Sale of packing materials depends on the totality of circumstances, not separate billing or container value alone.

Liability to purchase tax on gunny bags and packing materials depends on whether the transaction, viewed as a whole, shows an express or implied agreement to sell the containers themselves. Separate billing, the commercial identity of the packing materials, and their relative value are only relevant circumstances and are not conclusive on their own. The Tribunal erred by treating those factors as sufficient without examining the totality of the evidence, including trade usage, the purpose of packing, and whether the parties were ad idem. The Tribunal's finding of inter-State sale and exemption for the related turnover was therefore set aside and remitted for fresh decision under the correct principles.

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Issues: Whether the turnover relating to gunny bags and packing materials could be treated as liable to purchase tax or exempted on the footing that there was an express or implied sale of those materials in the inter-State transactions; and whether the Tribunal was justified in treating the value, separate billing, and commercial identity of the containers as sufficient to infer such a sale.

Analysis: Liability in respect of packing materials depends on whether, on the facts of the transaction as a whole, the parties intended to sell and buy the containers themselves, either expressly or by necessary implication. Separate itemisation in the bill, the physical or commercial identity of the containers, or the proportion between the value of the goods and the containers are only circumstances to assist in ascertaining the bargain, and none of them is decisive by itself. The question must be answered on the totality of the relevant circumstances, including trade usage, the nature and purpose of the packing, the value of the containers, and whether the parties were ad idem that the containers formed part of the bargain. The Tribunal erred in proceeding on an assumed admission that the containers were substantial in value and in not examining the issue in all its facets.

Conclusion: The Tribunal's conclusion that the packing materials and gunny bags were sold inter-State and that the related turnover was exempt could not be sustained on the record as considered by it.

Final Conclusion: The tribunal orders were set aside and the matters were sent back for fresh decision in accordance with law after applying the correct principles governing inference of sale of packing materials.

Ratio Decidendi: A sale of packing materials or containers can be inferred only from the totality of circumstances showing an express or implied agreement to sell them, and no single circumstance such as separate billing, commercial identity, or relative value is conclusive.

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