1. ABDUL KADIR SHAIKH, J.-- Petitioner-Company besides carrying on other business is a manufacturer of guar-gum. For the assessment year 1960-61, petitioner claimed refund of sales tax amounting toRs.9,436 on account of sales tax paid on gunny bags used as packing material for export of guar products. The Sales Tax Officer rejected the claim on the ground that the packing material i.e. Gunny bags are not partly manufactured goods. On appeal by petitioner, appellant Assistant Commissioner of Income-tax and Sales Tax, Karachi held that the view taken by the Sales Tax Officer is not correct, for, "packing material does qualify as partly manufactured goods within the meaning of section 2(12) of the Sales Tax Act, 1951, as not only goods 'used in' or 'brought into' but also goods 'attached to' the finished goods fall within the scope of that term." He, however, took the view that the real point for determination was whether "guar-gum" exported abroad was exempt under the Ministry of Finance Notification (Sales Tax) No. 1, dated the 1st May, 1953. In his view the exemption did not, however, extend to the partly manufactured goods used in, brought into or attached to such goods and consequently the assessee-Company was not entitled to any refund on the gunny bags used by it for the export of guar-gum.
2. Petitioner's Second Appeal before the Income-tax Appellate Tribunal, however, succeeded as-the Tribunal took the following view:- "Our attention in these circumstances was invited to S.T.A. Nos. 157, 158 and 159 of 1965-66 wherein relying on the instruction of the C.B.R. Namely, C. No. 21(16). ST/66, dated 10-9-1966 we had held that the sales tax paid on the packing material used in the goods exported was also entitled to the exemption from sales. Following that decision, therefore, we shall hold that the appellant is also entitled to a refund of sales tax paid on the gunny bags which were ultimately attached to the exported guar-gum."
3. The respondent then filed an application under section 17(1) of the Sales Tax Act before the Appellate Tribunal requesting that the following question' of law arising out of the appellate order of the Tribunal may be referred to the High Court for decision:- "Whether on the facts and circumstances of the case the Tribunal was right in allowing refund of sales tax paid on gunny bags used as packing material when the guar-gum exported abroad was exempt under the Ministry of Finance Notification (S.T.) No. 1, dated 1-5-1953."
4. The Tribunal rejected the application for the reason that it had followed its earlier decision which was based on the Instruction of the Central Board of Revenue, and the departmental representatives in that case had conceded that this exemption was available to the packing material which the Board had accepted as partly manufactured goods forming a constituent of the goods exported.
5. Respondent then filed an application under section 12(2) of the Sales Tax Act, 1951 in Sind High Court, and the learned Judges of the Division Bench who heard the case answered the aforesaid question in the negative, following the decision of this Court in Noorani Cotton Corporation v. Sales Tax Officer PLD 1965 SC 162, the assessee was not entitled to refund of sales tax on gunny bags purchased from the market.
6. Mrs. Rashida Patel, learned counsel appearing in support of the petition for special leave to appeal from the judgment of the High, Court submits that the High Court has failed to appreciate that under the Instructions of the Central Board of Revenue contained in Memorandum C. No. 21(16)- ST/66, dated 10th September, 1966 the packing material used in the exported goods is exempted from sales tax.
7. It seems that petitioner's ease based on exemption granted by the Central Board of Revenue whereby packing material is not subjected to sales tax has not received attention.
8. After having gone through the record before us, we are of the opinion that the points raised in support of the petition deserve consideration. Leave is granted. Security Rs.2,000.