TaxTMI 
TaxTMI 
1980 (12) TMI 160
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....1964-65 and one truck during the accounting period 1966-67?" 3.. The periods of assessment covered by these references are from 1st October, 1964, to 30th September, 1965, and 1st October, 1966, to 30th September, 1967. The assessee is a manufacturer of sugar which was sold during both the periods packed in gunny bags. Sugar is an exempted commodity. In the assessment in respect of the first period, a sum of Rs. 1,32,248 representing the value of the gunny bags in which the sugar sold by the assessee was packed, was included in the turnover and the assessee was taxed on it under the Madhya Pradesh General Sales Tax Act, 1958. Similarly, in respect of the second period, the assessee was taxed on a sum of Rs. 1,29,555 under the Central Sales Tax Act, 1956, and on a sum of Rs. 9,250 under the State Act, both amounts representing the value of gunny bags in which the sugar sold by the assessee was packed. Besides this, in respect of the first period, the assessee was assessed to sales tax under the State Act on the sales of old vehicles, i.e., one jeep, one car and one truck which were sold respectively for Rs. 7,600, Rs. 3,300 and Rs. 4,700. In respect of the second period, the asse....
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....and not for 101.2 kgs. which would be the gross weight of sugar plus the weight of the jute bag. The market value of gunny bag is nearly 1 per cent of the price of the sugar packed in it. 6.. As regards the sales of car and jeep, the Tribunal held that the sales were not in connection with or ancillary to or incidental to the main business of the assessee. In regard to the sales of trucks, it was, however, held that trucks were used for the transportation of raw materials, stores, manufactured product or bye-products and that the use of trucks was intimately connected with the business of manufacture and sale of sugar. The sales of trucks were thus held to be in connection with or ancillary to or incidental to the main business of the assessee and hence taxable. 7.. Sales tax on gunny bags can be imposed only on the basis that the assessee sold the bags to the purchasers of sugar. There was no express agreement for sale of gunny bags. The Tribunal has stated that there was no evidence to show even an implied agreement for sale of gunny bags. The learned Government Advocate, who appeared for the department, however, submitted that the other facts stated by the Tribunal lead to....
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....e was any implied sale of gunny bags. 8.. The law on the point was laid down by the Supreme Court in Hyderabad Deccan Cigarette Factory v. State of A.P.[1966] 17 S.T.C. 624 (S.C.). in the following words: "In the instant case, it is not disputed that there were no express contracts of sale of the packing materials between the assessee and its customers. On the facts, could such contracts be inferred? The authority concerned should ask and answer the question whether the parties in the instant case, having regard to the circumstances of the case, intended to sell or buy the packing materials, or whether the subject-matter of the contracts of sale was only the cigarettes and that the packing materials did not form part of the bargain at all, but were used by the seller as a convenient and cheap vehicle of transport. He may also have to consider the question whether, when a trader in cigarettes sold cigarettes priced at a particular figure for a specified number and handed them over to a customer in a cheap cardboard container of insignificant value, he intended to sell the cardboard container and the customer intended to buy the same? It is not possible to state as a proposition o....
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.... that the Tribunal was justified in drawing the conclusion that the crates in which bidis were packed were impliedly sold to the purchasers. These cases were decided on their special facts and no general principle can be drawn from them. This would be clear from the fact that in Ishag M. Gulam Bidi Merchants, Katni v. Commissioner of Sales Tax, M.P.(4), a Division Bench had taken the view that when bidis were sold packed in crates there was no implied sale of packing material. The question whether there is an implied sale of packing material depends upon the facts and circumstances of each case. We would, however, again like to emphasise that before drawing the conclusion that there was any implied sale of packing material, the court must be aware that it is necessary to exclude the other alternative that the packing material was used as a cheap and convenient mode of transporting the goods to the purchasers and that the burden is on the department to show that the facts and circumstances justify the inference of implied sale of packing material. 11.. In our opinion, having regard to the facts and circumstances of the instant case, it is not possible to hold that there was an....