Judgment Case ID: 2244

Judgment:
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. [(Madras)](1). But the contract of sale may be express or implied. In Hyderabad Deccan Cigarette Factory vs The State of Andhra Pradesh(2). 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. G.C. 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 S.T.C. 624	 relied on.