G.P. Singh, J.
1. This judgment will govern the disposal of Miscellaneous Civil Cases Nos. 198, 199 and 200 all of 1970.
2. These are three sales tax references made by the Sales Tax Appellate Tribunal (Board of Revenue) at the instance of the dealer referring for our answer the following questions of law :
(1) Whether, on facts and circumstances of the case, the Tribunal was correct in holding that there was an implied sale of packing material, namely, bardana and patti, along with sale of cloth bales, and the packing material was liable to tax under the State Act as well as under the Central Act?
(2) 'Whether, on facts' and circumstances of the case, the Tribunal was correct in holding that coal ash sold by the applicant was not coal for purposes of entry No, 2, Part II of the State Act but should be treated as residuary article for purposes of tax ?
Miscellaneous Civil Case No. 198 of 1970 relates to assessment of sales tax payable under the Madhya Pradesh General Sales Tax Act, 1958, for the period 1st January, 1960, to 31st December, 1960 ; Miscellaneous Civil Case No. 199 of 1970 relates to assessment of sales tax payable under the Central Sales Tax Act, for the period 1st January, 1961, to 31st December, 1961 ; and Miscellaneous Civil Case No. 200 of 1970 relates to assessment of sales tax payable under the Madhya Pradesh Act, for the period 1st January, 1961, to 31st December, 1961.
3. The dealer M/s. Binod Mills Company Limited is a company which carries on the business of manufacture and sale of textiles. Relevant to the first question, the facts found are that the dealer sold cloth to its customers in accordance with an agreement, a form of which is appendix 'B' to the order of reference. Cloth was sold in bales and the price was charged on meterage of cloth or according to its weight. No price was separately charged for the packing material, which consisted of hessian cloth, i.e., bardana, and iron hoops. Sale of cloth during the relevant period was tax-free. There was no express agreement for the sale of packing material. But in the opinion of the sales tax authorities, including the Tribunal, as the cloth was sold in bales, there was an implied agreement for the sale of packing material and the price of cloth impliedly included the price of packing material. The turnover in respect of the packing material was determined by fixing Rs. 4 per bale as its value and tax was imposed on this turnover.
4. Sales tax can be imposed only on the basis that the dealer sold the packing material to the purchasers of cloth. For coming to the conclusion that there was sale of packing material, it has to be found that there was an agreement express or implied for the sale of packing material for a price to be paid by the customers. In the instant case, it is not disputed that there was no express agreement for the sale of packing material and no price was separately charged for its sale. However, as the property in the packing material was transferred to the customers, the taxing authorities came to the conclusion that an implied agreement for the sale of the packing material must be inferred. The error in this reasoning lay in the omission to notice and consider the other alternative that the packing material was used by the dealer as a convenient and cheap vehicle of transporting the goods to the customers without charging any price for it. It was also not taken into account that the burden to prove that there was an implied sale of packing material liable to tax, was on the department.
5. The law on the point was laid down by the Supreme Court in Hyderabad Deccan Cigarette Factory v. State of A.P.  17 S.T.C. 624 (S.C.) In that case, the question involved was whether there was an implied sale of the containers in which cigarettes were sold, which could be subjected to tax. In that connection, their Lordships made the following observations;
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 of law that whenever particular goods were sold in a container the parties did not intend to sell and buy the container also. Many cases may be visualized 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 more readily implied....
Whether there was an agreement to sell the packing materials is a pure question of fact and that question cannot be decided on fictions or surmises. That is what has happened in this case. The Commercial Tax Officer invoked a fiction ; the Assistant Commissioner of Commercial Taxes relied upon the doctrine of 'finished product'; the Appellate Tribunal relied upon surmises; and the High Court, on the principle of implied agreement. But, none has tackled the real question. The burden lies upon the Commercial Tax Officer to prove that a turnover is liable to tax.
The Hyderabad Deccan Cigarette Factory's case  17 S.T.C. 624 (S.C.) was followed by the Supreme Court in Commissioner of Taws v. Prabhat Marketing Co. Ltd.  19 S.T.C. 84 (S.C.), where the question was whether the value of the containers in which hydrogenated oil was sold could be assessed to sales tax.
6. Now, the facts in the instant case are that the sale of cloth in large quantities, as was made by the dealer, could only be made in bales. Bardana and iron hoops formed convenient and cheap- packing material for transporting the goods to the customers. No separate price was charged for the packing material. The price was charged for the cloth either on the basis of meterage or on the basis of weight of the cloth. The price charged for the cloth bore no relation to the value of the packing material. A sample receipt, enclosed along with the order of reference, showed that the price of one bale of cloth roughly came to Rs. 1,500. Compared to that, the value of the packing material of, Rs. 4 per bale, as fixed by the assessing authority, was so insignificant that it was not possible to draw any inference that the dealer intended to sell the packing material to the customers. The burden lay upon the department to prove that there was an implied sale of the packing material liable to tax. On the material on record and on the facts found by the Tribunal, it cannot be held that the department succeeded in discharging that burden. Reference in this connection may be made to Shamsuddin Akbar Khan and Co. v. State of Orissa  26 S.T.C. 280, where the Orissa High Court took similar view in relation to the containers used for transporting tax-free gudaku. Similar view was expressed by the Allahabad High Court in Burhwal Sugar Mills Co. Ltd. v. Sales Tax Officer  23 S.T.C. 241, where the question related to gunny bags in which sugar was sold.
7. Learned counsel for the department relied upon Nimar Cotton Press v. Sales Tax Officer A.I.R. 1961 M.P. 88 and Nimar Cotton Press Factory v. Commissioner of Sales Tax  21 S.T.C. 505 in support of his submission that there was an implied contract for the sale of packing material. These cases relate to works contracts and are not relevant. In Hyderabad Deccan Cigarette Factory's case  17 S.T.C. 624 (S.C.), where a number of decisions relating to works contracts were cited before the Supreme Court, their Lordships did not consider them to be relevant. In that connection it was observed :
A number of decisions have been cited at the Bar. We are not concerned in this appeal with 'works contracts' and, therefore, the decisions bearing on that subject are, not relevant for the present enquiry.
8. Learned Government Advocate also referred to M/s. Vimalchand v. Commissioner, Sales Tax, M.P. 1968 M.P.L.J. 665 In that case, which related to sale of cotton in bales, the fact that a composite price was charged by the dealer for the compressed cotton and the packing material was not disputed. In the instant case, the dealer all along asserted that no price whatsoever was charged for the packing material. M/s. Vimalchand's case6 is, therefore, distinguishable on facts.
9. On the facts and circumstances of the case, we are, therefore, of opinion that there was no sale of the packing material by the dealer.
10. As regards the second question whether coal ash is included in the entry relating to coal, which reads-'coal including coke in all its forms'- the answer is covered by a recent decision of a Division Bench of this court in Commissioner of Sales Tax, M.P. v. Samrathmal Dhoolchand Miscellaneous Civil Case No. 253 of 1967, decided on 23-12-1969; printed at page 418 infra. This case decided that coal ash was included within the entry of coal.
11. For the aforesaid reasons, we answer both the questions in the negative.