)(ii) of the Hyderabad General Sales Tax Rules with respect to the deduction of packing charges etc., was not applicable to this case. In so far as the second contention relating to steam was concerned, he was of the view that the making of profit or loss is not a material consideration for the levy of sales tax as it is levied only a turnover if the goods are not otherwise exempt.
5. Learned Advocate for the petitioner before us has substantially raised similar pleas to those raised before the Sales Tax Authorities. His submission pertains to three categories of goods on which, he contends, there was no justification for imposing sales tax. They are as follows :
(ii) gunny bags in which sugar is sold,
(iii) gunny bags in which grain was given to the shops meant exclusively for the workers of the company. We have heard the arguments of the learned Advocate for the petitioner and that of the department. With respect to the contention that no sales tax can be levied on steam, it was submitted that since steam is not a tangible corporeal goods, it cannot come within the definition of goods under the General Sales Tax Act and hence no tax can be levied. The word 'goods' has been defined by clause (g) of section 2 to mean.'all kinds of movable property other than actionable claims, stocks and shares and securities and includes all materials, articles and commodities including materials, articles and commodities designed to be used in the construction, fitting out, improvement or repair of moveable or immoveable property.'
6. This definition is somewhat different to the definition of 'goods' given in clause 7 of section 2 of the Sale of Goods Act which is an under :
''goods' means every kind of moveable property other than actionable claims and money and includes stocks and shares, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.'
7. The difference between these two definitions is obvious in that for purposes of Sales Tax Act stocks and shares, growing crops, grass etc., are excluded though for purposes of Sale of Goods Act they have been included. Ignoring those specifically excluded or included things, 'goods' both for purposes of the Sale of Goods Act as well as for the Sales Tax Act generally man all or every kind of moveable property. Section 22 of the Indian Penal Code defines movable property as intended to include corporeal property of every description, except land and things attached to the earth or permanently fastened to anything which is attached to the earth. The question in this case is what is meant by moveable property and whether steam can properly be termed goods. Learned advocate for the petitioner contends on the basis of the decision in Rash Behari Shaw v. Emperor (1936 41 Cal. W.N. 225), where the Calcutta High Court had doubted whether electricity would come within the definition of goods under the Sale of Goods Act, that it is doubtful whether steam can be said to be goods. Before examining the meaning and import of the word 'goods' it might be useful to refer to a few decisions on the point. There are several English cases in which the question arose whether electricity or gas was goods and except in one case, viz., Erie County Natural Gas and Fuel Co. Ltd. v. Carroll (1911 A.C. 105), where gas was considered to be goods by the Privy Council, no definite opinion was expressed in the other cases and at any rate in County of Durham Electrical Power Distribution Co. v. Commissioners of Inland Revenue (1909 2 K.B. 604), the question whether electricity was goods or not was definitely left open. These cases therefore, except for the case of Erie County Natural Gas and Fuel Co. Ltd. v. Carroll (1911 A.C. 105), or for that matter the solitary Indian case cited before us of the Calcutta High Court, are not of much assistance in determining whether electricity, gas or steam is goods within the meaning of the Sale of Goods Act or under the Hyderabad General Sales Tax Act.
8. With respect to electricity no doubt in the Calcutta case the whole question turned on Section 39 of the Indian Electricity Act whereby a person who dishonestly abstracts, consumes or uses any energy is deemed to have committed theft within the meaning of the Indian Penal Code, i.e., sections 378-379. Some of the accused went up in appeal before the Privy Council in the case of Babulal Chowkhani v. Emperor (1938 65 Ind. App. 158), where the question whether the electricity was goods or not was neither raised nor decided. The only matter which was considered was the offence under section 39 of the Indian Electricity Act and their Lordships observed at page 180 :-
'The technical rules applicable for proving theft of a chattel do not apply to the proof of this special offence.'
9. In Mohamed Kabir v. Government, (15 Deccan L.R. 60) electricity has been held to be goods for the purposes of the Hyderabad Penal Code on the basis that everything which is capable of ownership is goods. We may, however, in passing point out that under the powers conferred on the State Legislatures, viz., List II of Schedule 7 of the Constitution, tax on sale of electricity has been made the subject-matter of a separate item 53 while item 54 deals with tax on purchase or sale of goods. From this it may be inferred that electricity was not considered to be goods, but in our view it is not really relevant for our purpose to determine this question. The word 'goods' is one which has an indefinite meaning and various statutes have defined it is including or excluding something or things which may or may not be included in or excluded from its generic meaning. We may with Lord Summer in the case of The Noordam (No. 2) (1920 A.C. 904 at p. 909) say that 'the content of the word 'goods' differs greatly according to the context in which it is found and the instrument in which it occurs.' This observation of Lord Summer was specifically referred to and adopted by Sankey, J., as he then was, in R. v. Dickinson (1920 3 K.B. 552 at pp. 555-556) in these words, 'When the word stands alone without definition its meaning must be ascertained, as was said by Lord Summer in The Noordam (No. 2) (1920 A.C. 904 at p. 909) by 'the character and scope' of the enactment in which the word is used.'
10. We must therefore try to ascertain the meaning of goods generally and to determine whether steam could properly be included in it. Generally speaking, all things containing matter in the scientific and physical sense are goods; and in economic parlance anything material or immaterial which can satisfy human wants is called goods. Some of the daily necessities if looked at from the economic point of view, such as air and water may be free goods without value as these are abundantly obtained, but once these are controlled and made available to the citizens for a cost, they would become economic goods having value. In the scientific sense therefore solids, liquids and gases, that is anything which has weight, occupies space, offers resistance and can transfer motion can be termed goods. For the purposes of law, goods are moveable, corporeal things, both tangible and intangible, and they are either choses in action or choses in possession. It may be observed that immoveable property is certainly excluded from the definition of goods as moveables have been defined in section 3(34) of the General Clauses Act to mean 'property of every description except immoveable property.' Generally the word 'goods' has been used in a limited sense not including intangible personal property such as choses in action or what under the Indian Acts is termed actionable claims which have been defined in section 3 of the Transfer of Property Act. Goods have therefore been used to denote property which is visible, tangible or moveable and in our view these need not be limited to things having considerable weight or bulk. It is the extensive meaning given to the word 'goods' generally that has necessitated the legislature to specifically include or exclude any particular item by defining the word 'goods' for the purposes of the particular Act in which the word occurs. Learned Advocate for the assessee argues, on the basis of the decision in State of Bihar v. Rameswar Jute Mills (1953 4 S.T.C. 179), that steam is not goods and cannot therefore be subjected to sales tax. All that that case decides is that goods in section 2(d) of the Bihar Sales Tax Act of 1947 must be construed to mean only tangible corporeal property, as actionable claims, stocks, shares and securities have been excluded from it. This case does not help the assessee because in our view also, as we have already stated, goods for purposes of the Hyderabad General Sales Tax Act is any property visible, tangible, corporeal or movable. The Patna High Court in the above case was distinguishing tangible corporeal property as against an abstract right as 'loom hours' and stocks and shares which are excluded from the purview of the Bihar Sales Tax Act where the definition of the word 'goods' is analogous to the one given in the Hyderabad General Sales Tax Act. Gas has been held to be movable property for the purposes of theft in several English cases and in that of the Privy Council in Erie County Natural Gas Co. (1911 A.C. 105), to which we have already adverted, it has been treated as goods. If gas in 'goods' there is no reason why steam should not be considered as goods. Steam is certainly a tangible property as it is visible, it has weight and it can be felt at any rate to the detriment of the person venturing to feel it. Once steam is declared to be 'goods' any sale of it within the meaning of the Hyderabad General Sales Tax Act would be subject to sales tax unless it is exempt. As we have observed in the case of Sharfaji Rao v. Commissioner of Sales Tax (1953 4 S.T.C. 6), since the object of the Hyderabad General Sales Tax Act is to levy sales tax on all goods generally other than those specified in the exempted list, the assessee must show that he comes within the exempted list or has been exempted by the Government under section 7 of the Sales Tax Act. It is further contended by the learned Advocate for the assessee that even if steam was goods inasmuch as the assessee had not sold it for profit no sales tax can be levied. Since this argument has also been raised in respect of the sale of gunny bags, we shall deal with it later.
11. With respect to the sales tax charges on the turnover of the gunny bags in which sugar is sold, the learned Advocate far the petitioner contends that the assessee was not a dealer in bags because according to him he must be a registered dealer for that particular article in which he is trading or doing business. He further contends that packing material is exempt under rule 8(g)(ii) and at any rate since he has not made any profit in gunny bags which according to him were given free to customers, there was no sale of these goods for purposes of attracting sales tax. In order to dispose of the several contentions raised by the learned Advocate it is necessary to examine the relevant provisions of the Hyderabad General Sales Tax Act. The taxing sections 3 and 5 make the turnover of every dealer, if his turnover exceeds a particular amount, and that of the casual trader, whatever be his total turnover, liable to sales tax. 'Dealer' has been defined in clause (e) of section 2 as meaning
'any person, local authority, company, firm, Hindu undivided family or any association, or associations of persons engaged in the business of buying, selling or supplying goods in the Hyderabad State whether for a commission, remuneration or otherwise and includes any society, club or association which buys or sells or supplies goods to its members.'
12. Clause (k) defines 'sale' with all its grammatical variations and cognate expressions as meaning
'every transfer of property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration and includes also a transfer of property in goods involved in the execution of a contract, but does not include a mortgage, hypothecation, charges or pledge.'
13. There are two explanations to this definition which are not relevant for our purposes and have therefore been omitted. 'Turnover' is defined in clause (m) to mean
'the aggregate amount for which goods are either bought by or sold by a dealer, whether for cash or for deferred payment or other valuable consideration.'
14. Explanation 1(ii) which is relevant for this purpose, provides that subject to such conditions and restrictions, if any, prescribed in this behalf,
'the amount for which goods are sold shall include any sums charged for anything done by the dealer in respect of the goods sold at the time of or before the delivery thereof.'
15. The cumulative effect of these provisions is that every person who in engaged in trade or business and who transfers any kind of movable property to another for cash or for deferred payment or for other valuable consideration is liable to be taxed on his turnover, which will include any sums charged for anything done by the dealer in respect of the goods sold at the time of or before the delivery thereof subject of course to any exemptions. That gunny bags are goods cannot be denied nor can it be denied that the assessee had transferred the property in these goods in the course of his trade or business for valuable consideration. In our view, the contention that the bags were supplied free of cost is untenable, because obviously even on the showing of the assessee in his balance sheet, the cost of the gunny bags was included in the manufacturing cost of sugar and it cannot therefore be said that they have been given free of cost. The cost of these bags is included in the price at which sugar with bags was sold. Even the invoices have clearly given the weight per bag and the number of bags that have been sold at a particular price which no doubt is the price fixed for sale of sugar in Hyderabad State by the Government of India. The fixation of price by the Government of India is only to ensure that sugar is not sold beyond that price; but there is nothing to prohibit a company from selling it for a price lower than what is fixed. The Government of India in fixing the price of sugar in any particular region or area must have taken into consideration various factors and circumstances prevailing in that region or area such as the price of sugar-cane, cost of the materials used and other charges etc., incurred in its manufacture by the various sugar factories including the profit to them. In determining the price of sugar therefore the Government of India must have taken the price of gunny bags also into consideration. In any case when the assessee is selling sugar with bags at the rate fixed by the Government of India, all that has to be done to arrive at the actual price of sugar is to deduct the cost of gunny bags from the price. If sugar was taxable as it was for the years 1953-54 the gross turnover under section 2(m) read with explanation 1(ii) would be the price of actual sugar plus the cost of gunny bags. During the periods when sugar was exempt for the assessment year 1950-51, 1951-52, and part of 1952-53, the method of computation is to take the gross turnover which is the cost of sugar and gunny bags and deduct from it under rule 8(e) all amounts for which any of the exempted goods are sold. This is the scheme of taxation and even according to this, the price of sugar with gunny bags minus the price of actual sugar would make the turnover on gunny bags liable to sales tax.
16. It is further contended on the authority of Gannon Dunkerley and Co. (Madras) Ltd. v. State of Madras (1954 5 S.T.C. 216) and of this Bench in Jubilee Engineering Company v. Commissioner of Sales Tax (1956 7 S.T.C. 423) that since sugar cannot be sold without bags, they become part of sugar and cannot be said to have been sold apart from sugar. Both the Madras High Court and this Bench were dealing with the question whether materials used in a works contract can be deemed to be a sale of goods for the purposes of item No. 54 of List II, Schedule 7, of the Constitution empowering a State to levy taxes on such materials, and this Bench held that where materials are so inseparably integrated with the contract of labour and work as to lose their identity and become inextricably identified with the service, there is no sale of such materials. In our view, the contention based upon these cases cannot be availed of by the assessee because gunny bags cannot be said to have been so inseparably integrated with sugar that they have lost their identity or have become part of the exempted goods. The invoices themselves clearly disclose sale of bags of sugar, each bag containing 2 3/4 maunds. The contract of sale is, therefore, of sugar plus bags for a composite price and the turnover on bags becomes leviable to sales tax. In this view we are supported by the other High Courts. In the cases of Mohanlal Jogani Rice & Atta Mills v. State of Assam (1953 4 S.T.C. 129), Varasuki & Co. v. Province of Madras (1951 2 S.T.C. 1), Indian Leaf Tobacco Development Co., Ltd. v. State of Madras and A. S. Krishna & Co., Ltd., Guntur v. State of Andhra (1956 7 S.T.C. 26), it was unmistakably held that the turnover of the containers or packing materials in which goods, whether exempted or otherwise, were contained or packed was liable to sales tax. The Madras High Court both in Varasuki's case (1951 2 S.T.C. 1) and in the Indian Leaf Tobacco Development Co's. case (1954 5 S.T.C. 354), held that the turnover of the gunny bags in which salt an exempted commodity was packed and the packing materials in which tobacco was wrapped were respectively liable to sales tax. The Andhra High Court in A. S. Krishna & Co., Ltd., Guntur v. State of Andhra (1956 7 S.T.C. 26) held that the turnover of packing materials used for packing the redried tobacco was liable to sales tax. Learned Advocate for the assessee submits that in all these cases, it was found as a fact or admitted by the parties that a separate charge was made for packing materials apart from the exempted goods or for the services as in the case dealt with by the Andhra High Court. In our view, this distinction does not make any difference to the levy of sales tax on the turnover of gunny bags, because the assessee has not only purchased gunny bags but also transferred the property in them for a consideration which was included in the price of the sugar.
17. With respect to the other contention, viz., that because the assessee has not purchased and sold gunny bags for profit, he cannot be said to be carrying on business or trade in gunny bags and is therefore not a dealer as defined in the Sales Tax Act, we may observe that to be a dealer, the test is not whether the assessee gets profit or loss but it is the object with which he carries on his trading activity. It is not permissible, as submitted by the learned Advocate, that a person should be declared a dealer with respect to every article constituting a transaction of sale. As long as he is a dealer in the goods of which the particular article is a part, the turnover of the goods would include, as we have already observed, the cost of the articles and consequently the aggregate value of the entire transaction would become the turnover. Therefore when the assessee is a dealer in sugar, he is deemed to be doing business or trade in selling sugar in bags, irrespective of whether he is carrying on a business in gunny bags with a view to earn profits. With respect to steam also, the assessee was manufacturing it for sale to the Government in the course of its business or trade and it would have been perfectly legitimate for it to have collected sales tax from the Government. The activity of the company in manufacturing steam and supplying it to the Government cannot be said to be done without any profit-making motive or with a philanthropic view. It is quite likely that the company did not make any profit but as we have observed that is not the criterion as long as the supply of steam was in course of its business or trade. The further point pressed by the assessee is that under rule 8(g)(ii) charges for packing materials are exempts from the turnover. This contention is equally unfounded. Exemption under rule (8)(g)(ii) is in the following terms :-
'All amounts falling under the following two heads, when specified and charged for by the dealer, casual trader or the agent of a non-resident, as the case may be, separately without including them in the price of the goods sold :
(ii) charges for packing, delivery and other such like services.'
18. It is clear from the above rule that the exemption contemplated is with respect to the service and not in respect of materials used in the performance of service whether that service is of packing or of delivery. The words which we have underlined in rule (8)(g)(ii), viz., such like services, clearly give a clue to the nature of the exemption and indicate that the charges exempted are for services rendered in packing and delivering goods. For these reasons we are of the view that the turnover on gunny bags for the three assessment years, the amount of which has not been challenged, is assessable to sales tax.
19. Now coming to the turnover of the empty gunny bags used for the issue of grain to the rationing shops to supply cheap grain to its workers, the contentions of the assessee was that these gunny bags were always used for refilling grain and as such they cannot be taxed. This contention was summarily rejected by the Sales Tax Officer without furnishing any reasons therefor. The Deputy Commissioner and the Commissioner of Sales Tax have not dealt with this matter specifically but have evidently confirmed the assessment order on the general question whether there is transfer of property in gunny bags. In our view when the supply of grains to the grain shops of the assessee was with the object of furnishing cheap grain to the workers, it is obvious that it was not carrying on business or trade in grains. The learned Advocate for the Department was unable to show that there was any material upon which the Sales Tax Officer could have come the conclusion that the assessee was engaged in the business of selling or supplying grain. In this view of the matter, the turnover on gunny bags is not liable for sales tax. For these reasons, we think that the turnover on bags in which grain was supplied to the grain shops for the following years, viz., 1950-51 Rs. 23, 710; 1951-52 Rs. 23, 360; 1952-53 Rs. 3, 703-12-0 and 1953-54 Rs. 11, 612, is not liable to sales tax. Consequently, we partly allow the petition and quash the assessment order by the issue of a certiorari in so far as it pertains to the aforesaid assessments and direct the Sales Tax officer for the refund of the tax collected by the Department in respect of the aforesaid assessments. Having regard to the particular circumstances of the case each party will bear his own costs.