Implied sale of packing material rejected, while disposal of business vehicles remained taxable as incidental to business.

An implied sale of packing material could not be inferred merely because gunny bags passed with sugar sold in prescribed packing; no separate price was charged, no express bargain for the bags was shown, and the department failed to discharge the burden of proving a taxable sale, so the estimated value of the bags was not liable to sales tax. By contrast, sales of trucks, a jeep and a car were treated as business-related transactions because the amended definition of business covered dealings connected with, incidental to, or ancillary to the business activity, and the vehicles had been acquired for business use before being sold when no longer useful, so those sales were taxable.

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Issues: (i) Whether the value of gunny bags used for packing sugar sold by the assessee was liable to sales tax on the basis of an implied sale of the bags. (ii) Whether the sales of trucks, jeep and car were taxable as being in connection with, or incidental or ancillary to, the assessee's business.

Issue (i): Whether the value of gunny bags used for packing sugar sold by the assessee was liable to sales tax on the basis of an implied sale of the bags.

Analysis: No express contract for sale of the gunny bags was shown, and the record did not establish an implied agreement either. The sugar was required to be sold in prescribed packing under the control order, the assessee charged only the controlled price of sugar, no separate price was charged for the bags, and the bags were used as a convenient mode of transport. The burden to prove an implied sale of packing material lay on the department, and the circumstances did not justify such an inference.

Conclusion: The assessee was not liable to sales tax on the estimated value of the gunny bags.

Issue (ii): Whether the sales of trucks, jeep and car were taxable as being in connection with, or incidental or ancillary to, the assessee's business.

Analysis: The amended statutory definition of business was wide enough to include transactions connected with the business activity. The vehicles had been purchased for business use, and their later sale after they ceased to be useful was treated as a transaction incidental to the business. The fact that the assessee was engaged in manufacture and sale of sugar did not exclude the vehicle sales from the business nexus required by the statute.

Conclusion: The assessee was liable to pay sales tax on the sales of the trucks, jeep and car.

Final Conclusion: The reference was answered by holding that the packing material turnover was not taxable, while the sale of the business vehicles remained taxable as business-related transactions.

Ratio Decidendi: An implied sale of packing material cannot be inferred merely because title to the containers passes with the goods; the department must prove, on the facts, that the packing material formed part of the bargain, whereas sales of business assets may be taxable if the governing definition of business extends to transactions incidental or ancillary to the business.

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