Srinivasa Iyengar, J.
1. This is a revision petition filed by the assessee against the order of the Mysore Sales Tax Appellate Tribunal, Bangalore, in S.T.A. No. 246 of 1970.
2. The point in dispute and the question raised is as to whether sales tax was liable to be charged in respect of the value of gunny bags in which the cement was sold by the assessee. The assessee is a retail seller in cement and he is a second dealer. It is common ground that the sale of cement by the second dealer was exempted from tax by virtue of section 5(3)(a) read with the relevant schedule. The Assistant Commissioner of Commercial Taxes inferred that there was a sale of gunny bags and determined the tax payable at Rs. 1,648.12. The assessee contested this before the Deputy Commissioner of Commercial Taxes and before the Tribunal, but was unsuccessful. The Tribunal held that there was no express contract for sale of gunny bags, but it was of the opinion that from the circumstances in the case it may be implied that there was a sale of gunny bags. The circumstance on which the Tribunal relied was that in the fixation of the price for the sale of cement, there was an item of packing charges at Rs. 25 per tonne. In its order the Tribunal states that the value of the packing materials was Rs. 25. But it is seen from the particulars given in regard to the retail price that the sum of Rs. 25 represented the value of packing material as well as other service charges. This was the only material on which the Tribunal came to a conclusion that there was an implied contract of sale of gunny bags.
3. Sri K. Srinivasan, learned counsel for the petitioner, has urged that the circumstance on which the Tribunal relied does not lead to the irresistible conclusion that there was any implied contract for sale of gunny bags. He argued that the cement could not be sold without the bags which were part and parcel of the commodity sold and were only a convenient mode for delivery. He also relied upon a decision of this court in S.T.R.P. Nos. 20 and 21 of 1969 decided on 16th December, 1969. In that case also the question was whether in respect of the bags in which potatoes, onions and chillies were sold, there was any implied contract of sale of the bags. The circumstance that had been relied upon in that case was that the assessee gave the value of the bags and stated that it would also have to be taken into account by prudent businessman. This court was of the opinion that by itself did not constitute sufficient material to infer an implied contract of sale of the gunny bags. The learned counsel also brought to our notice the decision of the Supreme Court in State of Tamil Nadu v. Cement Distributors P. Ltd. : 2SCR1019 and the decision in Commissioner of Taxes v. Prabhat Marketing Co. Ltd. : 1SCR961 .
4. The learned Senior Government Advocate, appearing for the respondent, has supported the reasoning given by the Tribunal and argued that the sum of Rs. 25 indicated as packing charges was not an insignificant amount in regard to the retail price fixed and, therefore, the conclusion drawn by the Tribunal was correct.
5. The Supreme Court in State of Tamil Nadu v. Cement Distributors P. Ltd. : 2SCR1019 considered the fixation of the price in regard to the gunny bags in which cement had to be sold and came to the conclusion that even the price in regard to the gunny bags had been controlled and in that view the transfer of gunny bags cannot be considered as sale. In the case reported in Commissioner of Taxes v. Prabhat Marketing Co. Ltd. : 1SCR961 , their Lordships pointed out that having regard to the circumstances, the question to be considered was whether there was any intention to sell or buy the packing materials or whether the subject-matter of the contract of sale was only the goods and that the packing materials did not form part of the bargain at all, but were used as a convenient and cheap vehicle of transport. This is the basic question that had to be considered by the authorities below. The assessee was a retail dealer and the argument of the learned counsel for the petitioner has been that he could not sell the cement loose and the use of the gunny bags was a necessity. His contention is sound. The mere circumstance that the packing charges amounted to Rs. 25 would lead to no definite conclusion that the gunny bags by themselves were intended to be sold or purchased. From the facts given in State of Tamil Nadu v. Cement Distributors P. Ltd. : 2SCR1019 , it appears that the price of gunny bags had ranged from Rs. 11 to Rs. 17 per tonne and apparently on account of the change of circumstances, the rate of charges had increased. But the reasoning that the price to be charged as packing charges was also controlled and that would not lead to the conclusion that there was a sale of the gunny bags, equally applies to the facts and circumstances of the case on hand. We are, therefore, of the opinion that there was no material justifying the conclusion of the Tribunal that there was any implied contract for sale of gunny bags. Accordingly the levy to tax in respect of these transactions cannot be sustained. Accordingly we allow the revision petition and reverse the order of the Tribunal. The assessee is entitled to its costs. Advocate's fee Rs. 100.
6. Petition allowed.