Sale price and packing material set-off: third-party inspection charges excluded, and relief allowed where transaction conditions were satisfied.

Amounts paid by the purchaser for third-party performance testing and inspection were not part of the sale price under the Gujarat Sales Tax Act because the inspection was arranged at the purchaser's instance, separately borne by the purchaser, and was not a charge made by the dealer for anything done in respect of the goods at or before delivery. Set off on packing materials was also admissible under the Gujarat Sales Tax Rules, 1970, as the relevant conditions were satisfied and the entitlement depended on the real nature of the transaction and whether the packing material formed part of the commercial sale arrangement. Both issues were answered in favour of the assessee.

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Issues: (i) Whether performance test and inspection charges formed part of the sale price under section 2(29) of the Gujarat Sales Tax Act. (ii) Whether set off on packing materials was admissible under rule 44 of the Gujarat Sales Tax Rules, 1970.

Issue (i): Whether performance test and inspection charges formed part of the sale price under section 2(29) of the Gujarat Sales Tax Act.

Analysis: The contractual and factual setting showed that the inspection was carried out at the purchaser's instance through a third-party agency and was separately borne by the purchaser. The amount was therefore not a sum charged by the dealer for anything done in respect of the goods at or before delivery within the meaning of the statutory definition of sale price. The reference in the contract to inspection was read in the context of the whole arrangement and did not cover the pre-sale inspection in question.

Conclusion: The performance test and inspection charges did not form part of the sale price and the issue was answered in favour of the assessee.

Issue (ii): Whether set off on packing materials was admissible under rule 44 of the Gujarat Sales Tax Rules, 1970.

Analysis: Rule 44 grants set off, drawback, or refund subject to its conditions, and the decisive question was whether the packing material had been sold as part of the transaction. The reasoning drawn from the governing principles on packing material was that where packing is not independently sold but forms part of the commercial transaction for the goods, the statutory consequence follows according to the actual nature of the bargain. On the facts, the conditions for set off were satisfied and the packing materials were treated as eligible for the claimed relief.

Conclusion: Set off on packing materials was admissible and the issue was answered in favour of the assessee.

Final Conclusion: Both questions of law were resolved against the Revenue, and the assessee succeeded on both counts.

Ratio Decidendi: Amounts paid by the purchaser for third-party inspection or testing are not part of sale price unless they are charged by the dealer for services done in respect of the goods at or before delivery, and packing material set off depends on the real nature of the transaction and the statutory conditions governing the sale or use of such material.

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