Packing materials sold with goods were not separately taxable where no independent contract for the containers was proved.

Sale of goods packed in tins and gunnies was treated as including only the containers incidental to transport, not as a separate sale of the packing materials. The decisive inquiry was whether there was an independent or implied contract for sale of the containers; on the facts found, the dealer did not sell the tins and gunnies separately from the coconut oil and oilcake, and no separate bargain could be inferred. The transfer of the containers was therefore only an unavoidable incident of the sale of the contents, so the containers could not be taxed at a higher rate than the goods packed in them.

---

---

Issues: Whether, on the facts of the case, the value of tins and gunnies used as containers for coconut oil and oilcake sold inter-State was taxable at the same rate as the contents or at a higher rate applicable to the containers independently.

Analysis: Sale under section 2(xxi) of the Kerala General Sales Tax Act, 1963 includes transfer of property in goods in the course of trade or business. The court treated the real question as whether the containers formed the subject of a separate or implied contract of sale, which is essentially one of fact. Where goods are ordinarily despatched only in packing, the decisive inquiry is whether the packing materials were intended to be sold separately or merely used as a convenient vehicle for transport. On the facts found, the dealer did not sell tins and gunnies independently of the contents, and there was no basis to infer a separate or implied bargain for their sale. The transfer of the containers was only an unavoidable incident of the sale of the goods packed in them.

Conclusion: The value of the containers could not be subjected to sales tax at a rate higher than that applicable to the contents, and the same rate applied to both.

---