COMMISSIONER OF SALES TAX, U.P.versusRAJ BHARAT DAS & BROS.

                      COMMISSIONER OF SALES TAX, U.P.                                 A
                                    v.
                         RAJ BHARAT DAS & BROS.

                                   AUGUST 30, 1988

               [SABYASACHI MUKHARJI AND M.H. KANIA, JJ.)                              B

                Central Sales Tax Act, 1956: s. 2(h)-Packing expenses incurred
          on putting the goods in deliverable state-Whether could be included in
        . sale price-Whether exigible to tax.

               Section 2(h) of the Central Sales Tax Act, 1956 contemplates sale      C
         price as the consideration for the sale of any goods, inclusive of any sum
         charged for anything done by the dealer in respect of the goods at the
         time of ·or before the delivery thereof, other than cost of freight or
         delivery and cash discount.

               'ftle assessee carried on the business of mining and sale of silica    D
         sand. The sales tax authorities sought to levy tax on:the packing charges
         that he had received from the purchasers. The Tribunal found that
         there was an implied agreement for sending silica in gunny bags, that
         the expenses on packing were incurred in order to put the goods in
         deliverable stati> prior to the delivery, that these expenses were rightly
         included iu the sale.price andhe-nce~xigible to tax.                         E

               The High Court came to the conclusion that since the Tribunal
         had not recorded1he finding that there was implied agreement to sell
         the gunny bags by the assessee to its customers, the packing charges
         were mentioned and not cost of gunny bags and since the price of goods
         and the packing charges were separately charged the said cltarges could      F
I   .    not be included in the sale price paid by the purchasers to the.assessee.

               Allowing the appeal by special leave,

               HELD: The·High Court was in error in the view it took. [689B]
                                                                                      G
                Whether there is an implied agreement to sell p~cking material
        . along with the .Product contained therein is a pure question of fact
          depending upon the circumstances of each case. In the instant case the
          Tribunal found th;d the packing in the gunny bags was done by the
          dealer in respect of the goods at .the time ()f or before the delivery
          thereof, thafit was.done at the request of buyers as it was a convenient    H
                                            685
    686         SUPREME COURT REPORTS                [1988] Supp. 2 S.t.R.

A   mode of delivery and that the buyers had given dlrection!l for the qua·
    lity of packing. In view of these facts found by the Tribunal, which must
    be taken to be conclusive, it could not be said that the parties did not
    intend to sell or buy the gunny bags. [687E-G]        ·

          In view of the definition of s. 2(h) of the Act, any1thing which was
B   integral part including any sum charged for anythi1og done by the
    dealer in respect of the goods, may form part but anything supplied
    separately pursuant to a separate order, directions or specifications. to
    the purchaser could not form part of the sale price. In the instant case
    the packing was done in order to putting the goods in deliverable state
    and incidental to the same. Such packing charges, th1erefore, could be
C   included. The mere fact that price of silica was shown separately and
    the cost of packing was also shown separately makes no difference to the
    assessment of sales tax. [688D, F-G]

       Commissioner of Taxes, .(lssam v. Prabhat MarketiW{ Co. Ltd.,
  19 STC 84 and Jamana Flour & Oil Mill (P) Ltd. v. State of Bihar, 65
D STC 462 applied.

          CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2456
    of 1986.

         From the Judgment and Order dated 12. 7.1982 of the Allahabad
E   High Court in Sales Tax Revision No. 42 of 1982.

          S.C. Manchanda anti Ashok K. Srivasi_ava for the Appellant.

          The Judgment of the Court was delivered by

F         SABYASACHI MUKHARJI, J. This is an appeal by leave from
    the judgment and order of the High Court of Allahabad. dated 12th
    July, 1982. The decision was rendered in a revision by the assessee
    which was directed against the order of the Sales Tax Tribunal. The
    year involved is the assessment year 1974-75.

G       The assessee carried on the business of mining and sale of silica
  sand. The question was whether the sales tax could be charged from
  the assessee in respect of packing charges received by the assessee
  from the purchaser. The sales tax authorities as well as the T~ibunal
  held that the assessee was liable to pay sales tax on the packing charges
  that he had received from the purchaser. From the facts found by the
H Tribunal it appears that there was a contract for packing the silica sand
         COMMR. OF SALES TAX v. R.B. DAS [MUKHARJI, J.]              687

in gunny bags and packing charges had been realised on the basis of
                                                                            A
mt. tons though these were separately shown and were added up with
the price of the-Silica sand and on the total sales tax was charged.

      Section 2(h) of the Central Sales Tax Act, 1956 (hereinafter
called 'the Act') provide as follows:
                                                                            B
           "sale price" means the ·amount payable to a dealer as con-
           sideration for the sale pf any goods, less any sum allowed as
           cash discount according to the practice normally prevailing
           in the trade, but inclusive of any sum charged for anything
           done by the dealer in respect of the goods at the time of or
           before tlie delivery thereof other than the cost of freight or
           delivery or the cost of installation in cases where such cost
                                                                            c
           is s~parately charged."

      The Tribunal categorically found that there was a contract for
packing the silica sand in sound gunny bags, hence, held that there was
an implied agreement for sending silica in gunny bags though these D
could be sent loose in wagons. As mentioned hereinbefore, Section
2(h) contemplates sale price as the consideration for the sale of any
goods unless any sum allowed as cash discount according to the
practice prevailing in the trade, but inclusive of any sum charged for
anything done by the dealer in respect of the goods at the time of or
before the delivery thereof other than the cost of freight or delivery or E
the cost of installation in cases where such cost is separately charged.
Hence, the short question is whether the price was charged for any-
thing done in respect of the goods at the time of or before the delivery
thereof.

      The Tribunal also found that packing was done at the request of F
 the buyer and that it was a convenient mode of delivery. The buyers
 had given directions for the quality of packing and it appears from the
 order form this all was done in respect of the goods for putting these in
 deliverable state and so the packing charges, according to the Tri-
 bunal, are exigible to tax in this case. The Tribunal clearly came to the
 conclusion that all the these expenses were incurred in order to put the G
 goods in deliverable state prior to their delivery. As per the agreement
 these expenses were rightly included in the sale price and it could not ·
 be said that these were not part of the sale price. Hence the Tribunal
 held that the tax was rightly levied under the Act on the sale price so
 computed.
                                                                           H
     688         SUPREME COURT REPORTS                [1988) Supp. 2 S.C.R.

A          The High Court came to the conclusion that the Tribunal had not
     recorded the finding that there was an implied agreement to sell the
     gunnt bags by the assessee to its customers. Packing charges were
     menlioned and not the cost of gunny bags. Packmg charges for each
     metric ton obviously include labour charges. In view of the fact that
     the price of goods and the packing charges were separately charged,
B    the High Court came to the conclusion that the packing charges could
     not be included in the sale price paid by the purchasers to the assessee.
     That is impugned in this appeal.

           ·we are of the opinion, in view of the facts found by the Tribunal
     which must be taken to be conclusive, and in the light of Section 2(h)
     of the Act, the High Court was in error. In the facts of this case such
c    packing charges could be included. There was an agreement to sell the
     gunny bags, as found by the Tribunal. The price of silica was shown
     separately and the' cost of packing was also shown separately. In view
     of the definition of Section 2(h) of the Act, anything which was an
     integral part included any sum charged for anything done by the dealer
D    in respect of the ·goods, may form part but anything supplied sepa-
     rately pursuant to a separate order, directions of" specifications to the
     purchaser, could not form part of the sale price of the gunny bags. This
     was done in order to putting them in deliverable state and incidental to
     the same.

E       In a slightly different state of facts this question came before this
  Court in Commissioner of Taxes, Assam v. Prabhat Marketing Co.
  Ltd., 19 STC 84. There, the respondent sold hydrogenated oil which
  was exempt from sales tax under the Assam Sales Tax Act, 1947. The
  question was whether the value of the containers in which hydro-
  genated oil was sold could be assessed to sales tax under the Act. The
F High Court held that the value of the containers was not assessable to
  sales tax unless separate price had been charged for the containers. On
                                                                                 (
  an appeal this Court held that the value of the containers was assess-
  able to sales tax under the said Act if there was an express or implied
  agreement for the sale of such containers and the mere fact that the
  price of the containers was not separately fixed, made no difference to
O the assessment of sales tax. This Court, however, came to the conclu-
  sion that where there was an agreement to sell packing material is a
  pure question of fact depending upon the circumstances of each case.

          In this case this Court asked the question that the sales tax
     authorities ·had to address themselves the question whether the parties
H    having regard to the circumstances of the case, intended to sell or buy
         COMMR. OF SALES TA){ v. R.B. DAS [MUKHARJ!, J.]             689

packing material and whether the subject-matter in the context of sale,     A
was only an exempted article or packing material did not form part of
the bargain at all.

      In that being the principle and the fact that here packing in the
gunny bags was done by the dealer in respect of the goods at the time
of or before the delivery, in our opinion, the High Court was in error      B
in the view it took. This Court had to consider again this aspect of the
matter in Jamana Flour & Oil Mills (P) Ltd. v. State of Bihar, 65 STC
462. There this Court held that whether there was an implied agree-
ment to sell packing material a\ong with the products contained the-
rein, is a question of fact.
                                                                            c
      In view of the principles enunciated in these two decisions,
though the facts were different, and on the basis of the conclusive
findings recorded by the Tribunal that there was a contract for packing
the silica in sound gunny bags, the cost of packing materials had been
realised, we are clearly of the opinion that the High Court was in error.
                                                                            D
       In the aforesaid facts and circumstances of.the case the judgment
and order of the High Court are set aside and the order of the Tribunal
is restored. There will, however, be no order as to costs.

P.S.S.                                                  Appeal allowed.
                                                                            E