Chandrasekhara Menon, J.
1. These Tax Revision Cases have come before us on a reference made by a Division Bench of this court by order dated 23-3-1978. As the questions that arise for consideration are the same in all these Tax Revision Cases, where the Revenue is the Revision petitioner, we would refer to the facts in T. R. C. No. 74 of 1977 and deal with the questions raised, in that case.
2. The assessee-respondent are dealers in copra, coconuts etc. In respect of the assessment year 1971-72 amongst others, a turnover of Rs. 2,07,780.53 representing value of gunny bags purchased from sundry persons and used for packing the coconuts and copra sold inter-State was brought to tax under Section 5A of the Kerala General Sales Tax Act, 1963 (hereinafter referred to as the Act). The assesses claimed exemption under Section 5A (c) of the Act. The assessing authority as well as the appellate authority found that what was sold inter-State was only copra and there was no sale of gunny bags which contained the copra. In the circumstances, the purchase tax under Section 5A was held to be exigible. On second appeal to the Kerala Sales Tax Appellate Tribunal, the Tribunal held that the packing materials and the gunny bags purchased by the assessee were sold inter-State and, therefore, the turnover in respect of them is eligible for exemption contemplated under Clause (c) of Section 5A.
3. The Tribunal posed the question whether there was an express or implied agreement for sale of gunnies in the inter-State transactions. When the containers are of an appreciable value it is possible to infer an implied agreement to pay an extra price for them and the fact that the price of the containers is not fixed separately makes no difference to the assessment of sales tax. The Tribunal said :
'The value of containers involved in these transactions is admittedly substantial and hence it is possible to infer an implied agreement for the sale of these gunnies', (underlining ours) The Tribunal then referred to the decision of this court in A. Sreenivasa Pai v. State of Kerala, (1975) 36 STC 482 (Ker) and Deputy Commr. of Agricultural Income Tax and Sales Tax v Balakrishna Pillai, 36 STC 487 : (1975 Tax LR 2060) (Ker) in support of the view that when the value of the containers involved in the transactions is substantial an implied agreement can be inferred.
4. Reference was also made by the Tribunal to the decision in Tushar Trading Co. v. State of Kerala, 28 STC 214 : (1971 Tax LR 1637) (Ker), where a dealer in coconuts, pepper, copra etc., was assessed to sales tax under the Act at 10 per cent on the turnover representing the value of empty gunnies, mats, coir etc., used for packing and transporting copra because the price of packing materials had been separately shown and the declaration in form C had not been furnished in support of the said sale. The assessee had argued there that the turnover relating to the packing materials could be taxed only at the rate at which copra was taxed, viz., 2 per cent on the ground that the sale of packing materials was only incidental to sale of copra. The High Court said in that case that the mere fact that in making out the invoices, the expense incurred in the use of gunny bags for transport of copra was separately shown by itself did not mean that there was any contract of sale, express or implied, in respect of gunny bags and other packing materials and the buyer intended to buy the same otherwise than as a vehicle for transport of the copra purchased. The court also pointed out that the value of the packing materials was so insignificant in relation to the value of the contents that it was not possible to imply any separate contract of sale regarding the packing materials and that the turnover relating to the packing materials should be assessed to tax only at 2 per cent and not at 10%.
5. After referring to 28 STC 214 : (1971 Tax LR 1637) (Ker) in this case, the Tribunal stated that in the present case there is no dispute regarding the fact that the value of the packing materials and gunnies is substantial and not insignificant. The Tribunal further observed that if there was no deemed sale of the packing materials, there was no necessity to direct that the turnover relating to packing materials should be assessed to tax at 2 per cent, in spite of the fact that there was no separate contract of sale regarding the packing materials. On this basis, the Tribunal took the view that in the present case the packing materials and gunnies purchased by the assessee have been sold inter-State and if that be so, the turnover is eligible for the exemption contemplated under Clause (c) of Section 5A. Therefore, the turnover of Rs. 2,07,780.53 in question was directed to be excluded from the taxable turnover of the assessee for the year under appeal.
6. The questions of law raised in the revision petition are as follows :--
'(A) Was the Appellate Tribunal justified in law in holding 'that the value of packing materials and gunnies is substantial and not insignificant' and that 'there is an implied agreement for sale of them', on the basis of the ratio of the decisions reported in (1975) 36 STC 482 and 36 STC 487 ; (1975 Tax LR 2060) (Ker). Are the said findings based on any material ?
(B) Is the finding and conclusion of the Appellate Tribunal to hold that the packing materials and gunnies purchased by the assessees have been sold inter-State, valid and justified in law in view of the decisions of this honourable Court reported in 28 STC 214 : (1971 Tax LR 1637) and (1975) 36 STC 501 (Ker) Mooken Devasia Ouseph's case. Do the earlier decisions reported in (1975) 36 STC 482 (Ker) and 36 STC 487 : (1975 Tax LR 2060) (Ker) lay down the law correctly in view of the later decision reported in (1975) 36 STC 501 (Ker).
(C) Is the reasoning and conclusion of the Appellate Tribunal directing exclusion of the turnover of Rs. 2,07,780.53 from the taxable turnover of the assessee valid and justified in law?'
7. The relevant portion of Section 5A of the Act under which the assessee claims exemption from incidence of tax reads as follows :--
'5A. Levy of purchase tax -- (1) Every dealer who, in the course of his business, purchases from a registered dealer or from any other person any goods, the sale or purchase of which is liable to tax under this Act, in circumstances in which no tax is payable under Section 5, and either -
(a) & (b) .....
(c) despatches them to any place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce, shall, whatever be the quantum of the turnover relating to such purchase for a year, pay tax on the taxable turnover relating to such purchase for the year at the rates mentioned in Section 5.
8. Before considering the questions raised we would like to point out that the Tribunal does not appear to be correct in stating that there was no dispute that the value of the containers involved in these transactions is substantial. Such an admission cannot be easily squared with the reliance placed by the State representative before the Tribunal on the ruling in 28 STC 214 : (1971 Tax LR 1637) (Ker). In any view we do not think that the Revenue should be tied down to any such admission alleged to have been made before the Tribunal on an aspect which depends on the legal inference to be deduced from the primary facts of the case.
9. Now we would refer to the various decisions cited before us by the learned Advocate General appearing for the Revenue end the learned counsel appearing for the assessee, revolving round the question whether there was or was nof a sale of the containers or packing materials themselves apart from the sale of the contained or packed goods.
10. The earliest case is that of Vara-suki & Co. v. Province of Madras (1951) 2 STC 1 : (AIR 1951 Mad 254). The appellant in that case was the plaintiff in a suit filed against the government for a declaration that the sales tax collected from him on the turnover calculated on the price of the gunny bags containing the salt sold by him (excluding the price of the salt which was exempted from sales tax) was illegally collected and ought to be refunded to him as salt could not be sold except after being put into gunny bags and he had merely purchased the gunny bags from dealers for the sake of filling them with salt and had included the cost price of the gunny bags in the ultimate price charged by him for the salt bags. A Division Bench of the Madras High Court said that exemption of salt from sales tax cannot be relied on for the purpose of claiming exemption for the gunny bags in which salt is packed on the ground that salt cannot be sold except after being put into gunny bags. Any exemption of an article must be strictly construed ' and confined to the exemption itself and not extended. It might be noted that in that case the plaintiff proceeded on the basis that he bought the gunny bags and sold them (see page 2 of the report). Therefore this case may not be of any help in resolving the controversy here.
11. In Mohanlal Jogani Rice and Atta Mills v. State of Assam, (1953) 4 STC 129 : (AIR 1953 Assam 42), the question arose before the Assam High Court whether the turnover from gunny bags in which the rice was packed was liable to sales tax when the assessee, a registered dealer supplied to the Government rice which was an exempted commodity. It was held there 'that the gunny bags came within the definition of 'goods' and as the assessee charged the government for the bags which contained the rice, the transaction came within the definition of 'sale'. The assessee was therefore a 'dealer' and was liable to sales tax on the turnover from bags. Held further, 'the fact that rice could not be supplied without bags or that the assessee did not make a profit from the supply of gunny bags was not material for deciding the question whether the assessee was liable to sales tax on the price of gunny bags.'
12. In Govindram Ramprasad v. Assessing Authority, (1957) 8 STC 407 : (AIR 1958 Madh Pra 16) a Division Bench of the Madhya Pradesh High Court held that where a dealer sold kerosene, which was an exempted commodity under the Madhya Bharat Sales Tax Act, 1950 in sealed tins, priced at Rs. 1-9-0 per four gallons more than the kerosene sold in sealed tins, there was a sale of the tins in addition to the kerosene; and as the exemption in respect of the kerosene could not be stretched to cover the containers, the sale price of tins was liable to sales tax. It was pointed out that 'a purchaser who buys kerosene in bulk knows that he is not paying for anything other than the kerosene while a purchaser of kerosene in a tin knows also that the value of the tin is part of the bargain for the price of kerosene, There is in the circumstances an implied agreement for the price of the tin. The person who buys and the person who sells are ad idem on the passing of property in the tin and the price of the tin has to be added to the price of kerosene. In these circumstances when the exemption is given only for the kerosene the exemption cannot by any reasonable method be stretched to cover a commodity for which the exemption was not meant'. The learned Judges further say : 'It may. be that when one buys shoes and the dealer packs them in a cardboard box for carriage, the box is given free and there is no tax on the box. There may not in such a case be a sale of the cardboard container. But where the container itself is priced and sold and its price is added to the price of the commodity it contains, there can be no manner of doubt that there is a sale of the container. In such event, unless there be an exemption of the container along with the commodity it contains, the tax cannot be avoided.'
13. Another decision referred to was that of a Division Bench of the Punjab High Court in Krishna Roller Flour Mills v. State of Punjab ((1958) 9 STC 439), The facts of the case were : The petitioners were appointed authorised wholesale distributors under the East Punjab Rationing Order, 1948. They undertook the work as authorised millers for the milling of foodgrains and distribution of atta within a certain rationed area on certain terms and conditions which were embodied in a written agreement. They had to purchase wheat, gram and barley from Government at a fixed price, transport the same to mill premises, clean the same, mill the grain into wholesale atta, bag it into standard weight bags and sell the bags to authorised depot-holders at a certain rate. Under the agreement they had to pay the price of gunny bags to government at the rate fixed by government from time to time and had to transfer these bags to depot-holders at the same price. Although wheat atta was exempted from sales tax the assessing authority directed the petitioners to pay sales tax on the sale to depot-holders of gunny bags purchased by them from the local market or from government. The petitioners contended that although they were liable to pay sales tax on the sale to depot-holders of gunny bags purchased by them from the open market, they were not liable to pay any sales tax on the gunny bags supplied to them by government at a fixed price and transferred by them to depot-holders at the same price. The court said :
'The expression 'sale' has been defined as 'a transfer of property in goods for cash or deferred payment'. A sale as defined in the statute consists of two separate and distinct elements; first, the transfer of property and, second, the payment of price in cash or kind The facts which constitute a sale must be determined from the evidence on record and the intention of the parties. If it is manifest from the contract that it was intended that title should pass and price be paid, the transaction constitutes the sale. The court is not concerned with the motive which actuates a person to part with his property for a monetary consideration and a transaction which falls within the ambit of the expression 'sale' will not cease to be a sale by the mere circumstance that the profit motive was wholly or partially absent. Whether a transaction is a sale or not does not depend upon the motive of the transferor, but upon the nature of the transaction. If the two factors mentioned above, namely, the transfer of property and the payment of price are present the transaction must be deemd to be a sale within the meaning of the expression as used in the Act of 1948.
Now, were these two elements present in the transactions on which the tax is sought to be imposed The answer is clearly in the affirmative. The essence of a contract under the East Punjab Rationing Order, like any other contract, is agreement. In deciding whether there has been an agreement and what its terms are the court looks for an offer to do or forbear from doing something by one party and acceptance of that offer by the other party turning the offer into a promise. If this promise is supported by a consideration the contract is complete. There is consideration where 'an act or forbearance of one party or the promise thereof is the price for which the promise of the other is bought.' Dunlop Pneumatic Tyre Co. Ltd. v. Selfridge and Co. Ltd. (1915 AC 847).
The State Government in the present case offered to appoint the petitioners as authorised wholesale distributors on certain terms and conditions and the petitioners accepted those terms. According to Clause 8 of the agreement the petitioners were to pay the price of the bags to government at the rate fixed by government from time to time and were to transfer these bags to depot-holders at the same price. The execution of this terra of the agreement involved the petitioners in two separate and distinct transactions -- (a) a purchase by the petitioners of a number of bags from government at a fixed price, and (b) a sale by the petitioners of a number of bags to depot-holders at the same price. On the completion of the first transaction the petitioners acquired the rights of ownership over the bags in question and on the completion of the second transaction they divested themselves of those rights for a monetary consideration and vested them in depot-holders. The second transaction involved both the elements mentioned in the definition of the expression 'sale' namely the transfer of property and the payment of price. There can thus be little doubt that the sale of gunny bags containing wheat atta to depot-holders under instructions of government is a sale under the East Punjab General Sales Tax Act, 1948.'
14. The question whether, when bags of rice were sold, the gunny bags concerned attract sales tax under the General Sales Tax Act, 1125, came up for consideration before a Division Bench of this court in Srinivasa Pai v. Sales Tax Appellate Tribunal, Trivandrum ((1961) 12 STC 80) : (AIR 1961 Ker 236). In that case the assessees were not charged separately for gunny bags when the bags of rice were sold. There was nothing however to indicate that the bags were given free, and that their value did not form part of the price paid by the purchasers. The court said that the assessees sell rice in gunny bags and charge a price which must be considered as a composite figure containing the price of rice and of the bags in which the rice is sold. Neither the rice nor the bags were supplied free, and it must follow that the assessees are dealers not merely in rice but in the bags as well. After referring to a number of decisions on the point, the court pointed out that the cases all depended on the facts and circumstances obtaining in those cases. The court then observed, (at p. 237 of AIR) :
'The contention apparently is that the rice and the bags form an integrated commodity and the exemption under Section 5 (vi) of the Act should hence apply not merely to the rice but to the bags as well. The exemption under Section 5 (vi) is only in respect of the sale of foodgrains and we are not prepared to say that when foodgrains are packed in gunny bags, the gunny bags lose their physical or commercial identity and form a part of the foodgrains themselves, aS stated in Varasuki and Co v. Province of Madras ((1951) 2 STC 1) : (AIR 1951 Mad 254), 'any exemption of any article must be strictly construed and confined to the exemption itself and not extended.'
15. Another case cited is that of another Division Bench of this court in West Coast Weaving Establishment v. State of Kerala ((1964) 15 STC 898) (Ker). The head-note of the decision reads :
'Materials in which bundles of cloth are packed in the usual course of trade are not 'containers'. Generally goods purchased are wrapped or packed before they are delivered to the customers, and traders charge nothing extra for such wrapping or packing. Unless there be a 'sale' of the packing materials, tax will not be attracted.
Where the assessee was assessed to sales tax on the value of packing materials used for sending handloom cloth (an exempted commodity) to parties outside the State, but the assesses declared that it had not charged its consignees for the packing of goods consigned to them, and that its assertion that the packing materials had no resale value was not challenged by the department, which only stated that the price of the cloth must in the circumstances be deemed to include the price of its 'containers' as well : Held, that the inference of the Sales Tax authorities that the price of cloth sold included the cost of its packing was not based on any evidence, nor was it warranted by the circumstances of the case.'
16. In a case which came before the Madhya Pradesh High Court, Patel Volkart Pvt. Ltd. v. Commr. of Sales Tax, M. P. ((1972) 29 STC 515) : (1972 Tax LR 1909), the assessees were dealers carrying on the business of purchase and sale of cotton bales. Under the agreement cf sale of cotton bales by the assessees to various mills it was obligatory on the assessee's part to deliver the cotton to thepurchaser fully pressed in the form ofbales along with the packing materials.It was decided in that case on the factstherein that there was an implied contract of sale of packing materials alongwith the sale of cotton bales. It mightbe pointed out however that where thecourt had found, on the facts and in thecircumstances of the case, that the saleof packing materials was not casual andthat the assessees were dealers in packing materials as well.
17. Before we deal with some other decisions of this court itself, we think it would be useful to refer to the decisions of the Supreme Court on the point. The first of such decisions is the one reported in ((1966) 17 STC 624 (SC)) Hyderabad Deccan Cigarette Factory v. State of A. P. Sales or purchases of tobacco and all its products were exempted from sales tax as per a notification issued by the Andhra Pradesh State Government. However, in respect of the assessee concerned in that case, the department sought to assess him on the turnover in respect of packing materials consisting of cardboard and deal wood. The assessee had contended that there was no sale of the packing materials as it sold only cigarettes at Rs. 8.50 per thousand without charging extra for packing materials and that the price was the same to whatever place they were sent. It was not in controversy that there was no express contract of sale of the packing materials. The questions that the assessee raised before the Supreme Court, relevant for the purpose of this case were :
'(1) Neither the Sales Tax Authorities nor the High Court had given a definite finding on the crucial and important question, namely, whether in fact the assessee, as it had contended all through, sold the cigarettes at the same rate, whether it sold them in cardboard or wooden cases and whether in or outside the State of Andhra Pradesh; if that fact was held in favour of the assessee, the argument proceeded, it would be decisive of the question whether the packing materials were the subject-matter of the agreements of sale between the assessee and its customers. (2) The question whether the packing materials were the subject of the agreements of sale between the assesses and its customers was a pure question of fact depending upon the nature of the goods sold and the nature of the packing materials and the purpose for which the said materials were used. In the present cage, it was said, the packing materials, namely cardboard and deal-wood boxes, were the minimum materials necessary to give or send the cigarettes to the customers and that it would not have been possibly the intention of the seller to sell or the buyer to buy the said materials which had no intrinsic worth apart from the cigarettes they contained.'
In considering these questions the Supreme Court had made the following significant observations at pages 628 & 629 :
'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 contained 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 visualised 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, in the present case, if we may say so with respect, all the authorities, including the high court dealt with the question as a question of law without considering the relevant factors which would sustain or negative any such agreement.'
At pages 630 and 631 :--
'The Tribunal rejected the contention on the ground that the value of the packing materials must have been taken into consideration in fixing the price of the cigarettes. But that reasoning does not answer the contention that however the price was fixed, the cigarettes were sold, whether packed in cardboards or wooden boxes, in or outside the State of Andhra Pradesh, at the same rate. The High Court also held that though there was no express contract to sell the packing materials and the packets separately, such a contract was implicit in the contract for the sale of the goods. This implied agreement was based on the fact that the packed cigarettes were sold at a price and on the surmise that in fixing the price the assessee might have taken into consideration the cost of all the materials used in the packing. The high court also ignored the aforesaid contention of the assessee. It also did not consider the relevant material to come to the conclusion that the assessee agreed to sell the packing materials to the customers.
A perusal of the orders of the various authorities and the High Court shows that a simple question of fact has been sidetracked by copious citations. 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. No doubt he can ask the assessee to produce the relevant material; and if he does not produce the same, he may draw adverse inference against him. But, he must decide the crucial question whether the packing materials were subject of the agreement of sale, express or implied. To ascertain the said fact he can rely upon oral statements, accounts and other documents, personal enquiry and other relevant circumstances such as the nature and the purpose of the packing materials used.'
At page 631 :--
'The decisions relevant to sales turn upon the facts of each case : see Mohan Lal Jogani Rice and Atta Mills v. State of Assam, (1953) 4 STC 129 : (AIR 1953 Assam 42); Indian Leaf Tobacco Development Co. Ltd. v. State of Madras, (1954) 5 STC 354 (Mad); Hanumamtha Rao v. State of Andhra, (1956) 7 STC 486 (Andhra); Varasuki and Co. v. Province of Madras, (1951) 2 STC 1 : (AIR 1951 Mad 254); and Chidambara Nadar Sons & Co. v. State of Madras, (1960) 11 STC 32i (Mad). The learned Judges, though they differed on the facts, accepted the principle that to attract sales tax the packing material or the container, as the case may be, should have been the subject matter of an agreement to sell. In this case the High Court has not arrived at that finding on the consideration of the relevant material.
We have, therefore, no option but to remand the case to the High Court to consider the question whether having regard to the facts of the case and the observations made by us, there was an agreement, express or implied, between the assessee and its customers to sell the packing materials or whether the packing materials, which were comparatively of insignificant value, were used only as a convenient vehicle to put the purchasers in possession of the cigarettes sold.'
18. M.A. Razack & Co v. State of Madras ((1967) 19 STC 135 (SC)) is another Supreme Court decision on the point. In that case the assessees were dealers carrying on business in chewing tobacco. The business was purchasing raw tobacco from dealers in the State of Madras, converting it into chewing tobacco and selling it. In respect of the assessment for a particular year, they had contended before the Sales Tax Authorities and also before the Tribunal that the packing material used for preparing packets of chewing tobacco was exempt from sales tax. The authorities had rejected this contention. It had been contended before the authorities that packing material becomes unfit for any use after 'chewing tobacco' is taken out and that it has no resale value. The Sales Tax Authorities had rejected the contention observing that packing material had sale value if it was sold and even if it had no value after the packet of chewing tobacco was purchased the packing material was still liable to be taxed. The High Court had rejected the contentions of the assessee on the ground that the requirements of Rule 5 (1) (g) (ii) of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939 were not satisfied since the assessee did not specify the charges for the 'chewing tobacco' and charges for packing material separately. Justice Shah speaking for the Supreme Court observed that it was never suggested that there was any contract -- express or implied of sale of packing material between the assessees and their customer. The value of the packing material as compared to the value of the contents of the packet was insignificant. In the circumstances an agreement to sell packing material independently of chewing tobacco cannot under the general law be implied.
19. Now we would consider four decisions of this court :
Tushar Trading Co. v. State of Kerala (1971-28 STC 214); (1971 Tax LR 1637) (Ker); Srinivasa Pai v. State of Kerala, (1975-36 STC 482) (Ker); Dy. Commr. of Agricultural Income-tax and Sales Tax v. Balakrishna Pillai (1975-36 STC 487) : (1975 Tax LR 2060) (Ker) and Mooken Devassy Ouseph & Sons v State of Kerala, (1975-36 STC 501) (Ker).
20. In the first of these cases, (1971) 28 STC 214 : (1971 Tax LR 1637) (Ker), the assessee, a dealer in coconuts, pepper copra etc., was assessed to sales tax under the Central Sales Tax Act, 1956 at 10 per cent on the turnover representing the value of empty gunnies, mat, coir etc., used for transporting copra, as according to the Tribunal, in the invoice drawn in favour of the purchasers the prices of packing materials had been separately shown and the declaration in form C were not furnished in support of the said sales. The assessee argued that the turnover relating to the packing materials could be taxed only at the rate at which copra was taxed, viz., 2 per cent on the ground that the sale of packing materials was only incidental to the sale of copra. The court held that sales will be attracted in respect of packing materials or containers only if they have been the subject matter of agreement to sell expressly or by necessary implication, it was said there that the mere fact that in making out the invoice, the expenses incurred in the use of gunny bags for transport of copra were separately shown by itself did not mean there was any contract of sale, express or implied in respect of gunny bags and other packing materials and the buyer intended to buy the same except as a vehicle for the transport of the copra purchased. If the value of the packing materials was so insignificant to the value of the contents, it was not possible to imply any separate contract of sale regarding the packing materials.
21. In (1975) 36 STC 482 (Ker), the facts that particular packing materials are independent commercial commodities having substantial resale value and that they do not lose their physical or commercial identity when used as packing materials, are emphasised in determining whether there has actually been a sale of those materials. This aspect is also again high-lighted in 36 STC 487 : (1975 Tax LR 2060 (Ker)). In (1975) 36 STC 501 (Ker) the circumstances that the value of the gunny bags was only about 1/80th of the value of the articles contained in them (wheat and rice) was relied on as a circumstance negativing an implied agreement for sale of the gunny bags. More than this, the decision is not to be understood as laying down as a proposi-tion of law that the question of an implied sale must depend on the relatively-low proportion of the value of the container to that of the goods sold.
22. On a conspectus of the authorities, we think the law has been succinctly stated by Subba Rao, J., speaking for himself, Shah and Sikri, JJ. in (1966) 17 STC 624 (SC). We have extracted the relevant passage earlier and need not repeat the same. The decisions that have followed, as we understand them, have applied the principles in practice, but in some of them, one or other of the considerations that should cumulatively enter the reckoning have been overstressed, and exalted to a higher level than the parent decision would warrant.
23. Thus we do not think that the making out of a separate bill for the container or its separate itemizing in the bill made out, for the goods, or the physical or commercial identity of the container, or its value in proportion to the goods, would, by themselves be decisive of the question. They are only aids to understand the nature of the bargain. Mr. Shenoi, learned counsel appearing for the assessee strongly contended that a specific separate fixation of the price of the container in the bill issued for the sale of the goods was conclusive evidence of the sale of the container; and that in the case of what may be called composite sales of the container and the goods together, the substantial, as opposed to the insignificant, value of the container, and its individual and commercial identity, would determine the issue. We do not think these considerations should have any further weight or effect than as aids to construe and assess the bargain between the parties. A bill may very often be a unilateral document: and where it is bilateral, it may well be that the parties did not direct their mind to this aspect and were not ad idem on it. Let us illustrate what we mean. If we indent fifty bags of rice from the local market, which are supplied in fifty gunny bags, the test would be, what did the purchaser intend to buy and the seller intend to sell If, according to trade usage and commercial practice, rice is sold in bags, that is a circumstance which may point to a particular conclusion. Would that be affected by the circumstance that the rice is despatched by rail from Andhra State instead of being supplied from the local market, and the value of the gunny bags is materially impaired during transport We think not. Nor do we think that the circumstance that the container and the rice were separately priced would be decisive.
24. As Mr. Justice Viswanatha Iyer, if we may say so with respect, pertinently pointed out in (1975) 36 STC 501 (Ker), the conclusion whether there is sale is a matter for inference from the various circumstances of the case. An agreement of sale cannot be implied from one circumstance alone, irrespective of its relationship or impact on the other circumstances connected with the transaction. The fact that the packing materials, namely, the gunny bags retain their physical or commercial identity after the contents are removed may not be decisive of the question. We might add that how an ordinary customer would view the transaction concerned, whether he would consider the transaction as a composite one, purchasing the packing materials besides its contents, would be of considerable significance in the matter. Where the containers are of substantial value, it might be possible to infer more readily an implied agreement to pay an extra price for the containers than when they are insignificant in value.
25. We are afraid that in the cases that have come before us the Tribunal has not considered this question in all its facets which we have indicated above. Moreover, the Tribunal proceeds on an alleged admission made by the Revenue that the value of the containers is substantial -- an admission now disowned by the government pleader, and which, we are inclined to think was rather inconceivable in the circumstances.
26. One of the learned counsel for the assessees Sri Karunakaran Nambiyar, raised an argument that in regard to packing materials of no worth when they are used for despatch of the contained goods to any place outside the State, these materials cannot be said to have been despatched, for attraction of the purchase tax. This is a matter which is not before us as it had not been raised before the Tribunal. On the facts and circumstances of the case if this is a question which could be raised before the Tribunal, it is for the assessee to take it before that forum. We are not called upon to consider that question in these revision cases.
27. Therefore, we set aside the orders of the Sales Tax Appellate Tribunal in all these cases and remit back the cases to the Tribunal for decision in accordance with law and in the light of what we have stated above.