COMMISSIONER OF TAXES ASSAM, SlULLONG v. PRABHAT MARKETING CO. LTD., GAUHATI

By its judgment dated May 20, 1964 the High Court answered the first question against the assessee. With regard to the second question, the High Court held that the value of the containers was not assessable to sales-tax "unless separate price has been charged for the containers". The High Court took the view that there was no evidence to show that actually separate price was paid for the containers and hence there was no sale and there could not be any tax on the containers. The High Court accordingly answered the second question in favour of the assessee. The question presented for determination in these appeals is the value of containers of hydrogenated oil is assessable whether to sales-tax under the Assam Sales Tax Act, 1947. B c D E F On behalf of the appellant Mr. Naunit Lal contended that the High Court has erred in holding that unless a separate piice has been charged for the containers the value of the containers is G It was submitted that the parties may not assessable to sales-tax. have intended in the circumstances to sell the hydrogenated oil apart from the containers; and the mere fact that the price of the containers was not separately fixed would make no difference to the assessment of sales-tax.

In our opinion, the argument put forward on behalf of the appellant is well-founded and must be H It is well-established that in order to con accepted as correct. stitute a sale it is necessary that there should be an agreement bet ween the parties for the· purpose of transferring title to goods, the ( COMMR. OF TAXES v. MARKETING co. (Ramaswami, J.) 963 A B c agreement must be supported by money consideration, and that as a result of the transaction the property should actually pass in the good~. Unless all the ingredients are present in thf' transaction there could be no sale of goods and sales-tax cannot be imposed [State of Madras v. Gannon Dunkerley and Co. (Madras)]('). But the contract of sale may be express or implied. In Hyderabad Deccun Cigarette Factory v. The State of Andhra Pradesh(2). It wan held by this Court that in a case of this description what the Sales-tax authorities had to do was to ask and answer the question whether the parties, having regard to the circumstances of the case, intended to sell or buy the packing materials or whether the subject matter of the contracts of sale was only an exempted article, and packing materials did not form part of the bargain at all, but were used by the sellers as a convenient and cheap vehicle of transport.

At page 628 of the Report Subba Rao, J., spea)dng for the Court, observed as follows: D - E F G "In the instant case, it is not disputed that there were no express contracts of sale of the packing materials between the assessee and its customers. On the facts, could such con tracts be inferred ? The authority concerned should ask and answer the question whether the parties in the instant cuse, having regard to the circumstances of the case, inten ded to sell or buy the packing materials, or whether the subject-matter of the contracts of sale was only the ciga rettes and ·that the packing materials did not form part of the bargain at all, but were used by the seller as a con venient and cheap vehicle of transport. He may also have to consider the question whether, when a trader in ciga rettes sold cigarettes priced at a particular figure for a speci fied number and handed them over to a customer in a cheap card-board container of insignificant value, he intended to sell the cardboard container and the cus tomer intended to buy the same ? It is not possible to state as a proposition of law that whenever · particular goods were sold in a container the parties did not intend tc> sell and buy the container also.

Many cases may be 1isualized where the container is comparatively of high value and sometimes even higher than that contained in it. Scent or whisky may be sold in costly containers, Even cigarettes may be sold in silver or gold caskets. It may be that in such cases the agreement to pay an extra price for the container may be moo:e readily implied. " H The question as to whether there is aa agreement to sell packing material is a pure question of fact depen~ing upon the circum stances found in each case. But the High Court answeaed the (I) [19S9j S. C.R. 379. (2} 17 S. T. C. 624. 95' SUPUMB OOUJ.T UPOl.TS [1967) I S.c.L question of law referred to it by the Board of Revenue without addressing itself to the question whether there was an express or implied agreement for the sale of the containers of hydrogenated oil in the present case. We accordingly set aside the judgment of the High Court and direct that the answer to the second question should be that the value of containers of hydrogenated oil is assessable to ~ales­ tax under the Act if there is an express or implied agreement for the sale of such containers.