# COMMISSIONER OF TAXES ASSAM, SlULLONG v. PRABHAT MARKETING CO. LTD., GAUHATI

- **Citation:** [1967] 1 S.C.R. 961
- **Court:** Supreme Court of India
- **Decided:** 1966-10-27
- **Case number:** Civil Appeal Nos. 199 and 200 of 1966
- **Bench:** J. C. Shah, V. Ramaswami, V. Bhargava
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/commissioner-of-taxes-assam-slullong-v-prabhat-marketing-co-ltd-gauhati-3948
- **Pages:** 4

## Headnote

D
JI
Assam Sales Tax Act (Act 17 of 1941)-Packing materials of exempt·
ed goods when liable to sales tax.
The respondent
was a registered dealer under the Assam Salea Tax
Act, 1947. The Sales-tax Officer assessed the respondent to Sales-tax in
respect of the containers of hydrogenated oil and other exempted goods.
Appeals to the Assistant Commissioner of Taxes failed as also second appeals to the Assam Board of Revenue. In reference the High Court held
that the value of the containers was not assessable to sales tax "unless
separate _Price has been charged for the containers." This finding was based
on the view that there was no evidence to show that actually separate price
was paid for the containers and hence there was no sale and there could
not be any tax 0n the containers. In appeal to this Court by the Commill·
sioner of Taxes it was urged that the parties may have intended in the
citeumstances to sell the hydrogenated oil apart from the containers, and
the mere fact that the price of the containers was not separately fixed
would make no difference.
HELD : The question as to whether there is an agreome.nt to sell packing material is a pure question of fact depending upon the circumstancea
found in each case.
The High Court was in error when it answered the
question of law referred to it without addressing itself to the question
whether there was .an express or implied agreement for the sale of the containers of hydrogenated oil in the present case. [963 H]
Hyderabad Deccan Cirgrette Factory v. State of Andhra Pradesh, 17
S.T.C. 624, relied on.

## Text

COMMISSIONER OF TAXES ASSAM, SlULLONG
v.
PRABHAT MARKETING CO. LTD., GAUHATI
October 27, 1966
B
[J. C. SHAH, V. RAMASWAMI AND V. BHARGAVA, JJ.]
D
JI
Assam Sales Tax Act (Act 17 of 1941)-Packing materials of exempt·
ed goods when liable to sales tax.
The respondent
was a registered dealer under the Assam Salea Tax
Act, 1947. The Sales-tax Officer assessed the respondent to Sales-tax in
respect of the containers of hydrogenated oil and other exempted goods.
Appeals to the Assistant Commissioner of Taxes failed as also second appeals to the Assam Board of Revenue. In reference the High Court held
that the value of the containers was not assessable to sales tax "unless
separate _Price has been charged for the containers." This finding was based
on the view that there was no evidence to show that actually separate price
was paid for the containers and hence there was no sale and there could
not be any tax 0n the containers. In appeal to this Court by the Commill·
sioner of Taxes it was urged that the parties may have intended in the
citeumstances to sell the hydrogenated oil apart from the containers, and
the mere fact that the price of the containers was not separately fixed
would make no difference.
HELD : The question as to whether there is an agreome.nt to sell packing material is a pure question of fact depending upon the circumstancea
found in each case.
The High Court was in error when it answered the
question of law referred to it without addressing itself to the question
whether there was .an express or implied agreement for the sale of the containers of hydrogenated oil in the present case. [963 H]
Hyderabad Deccan Cirgrette Factory v. State of Andhra Pradesh, 17
S.T.C. 624, relied on.
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 199 and 200
of 1966.
Appeals by special leave from the judgment and order dated
May 20, 1964 of the Assam and- Nagaland High Court in Sales
Tax Reference No. 1 of 1963.
Naunit Lal, for the appellant (in both the appeals).
G
B. P. Maheshwari, for the respondent (in both the appeals).
H
The Judgment of the Court was delivered by
Ramaswami, J. These appeals are brought, by special leave,
from the judgment of the High Court of Assam and Nagaland
dated May 20, 1964 in Sales Tax Reference No. 1 of 1963.
The respondent is a registered dealer under the Assam Sales
Tax Act (Act 17 of 1947). For the two periods ending September
30, 1959 and September 30, 1960, the Sales Tax Officer assessed the
962
SUPllBME COURT RBPORTS
[1967) 1 S.C.ll.
respondent to sales tax holding that hydrogenated oil was exempt
from sales tax but the value of the containers should be assessed
at Re. 1/- for each container of hydrogenated oil and at 2 annas
for salt bag and a small mustard oil tin which are other exempted
goods for the period ending September 30, 1959.
For the other
period ending
September 30, 1960, the value of the containers
of the exempted goods was estimated at Rs. 21,500/-. The respondent preferred appeals to the Assistant Commissioner of Taxes.
but the appeals were dismissed. The respondent preferred second
appeals before the Assam Board of Revenue which by its order
dated June 17, 1963 also dismissed the appeals. The respondent
thereafter filed an application under s. 32 of the Assam Sales Tax
Act,
1947 for reference of the following two questions of law to
the High Court :
"(I) Whether deli\·ery of goods made to the Assam Rifles
and NEFA, at Rowriah Air Port for consumption
outside the State of Assam, constitutes a sale liable to
Sales Tax under the Act ?
(2) Whether the value uf the containers of hydrogenated
oil is <L'sessable to Sales Tax under the Act though
the oil itself is not taxable under it ?"
By its judgment dated May 20, 1964 the High Court answered
the first question against the assessee. With regard to the second
question, the High Court held that the value of the containers was
not assessable to sales-tax "unless separate price has been charged
for the containers". The High Court took the view that there
was no evidence to show that actually separate price was paid for
the containers and hence there was no sale and there could
not be any tax on the containers. The High Court accordingly
answered the second question in favour of the assessee.
The question presented for determination in these appeals is
whether the value of containers of hydrogenated oil is assessable
to sales-tax under the Assam Sales Tax Act, 1947.
B
c
D
E
F
On behalf of the appellant Mr. Naunit Lal contended that
the High Court has erred in holding that unless a separate piice
has been charged for the containers the value of the containers is
G
not assessable to sales-tax. It was submitted that the parties may
have intended in the circumstances to sell the hydrogenated oil
apart from the containers; and the mere fact that the price of the
containers was not separately fixed would make no difference to
the assessment of sales-tax. In our opinion, the argument put
forward on behalf of the appellant is well-founded and must be
H
accepted as correct. It is well-established that in order to constitute a sale it is necessary that there should be an agreement between the parties for the· purpose of transferring title to goods, the
_,
(
A
B
c
D
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E
F
G
H
COMMR. OF TAXES v. MARKETING co. (Ramaswami, J.) 963
agreement must be supported by money consideration, and that
as a result of the transaction the property should actually pass in
the good~. Unless all the ingredients are present in thf' transaction
there could be no sale of goods and sales-tax cannot be imposed
[State of Madras v. Gannon Dunkerley and Co. (Madras)]('). But
the contract of sale may be express or implied. In Hyderabad
Deccun Cigarette Factory v.
The State of Andhra Pradesh(2).
It wan held by this Court that in a case of this description what the
Sales-tax authorities had to do was to ask and answer the question
whether the parties, having regard to the circumstances of the case,
intended to sell or buy the packing materials or whether the subjectmatter of the contracts of sale was only an exempted article, and
packing materials did not form part of the bargain at all, but were
used by the sellers as a convenient and cheap vehicle of transport.
At page 628 of the Report Subba Rao, J., spea)dng for the Court,
observed as follows:
"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
cuse, 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 card-board 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 of law that whenever · particular
goods were sold in a container the parties did not intend
tc> sell and buy the container also. Many cases may be
1isualized where the container is comparatively of high
value and sometimes even higher than that contained in
it. Scent or whisky
may be sold in costly containers,
Even cigarettes may be sold in silver or gold caskets. It
may be that in such cases the agreement to pay an extra
price for the container may be moo:e readily implied."
The question as to whether there is aa agreement to sell packing
material is a pure question of fact depen~ing upon the circumstances found in each case. But the High Court answeaed the
(I) [19S9j S. C.R. 379.
(2} 17 S. T. C. 624.
95'
SUPUMB OOUJ.T UPOl.TS
[1967) I S.c.L
question of law referred to it by the Board of Revenue without
addressing itself to the question whether there was an express or
implied agreement for the sale of the containers of hydrogenated
oil in the present case.
We accordingly set aside the judgment of the High Court
and direct that the answer to the second question should be that
the value of containers of hydrogenated oil is assessable to ~ales
tax under the Act if there is an express or implied agreement for the
sale of such containers. These appeals are, accordingly, allowed.
At the time of grant of special leave this Court made a condition
that the appellant will pay the cost of the respondent in any event.
A
B
Mr. Naunit Lal on behalf of the appellant gave an underc
taking that if these appeals are allowed no further steps will be
taken to tax the respondent for the containers for the :fperiods
covered in the present case.
G.C.
Appeals affowed.
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