Appeal Nos 199 and 200 of 1966
Appeals by special leave from the judgment and order dated May 20 1964 of the Assam and Nagaland High Court in Sales Tax Reference No 1 of 1963
Naunit Lal for the appellant in both the appeals
B P Maheshwari for the respondent in both the appeals
The Judgment of the Court was delivered by Ramaswami J
These appeals are brought by special leave from the judgment of the High Court of Assam and Nagaland dated May 20 1964 in Sales Tax Reference No 1 of 1963
The respondent is a registered dealer under the Assam Sales Tax Act Act 17 of 1947
For the two periods ending September 30 1959 and September 30 1960 the Sales Tax Officer assessed the 962 respondent to sales tax holding that hydrogenated oil was exempt from sales tax but the value of the containers should be assessed at Re 1 for each container of hydrogenated oil and at 2 annas for salt bag and a small mustard oil tin which are other exempted goods for the period ending September 30 1959
For the other period ending September 30 1960 the value of the containers of the exempted goods was estimated at Rs 21 5001
The respondent preferred appeals to the Assistant Commissioner of Taxes but the appeals were dismissed
The respondent preferred second appeals before the Assam Board of Revenue which by its order dated June 17 1963 also dismissed the appeals
The respondent thereafter filed an application under section 32 of the Assam Sales Tax Act 1947 for reference of the following two questions of law to the High Court 1 Whether delivery
of goods made to the Assam Rifles and NEFA at Rowriah Air Port for consumption outside the State of Assam constitutes a sale liable to Sales Tax under the Act  2 Whether the value of the containers of hydrogenated oil is assessable to Sales Tax under the Act though the oil itself is not taxable under it  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 whether the value of containers of hydrogenated oil is assessable to sales tax under the Assam Sales Tax Act 1947
On behalf of the appellant Mr Naunit Lal contended that the High Court has erred in holding that unless a separate price has been charged for the containers the value of the containers is not assessable to sales tax
It was submitted that the parties may 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 accepted as correct
It is well established that in order to con stitute a sale it is necessary that there should be an agreement between the parties for the purpose of transferring title to goods the 963 agreement must be supported by money consideration and that as a result of the transaction the property should actually pass in the goods
Unless all the ingredients are present in the transaction there could be no sale of goods and sales tax cannot be imposed State of Madras vs Gannon Dunkerley and Co Madras1
But the contract of sale may be express or implied
In Hyderabad Deccan Cigarette Factory vs The State of Andhra Pradesh2
It was 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 subjectmatter 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 speaking for the Court observed as follows 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 contracts be inferred  The authority concerned should ask and answer the question whether the parties in the instant case 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 cigarettes 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 customer 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 to sell and buy the container also
Many cases may be visualized 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 more readily implied
 The question as to whether there is an agreement to sell packing material is a pure question of fact depending upon the circumstances found in each case
But the High Court answered the 1  2 17 section T C 624
964 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 salestax under the Act if there is an express OK implied agreement for the sale of such containers
These appeals are accordingly allowed At the time of grant of special leave this Court made a condition that the appellant will pay the cost of the respondent in any event
Mr Naunit Lal on behalf of the appellant gave an under taking that if these appeals are allowed no further steps will be taken to tax the respondent for the containers for the periods covered in the present case
GC Appeals allowed


Summary:
The respondent was a registered dealer under the Assam Sales Tax Act 1947
The Sales tax Officer assessed the respondent to Sales tax in respect of the containers of hydrogenated oil and other exempted goods
Appeals to the Assistant Commissioner of Taxes failed as also second ap peals to the Assam Board of Revenue
In reference 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
 This finding was based on 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
In appeal to this Court by the Commissioner of Taxes it was urged that the parties may have intended in the circumstances to sell the hydrogenated oil apart from the containers the mere fact that the price of the containers was not separately fixed would make no difference HELD  The question as to whether there is an agreement to sell packing material is a pure question of fact depending upon the circumstances found in each case
The High Court was in error when it answered the question of law referred to it 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
963 HI Hyderabad Deccan Cirgrette Factory vs State of Andhra Pradesh 17 STC 624 relied on