Tax on gunny bags requires proof of sale agreement; price orders and packing charges alone are insufficient.

Revenue must prove an express or implied agreement to sell packing materials before gunny bags can be treated as separately taxable goods. A statutory price-control order merely fixes the maximum price and does not itself create a contract of sale. Separate entries for goods and packing charges, without proof of a distinct price for the gunny bags, are insufficient to establish taxable turnover. The preliminary objection on maintainability failed because the reference raised a mixed question of law and fact, but on the merits the alleged sale of gunny bags was not established and sales tax was not payable.

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Issues: (i) whether the reference involved a question of law and was maintainable, and (ii) whether, on the facts and circumstances, the turnover relating to gunny bags was liable to sales tax as a sale of containers.

Issue (i): whether the reference involved a question of law and was maintainable

Analysis: The question referred was not a pure question of fact. The Tribunal had drawn an inference from the price order and the sample bill, and the real controversy was whether those materials supported an inference of an express or implied agreement to sell the gunny bags. A transaction being exigible to sales tax on the footing of sale of packing materials raises a mixed question of law and fact, and such a reference was competent.

Conclusion: The preliminary objection failed and the reference was answerable.

Issue (ii): whether, on the facts and circumstances, the turnover relating to gunny bags was liable to sales tax as a sale of containers

Analysis: Liability depended on proof that the gunny bags were themselves the subject-matter of an agreement of sale, express or implied. The statutory price order only fixed the maximum price and did not create a contract of sale. The bill showed separate heads for rice and incidental charges such as sewing and packing, but it did not establish that any distinct price had been charged for the gunny bags. The burden lay on the revenue to prove that the alleged sale of gunnies formed part of the taxable turnover, and that burden was not discharged on the materials relied upon.

Conclusion: The alleged sale of gunny bags was not established and the turnover was not liable to sales tax.

Final Conclusion: The reference was answered in favour of the assessees, holding that the facts did not justify treating the gunny bags as separately sold goods exigible to sales tax.

Ratio Decidendi: For packing materials or containers to be taxed as sales, the revenue must prove an express or implied agreement to sell them, and a mere statutory price-control order or separate packing charge does not by itself establish such a sale.

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