R.K. Vijayvargiya, J.
1. By this reference under Section 44(1) of the M.P. General Sales Tax Act, 1958 (for short 'the Act'), the Sales Tax Appellate Tribunal (Board of Revenue), M.P., Gwalior, has referred the following questions of law for the opinion of this Court:
(1) whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the cost of freight will form part and parcel of the sale price and will, therefore, be exigible to tax, thereby disallowing the claim of the applicant for deduction of Rs. 1,63,004.00 from the turnover on this account ?
(2) whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the applicant has rightly been assessed to pay tax on the estimated price of tins and gunny bags ?
(3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the penalty of Rs. 2,500 imposed on the applicant under Section 43(1) of the M.P. General Sales Tax Act, 1958, was proper and legal ?
2. The material facts giving rise to this reference are as follows : The assessee is a dealer registered under the Act and is engaged in the business of manufacture and sale of hydrogenated oil, refined oil, oilcakes and other byproducts. In the return filed by the assessee for the calender year 1960 the assessee disclosed its gross turnover at Rs. 1,74,07,841.75. The Assistant Commissioner of Sales Tax determined the gross turnover at Rs. 2,35,77,168.00. After making the permissible deductions the Assistant Commissioner determined the taxable turnover at Rs. 1,11,81,085. The Assistant Commissioner also imposed on the assessee penalties under Sections 8(2), 17(3) and 43(1) of the Act. We are not concerned in this reference with the penalties imposed under Sections 8(2) and 17(3) of the Act. The penalty imposed under Section 43(1) of the Act with which we are concerned was Rs. 2,500. On appeal by the assessee the Deputy Commissioner of Sales Tax, Indore Division, Indore, remanded the matter to the assessing authority to determine afresh certain matters. The appellate authority, however, maintained the penalty under Section 43(1) of the Act. The assessee preferred a second appeal in which it was urged that no sales tax should have been charged on the cost of freight amounting to Rs. 1,63,004 ; that no addition should have been made in the taxable turnover of the price of the containers such as tins and gunny bags used by the assessee for packing the vegetable oil and oilcakes and that no penalty under Section 43(1) of the Act should have been levied. The Tribunal did not accept any of the contentions of the assessee. At the instance of the assessee the Tribunal has referred the aforesaid questions of law arising out of its order for the opinion of this Court.
3. We have heard the learned counsel for the parties.
Question No. (1):-The price of the goods charged by the assessee was f.o.r. Indore less railway freight or lorry hire, whichever is lower up to the place of destination. The railway receipts obtained by the assessee were 'freight to pay'. In the circumstances as the purchaser was required to pay the freight on taking delivery of the goods and the price was f.o.r. Indore less railway freight, in the bills prepared by the assessee railway freight to be paid by the purchaser was deducted. The standard conditions of the contract of sale returned to in the statement of the case include the following condition :
Our responsibility ceases after the goods leave our factory in indore for onward despatch and no claim for damage or shortage or leakage, etc., in transit will be accepted afterwards. The risk can be covered on buyer's account by insurance on the buyer making a request in writing.
The aforesaid term makes it clear that the delivery of the goods was complete at the loading station when the goods were delivered to the carrier. As stated above the freight was invariably deducted from the price in the bills and it was paid by the buyer as the railway receipts were obtained freight to pay. The property in the goods passed to the buyer as soon as the goods were delivered to the carrier at Indore. In the circumstances as held by the Supreme Court in Hindustan Sugar Mills Ltd. v. State of Rajasthan  43 STC 13 (SC) and a Division Bench of this Court in Orient Paper Mills Ltd., Amlai v. Commissioner of Sales Tax, M.P. (1982) 15 VKN 354, the freight paid by the purchasers and deducted by the assessee in the bills because under the contract the assessee was required to bear the cost of freight up to destination cannot be said to form part of the sale price.
4. The Tribunal, therefore, on the facts and in the circumstances of the case, was not right in holding that the cost of freight formed part and parcel of the sale price and was therefore exigible to tax and thereby in disallowing the claim of the applicant for deduction of Rs. 1,63,004.00 from the turnover on this account. Question No. (1) is therefore answered in the negative and in favour of the assessee.
5. Question No. (2): In this case the assessee sold the vegetable oil produced by it in tins and the oilcakes in gunny bags. The question that arises for determination is whether the estimated price of tins and gunny bags was rightly included in the taxable turnover of the assessee. It has not been found that there was an express contract for the sale of the tins and the gunny bags. The Tribunal has observed that it was possible to infer an implied agreement to pay an extra price for the containers and that the containers, gunny bags, etc., had a resale value which could not be considered to be insignificant and hence the estimated value of the packing materials was exigible to tax. In our opinion the Tribunal committed an error of law in so holding.
6. In Commissioner of Sales Tax, M.P., Indore v. Bhopal Sugar Industries Ltd.  48 STC 45 a Division Bench of this Court had occasion to consider the question whether the price of gunny bags in which the sugar sold by the assessee was packed was exigible to tax. It was contended that may be that in fixing the price of 100 kgs. sugar packed in a gunny bag, the Government took into account the price of the packing material just as it must have taken into account the manufacturing cost and other incidental charges and expenses of the producer. But from this alone, it cannot be said that the assessee charged the price of gunny bags from the purchasers or that there was an implied sale of gunny bags to the purchasers. Reliance was placed by the Division Bench upon a decision of the Supreme Court in Hyderabad Deccan Cigarette Factory v. State of A.P.  17 STC 624 (SC), in which it is held that the question as to whether there is an agreement to sell the packing materials cannot be decided on fictions or surmises and the burden is upon the revenue to prove that a turnover is liable to tax.
7. In Atmaram Manaklal v. Commissioner of Sales Tax, M.P.  47 STC 24, we had occasion to consider the question whether the price of the packing materials consisting of bardana and patti used in packing cotton sold by the assessee was liable to tax, we held that in the absence of an express or implied agreement for the sale of the packing material, the price thereof was not exigible to tax. In the instant case, it has not been found that separate price was charged for the packing material or that a composite price for the goods and the packing material was charged by the assessee. The price of the packing material is insignificant as compared to the price of the goods sold by the assessee. In the circumstances, following the aforesaid decisions of this Court and the Supreme Court we hold that the Tribunal was not right in holding that the applicant has rightly been assessed to pay tax on the estimated price of tins and gunny bags. Our answer to question No. (2) referred to us in the negative and in favour of the assessee.
8. Question (3) : The learned counsel for the assessee contended that there was no mens tea on the part of the assessee and it cannot be said that the assessee had deliberately concealed the turnover or deliberately filed false returns and therefore the Tribunal was not justified in sustaining the order of the assessing authority imposing penalty upon the assessee under Section 43(1) of the Act. The contention cannot be upheld. While sustaining the order of penalty the Tribunal observed as follows : 'In the present case it is not the contention of the learned counsel for the applicant that there was an omission to include certain amounts in the taxable turnover either on account of legal advice or a genuine belief that it should not have been included.
9. In view of the above concession made on behalf of the assessee it cannot be said that the Tribunal was not justified in maintaining the order passed by the assessing authority in imposing penalty upon the assessee under Section 43(1) of the Act. Our answer to question No. (3) referred to us is therefore is in the affirmative and against the assessee.
10. The reference is answered accordingly. The parties shall bear their own costs of this reference.