ORDER
U.L. Bhat, C.J.
1. This is a reference under Section 44(1) of the General Sales Tax Act, 1958, made by the Tribunal at the instance of the assessee. The following questions have been referred;
(i) Whether under the facts and circumstances of the case, there was any implied sale of packing material along with the fertilisers?
(ii) Whether under the facts and circumstances of the case, the Sales of Coal Tar to Shalimar Tar Products are intra-State or inter-State sales?
2. The period under assessment is 1966-67. The assessee is manufacturer of steel, steel products and fertilisers. The assessment is made treating certain sales of steel and steel products as inter State sales and including in the taxable turn-over the price of polythene bags in which the fertiliser was packed. The appellate authority and the Tribunal confirmed the order. The Tribunal has made the reference at the instance of the assessee.
3. At the relevant time, sale or purchase of fertilizer was not exigible to sale tax, but since fertiliser sold by the manufacturer was packed, the authorities took the view that polythene bags were sold along with the fertiliser, the price of polythene bags would be included for the purpose of computing the turnover. Our attention has been invited to the decisions of the Supreme Court in Commissioner of Taxes, Assam v. Prabhat Marketing Co. Ltd., AIR 1967 SC 602, Jamana Flour and Oil Mills Pvt. Ltd. v. State of Bihar, AIR 1987 SC 1207, and Raj Steel and Ors. v. State of Andhra Pradesh, AIR 1989 SC 1696. In the last case, three contingencies which may arise have been discussed in paragraph 7. The first contingency is one where a transaction of sale may consist of a sale of that product and a separate sale of the container with respective sale considerations for each separately. In such a case, sales tax will be levied on the product and the container according to the rate prescribed for respective goods. The second contingency is one of transaction of sale consisting of sale of the product and sale of the container, both sales being conceived of as integrated components of a single sale transaction. In such a case, the price paid would be taken to be the price paid for the product as well as the container and sales tax would be levied on the entire price at the rate prescribed for the product. The third contingency is where there is a sale of the product with transfer of the container without any sale consideration therefore, i.e. sale of the product without sale of the container. In such a case, the entire price will be taken to be the price of the product and sale tax levied accordingly. Whether a sale is under one or the other of the above contingencies is a question of fact which has to be decided on the consideration of facts, materials and circumstances available in each case.
4. In the instant case, none of the authorities has adverted to the law governing the decision on the question posed before them and merely asserted that in the sale of fertiliser, there was implied sale of polythene bags and that the price referable to polythene bags is liable to be reckoned for computing the taxable turnover. The statutory authorities have not adverted also to the facts of the case.
5. Though there was price control in respect of fertiliser at the relevant time, there was no legal requirement that fertilizer should be packed in a particular kind of container. The price of the container as worked out in this case is Rs. 1.50 per container, which bears only an insignificant proportion to the price charged per bag of fertiliser. There are no circumstances from which an inference can be drawn that the parties intended that the transaction would include sale of the polythene bag also or that the price for the polythene bag was reckoned for determining the price of the product. In these circumstances, the only irresistible inference is that there was no implied sale of packing material and no sales tax could have been charged on the so called price of packed material.
6. The tribunal held that the sale of coal tar to Shalimar Tar Products is inter-State sale. The assessee was not satisfied with the finding, but the finding is in accord with the decision in Oil India Ltd. v. Superintendent of Taxes, AIR 1975 SC 887. We find no illegality in the decision.
7. In the result, question No. 1 is answered in the negative, i.e. in favour of the assessee and against the Revenue and question No. 2 is answered in the affirmative by holding that the sale is inter-State sale, i.e. in favour of the revenue and against the assessee.
8. A copy of this order under the signature of the Registrar and the seal of the High Court be transmitted to the Board of Revenue.