Sale of packing materials in composite work contracts is taxable where property passes to the customer for an inclusive price.

Hessian cloth and iron hoops used in baling cotton were treated as taxable goods where a ginning and pressing factory purchased the materials, used them in the packing process, and supplied finished bales for a consolidated charge. The court reasoned that tax is attracted when property in identifiable goods passes to the customer for consideration, even if the price is not separately stated and the supply occurs within a composite work-and-supply arrangement. Because the packing materials retained their character as marketable goods and were not absorbed into the work process, the transfer amounted to a sale under the Madhya Bharat Sales Tax Act, 1950, and sales tax was payable on their value.

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Issues: Whether hessian cloth and iron hoops used by a ginning and pressing factory in baling cotton supplied by customers were liable to sales tax where a consolidated charge was collected for pressing and packing.

Analysis: Under the Madhya Bharat Sales Tax Act, 1950, tax is attracted where a dealer transfers property in goods for consideration and the goods form part of the taxable turnover. Hessian cloth and iron hoops are goods within the statutory definition. Where the assessee purchases such materials, uses them in the baling process, and delivers the finished bales to customers for an inclusive charge covering both labour and packing materials, property in those materials passes to the customers for consideration. The circumstance that the materials are supplied in the course of a pressing arrangement or that their price is not separately stated does not prevent the transaction from amounting to a sale. The packing materials remain identifiable marketable goods and are not absorbed so completely into the work process as to lose their character as goods.

Conclusion: The assessee was liable to sales tax on the value of the hessian cloth and iron hoops supplied in the baling process.

Ratio Decidendi: Where goods remain identifiable and property in them passes to the customer for an inclusive price, the transfer is a sale for consideration and is taxable even though the supply occurs as part of a composite work-and-supply transaction.

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