Bhave, J.

1. Miscellaneous Civil Cases Nos. 212 and 213 of 1970 are also disposed of by this common judgment, as common questions of law have been referred by the Board of Revenue under Section 44 of the Madhya Pradesh General Sales Tax Act, 1958. The questions referred are :

(1) Whether, on the facts and circumstances of the case, the Tribunal was correct in holding that there was an implied contract of sale of packing materials, i.e., bardana and patti along with the sale of cotton bales ?

(2) Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the packing material was chargeable at the rate applicable to the said material and not at the rate applicable to the baled cotton ?

(3) Whether, on the facts and circumstances of the case, the Tribunal was correct in levying sales tax on packing material when the same was purchased from registered dealers of Madhya Pradesh and was sold in the course of inter-State sale ?

(4) Whether, on the facts and circumstances of the case, hessian used in packing material did not fall in the category of 'cloth' for purposes of entry No. 6, Schedule I, to the State Act ?

(5) Whether, on the facts and circumstances of the case, the assessee could not be treated as a dealer in packing materials in respect of which there were only casual sales ?

(6) Whether, on the facts and circumstances of the case, sale of 1,300 cotton bales (1964-65 case under the Central Act) could be treated as complete on the date of despatch of the same from the State or after reaching destination, i.e., after 16th January, 1965, and taxable accordingly ?

2. M/s. Patel Volkart Private Limited, Ujjain, and M/s. Patel Cotton Co. (Pvt.) Limited, Ujjain, are dealers and carrying on the business of purchase and sale of cotton bales. The finding of the Board of Revenue with respect to the agreement of sale of cotton bales by the assessee to various mills was to the following effect:

It is, however, admitted by the applicant that it was obligatory on his part to deliver the cotton to the purchaser fully pressed in the form of bales along with the packing material. It is also not denied that if the packing materials were used at the expense of the purchaser, the latter would not have paid the full price of cotton as settled with the assessee.

In this view of the matter, it was held that the price of the packing material could be assessed to tax. On that finding it was further held that the material was chargeable at the rate applicable to the said material and not at the rate applicable to the baled cotton. There was also a controversy before the Board whether the packing material was purchased by the assessee from registered dealers and having been sold in the course of inter-State sale the assessment at full rate was justified and whether hessian did not fall in the category of "cloth" and whether the sale of the packing material, if any, was not casual and whether to the sale of 1,300 cotton bales the rate applicable was the one prescribed after 16th January, 1965, or the rate available before that date. On all these controversies the decision of the Board of Revenue was against the assessee. The Board, however, referred the questions, as questions of law were involved according to the Board of Revenue.

3. On question No. (3) the Board of Revenue had held that there was no material on record to support the contention of the assessee and hence the decision was given against it. That question was not pressed before us for our answer. Hence, no answer is being recorded on this question.

4. Question No. (4) will have to be decided against the assessee in view of the decision of this court in Commissioner of Sales Tax, M.P. v. Bharat Kala Bhandar, Khandwa 1971 M.P.L.J. 764, wherein it was held that hessian is not covered by the term "cloth" used in item No. 6 of Schedule I to the State Act and is not exempt from sales tax. It was so held because, by the Madhya Pradesh General Sales Tax (Amendment and Validation) Act, 1971, entry No. 6 of Schedule I to the Sales Tax Act was amended so as to exclude hessian cloth from that entry, and retrospective effect was given to that amendment. The answer to question No. (4), therefore, is that the hessian used in packing material did not fall in the category of "cloth" for purposes of entry No. 6, Schedule I, to the State Act.

5. As to question No. (5), it may be observed that selling the cotton bales is not a casual business of the assessee. When the packing material is also sold along with the bales, by no stretch of imagination can it be said that the sale of the packing material is casual. The answer to question No. (5), therefore, is that the sales of packing material were not casual sales.

6. As to question No. (6), it may be observed that the finding of the Tribunal was that the contract by the assessee with the purchaser was to deliver the goods at the destination hence the rate available on the date the goods were loaded in the railway wagons could not be availed of and that the rate which was in operation on the date the delivery was actually made at the destination was applicable, and the delivery having been made at the destination after 16th January, 1965, the rate applicable after that date was properly applied. It was urged on behalf of the assessee that the Central sales tax is imposed on the movement of the goods, and hence the date of the movement is the material date for deciding the rate at which the goods can be charged, This contention cannot be accepted. The tax is leviable on the sale of goods and not because of the movement of the goods. It must, therefore, , be seen as to when the sale was completed. It is not controverted before us that the sale was completed when the cotton bales were delivered at the destination. The movement of the goods is only material for the purposes of deciding whether the sale took place in the course of inter-State trade or whether it was an intra-State transaction and to decide as to which State would be entitled to recover the Central sales tax. But the levy of the tax is only on the sale of the goods and not on the movement thereof. The answer to question No. (6), therefore, is that the, sale of the 1,300 cotton bales was completed only after the goods reached the destination and were taxable according to the rate in force after 16th January, 1965.

7. The first two questions are taken up together for consideration. In the case of Nimar Cotton Press v. Sales Tax Officer, Nimar Circle, Khandwa, [1961] 12 S.T.C. 313 a Full Bench of the Nagpur High Court had held that in a contract of pressing cotton and delivery of compressed cotton in bales covered with hessian cloth and iron hoops for a consolidated charge of pressing and packing, it is implicit that there would be a. sale of packing material and the parties are impliedly ad idem on the passing of the property in the material qua material and the addition of its price to the pressing charges; and if the property in the extraneous packing material vests in the owner of the cotton on payment of a consolidated price and the vesting is not accession, then it can only be under an implied contract of sale of the material. In another case of the same assessee, Nimar Cotton Press Factory, Khandwa v. Commissioner of Sales Tax, M.P. 1968 M.P.L J. 582, it was urged that the previous decision of the Full Bench of the Nagpur High Court was no longer good law in view of the Supreme Court decision in Government of Andhra Pradesh v. Guntur Tobaccos Ltd [1965] 16 S.T.C. 240 (S.C.) This contention was repelled by this court to which decision one of us (R. J. Bhave, J.) was a party. On the analysis of the Supreme Court decision it was held in the latter case that in a works contract, where packing material is used, and where there is no specific agreement to transfer the packing material, the test to determine whether there was a sale of the packing material or not is to find out from the circumstances of each case whether the packing was an integral part of the works contract or it was extraneous to it; and that if it was an integral part, then no agreement for sale can be inferred; but if it was not so, then an implied contract of sale could be inferred. It was further held that where the assessee, who carried on the business of ginning and pressing cotton, wrapped the ginned cotton in hessian cloth and then the bales were secured with iron hoops, there was an implied contract to sell the packing material and the sale was liable to tax. In the second Nimar Cotton Press case2, reference was made to the decision in M. S. Chidambara Nadar Sons & Co. v. State of Madras [1960] 11 S.T.C. 321, in which it was held that where under an agreement to purchase cotton to be delivered by the seller to the buyer it was implicit that the goods should be delivered packed, the contract to pay for and purchase the packing material may be implied and the turnover relating to the packing material would be liable to sales tax. It was also noted that the Madras case was quoted, with approval, by their Lordships of the Supreme Court in Government of Andhra Pradesh v. Guntur Tobaccos Ltd.3 It is thus clear that even according to the Supreme Court not only in works contracts but in ordinary contracts of sale also there can be an implied agreement to sell the packing material.

Our attention was, however, invited to a decision of another Division Bench of this court in M/s. Binod Mills Co. Ltd., Ujjain v. Commissioner of Sales Tax, M. P. Miscellaneous Civil Case No. 198 of 1970 decided on 2nd August, 1971 ; since reported in [1972] 29 S.T.C. 413 In that case, the facts found by the Tribunal were that the dealer sold the cloth in bales, though ;the price was charged on the meterage of cloth or according to its weight. In the circumstances of that case, it was held by the Division Bench that it was not possible to draw any inference that the dealer intended to sell the packing material to the customers. The burden which lay upon the department to prove that there was an implied sale of the packing material liable to tax was not discharged by it. The two decisions in Nimar Cotton Press cases 1968 M.P.L.J. 582, referred to above, were distinguished on the ground that .they related to works contract. Similarly, the case of Vimakhand Prakashchand, Ujjain v. Commissioner of Sales Tax, M. P. 1968 M.P.L.J. 665, was also distinguished on the ground that in that case it was not disputed that a composite price was charged by the dealer for the compressed cotton and the packing material. It is thus clear that even in M/s. Binod Mills case (Miscellaneous Civil Case No. 198 of 1970 decided on 2nd August, 1971 ; since reported in [1972] 29 S.T.C. 413), if there would have been an admission that the price of the cloth sold was a composite price for the cloth and the packing material, the Bench would have come to the conclusion that the packing material was taxable. It thus all depends on the facts of each case. We have already referred to the finding recorded by the Tribunal to the effect that

"the contract was for sale of cotton bales duly pressed which made it essential that the cotton was to be supplied with the packing material"

. This is a finding of fact. The only question is as to whether on the basis of this finding an inference can be legitimately drawn that there was, in fact, a contract to sell the packing material as well. Where there is a simple contract to sell cotton or cloth and the seller supplies the cotton or the cloth in bales for convenience of delivery, an inference may be possible that there was no agreement to sell the packing material as well. But where the contract specifically speaks of the cloth or the cotton being delivered packed in the manner prescribed, an inference can be legitimately drawn that there was also an implied agreement to transfer the packing material as well. We are, therefore, of the opinion that there is no conflict between the recent decision in M/s. Binod Mills case (Miscellaneous Civil Case No. 198 of 1970 decided on 2nd August, 1971 ; since reported in [1972] 29 S.T.C. 413) and the previous decisions of this court. We are also of the opinion that on the facts and in the circumstances of the case the Tribunal has rightly come to the conclusion that there was an implied contract to sell the packing material as well. In our opinion, the dictum laid down by the Supreme Court in Government of Andhra Pradesh v. Guntur Tobaccos Ltd. [ 1965] 16 S.T.C. 240 (S.C.) has not been, in any way, modified by its subsequent decision in Hyderabad Deccan Cigarette Factory v. State of A. P. [1966] 17 S.T.C. 624 (S.C.) or the recent decision in State Of Madras v. Cement Allocation Co-Ordinating Organisation. and Co-ordinating Organisation (1971) 2 S.C.C. 587. The law still is that in each case whether an implied contract of sale of the packing material can be inferred or not is to be determined from the facts and circumstances of that case. We are of the opinion that in this particular case the Tribunal was justified in drawing the inference that it did. Our answer to the first question, therefore, is that the Tribunal was justified in holding that there was an implied contract of sale of the packing material along with the cotton.

8. The answer to the second question is simple on the finding of the Tribunal that there was a composite contract of selling cotton as well as the packing material. When different articles are transferred under a composite contract, the rate available for either of the two cannot be charged. The different items will have to be charged at the different rates. The Tribunal was, therefore, justified in holding that the packing material could not be charged at the rate prescribed for cotton. Our answer to the second question, therefore, is that the Tribunal was right in holding that the packing material was chargeable at the rate applicable to the said material and not at the rate applicable to baled cotton.

9. We have already recorded our answers to the questions referred to us when each question was discussed separately. , For the sake of convenience, the answers are, however, repeated again in chronological order. They are as under :

(1) The Tribunal was right in holding that there was an implied contract of sale of packing materials, i.e., bardana and patti, along with the sale of cotton bales.

(2) The Tribunal was right in holding that the packing material was chargeable at the rate applicable to the said material and not at the rate applicable to baled cotton.

(3) No answer to this question is called for as it was not pressed before us and there is no material on record to support it.

(4) Hessian used in packing material did not fall in the category of "cloth" for purposes of entry No. 6, Schedule I, to the State Act.

(5) On the facts and in the circumstances of the case, it could not be held that the sales of packing material were casual. The Tribunal was right in holding that the assessee was a dealer in packing material as well.

(6) The sale of 1,300 cotton bales could be treated as complete only after the goods reached the destination, i.e., after 16th January, 1965, and that the Tribunal was right in holding that the rate in force after that date was applicable.

The references are decided accordingly. The assessee shall pay the costs of the Commissioner of Sales Tax, M. P. Hearing fee is fixed at Rs. 100 per case.