Implied sale of packing material arises only when the container forms part of the bargain, not mere transport packing.

Purchase tax under section 13 of the Bombay Sales Tax Act, 1959 on gunny bags used to pack empty bottles depended on whether the bags were separately purchased and whether an implied sale could be inferred from the transaction. The text states that the bargain was for empty bottles only, with no separate price charged for the gunny bags and the packing used merely as a transport vehicle. It further states that implied sale of packing material arises only in exceptional cases where the container itself forms part of the bargain; ordinary packing used for carriage does not, by itself, support that inference. On the stated conclusion, no implied sale of the gunny bags was established and purchase tax was levied on their purchase price.

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Issues: Whether purchase tax under section 13 of the Bombay Sales Tax Act, 1959 was leviable on gunny bags used for packing empty bottles, where there was no express contract of sale of the gunny bags and the question was whether an implied sale of the gunny bags could be inferred from the transaction.

Analysis: Liability to purchase tax under section 13 arose only if the gunny bags were purchased and not resold. The contracts and purchase orders showed that the bargain between the parties was for sale of empty bottles only. The certificates and correspondence from the breweries also indicated that no separate price was charged for the gunny bags and that the bottles were merely packed in gunny bags for transport. The rule applied was that an implied sale of packing material can be inferred only in exceptional cases where the nature and value of the container make it part of the bargain; ordinary packing used as a convenient and cheap means of carriage does not by itself support such an inference.

Conclusion: No implied sale of gunny bags was established and purchase tax under section 13 was rightly levied on their purchase price. The question was answered in favour of the Revenue.

Ratio Decidendi: An implied sale of packing material can be inferred only where the circumstances show that the container itself formed part of the bargain and not where it was merely used as a convenient and cheap vehicle of transport for the goods sold.

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