Case: Commissioner of Taxes Assam, Shillong Vs. Prabhat Marketing Company Limited, Gauhati

2. The respondent is a registered dealer under the Assam Sales Tax Act (Act XVII of 1947). For the two periods ending September 30, 1959 and September, 30, I960, the Sales Tax Officer assessed the 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 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. 21,500. 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 S. 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 NFFA, 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.

Reasoning:
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 constitute a sale it is necessary that there should be an agreement between the parties for the purpose of transferring title to goods, the 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 conic be no sale of goods and sales tax cannot be imposedThe 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 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 the present case.