Implied sale of packing material can attract separate sales tax when bags are part of the bargain with the goods.

Where the factual record showed an implied agreement to sell gunny bags along with wheat products at an all-inclusive price, the packing material was treated as a distinct commodity rather than a mere transport container. The price control order contemplated sale of wheat products on a net-weight basis, with the bag cost included in the price, and also recognised higher charging where bags were used. On those facts, the turnover attributable to the gunny bags was held taxable at the higher rate applicable to the bags, because the bags formed part of the bargain and were separately sold with the goods.

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Issues: Whether the turnover attributable to gunny bags used for packing wheat products and sold along with them under an all-inclusive price was liable to sales tax at the higher rate applicable to the bags.

Analysis: The price control order contemplated sale of wheat products on a net-weight basis and treated the cost of the bag as included in the price, while also permitting a higher charge where cloth bags were used. The record showed that gunny bags were a distinct commodity and that the price charged by the dealer included the value of the bags. The Tribunal and the High Court had recorded a factual finding that there was an implied agreement for the sale of the gunny bags along with the wheat products. On those facts, the packing material was not merely a vehicle of transport but formed part of the bargain.

Conclusion: The turnover relating to the gunny bags was rightly treated as taxable at the higher rate, and the challenge failed.

Ratio Decidendi: Where the factual findings show an implied agreement to sell packing material along with the goods, the packing material is separately taxable as a distinct commodity notwithstanding that the principal goods are sold at an all-inclusive price.

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