Taxability of packing containers depends on the true transaction and surrounding facts, not on absence of separate billing.

Taxability of containers used for packing insecticides turns on the true character of the transaction, including the parties' contract and surrounding facts. The absence of a separate bill or separate pricing does not by itself show that the containers formed part of the sale price of the contents. The relevant enquiry is whether the containers retained a separate identity, were reusable, and were intended to be sold independently. A revisional authority cannot decide the issue on broad assumptions that the container merges into the product without examining the correspondence and other material bearing on the transaction. The order was therefore set aside and the matter remitted for fresh consideration after enquiry and hearing.

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Issues: Whether tax liability on containers used for packing insecticides depended on proof of an implied contract to sell the containers, and whether the revisional order could stand without a fuller factual enquiry into the nature of the transaction.

Analysis: The character of a transaction involving goods sold in containers depends on the contract between the parties and the surrounding facts. The mere absence of a separate bill or separate pricing does not by itself establish that the packing material formed part of the sale price of the contents. The relevant enquiry is whether the containers retained their separate identity, were reusable, and were of such value and nature as to indicate an intention to sell them independently. The revisional authority proceeded on a generalised assumption that the container merged into the product and did not examine the actual correspondence and material said to support the assessee's case. In matters of this kind, the true nature of the sale must be determined on a full factual investigation.

Conclusion: The revisional order could not be sustained and was set aside. The matter was remitted for fresh consideration after enquiry and opportunity to the assessee, so the result was in favour of the assessee.

Final Conclusion: The dispute was not finally determined on the merits of taxability of the containers, but the assessee succeeded in obtaining restoration of the issue for reconsideration in accordance with law.

Ratio Decidendi: Whether packing material is sold separately or merely transferred with the goods is a question of fact to be decided on the entire transaction and surrounding circumstances, and it cannot be concluded on broad assumptions or on the absence of separate billing alone.

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