1. This Judgment shall also govern the disposal of Misc. Civil Case Nos. 148 to 154 of 1972 in each of which the parties are the same. The Board of Revenue, Madhya Pradesh, Gwalior, has under Section 44 of the Madhya Pradesh General Sales Tax Act, 1958, referred the following questions for the decision of this court:

(1) Whether, in the facts and circumstances of the case, an implied sale of packing material taxable to State and Central sales taxes could be presumed ? and (2) Whether as a result of the amendment given retrospective effect: vide Sections 9 and 10 of the M. P. General Sales Tax (Amendment and Validation) Act, 1971 (No. 13 of 1971), hessian cloth can be treated as outside entry No. 6 of Schedule I and, therefore, held liable to State and Central sales taxes for the period prior to 6th May, 1971 (the said Amendment and Validation Act was published in the Madhya Pradesh Gazette on 6th May, 1971)?

2. The periods of assessment covered in all these cases is Diwali 1965-66, 1966-67 and 1967-68. The assessee was assessed both under the Madhya Pradesh General Sales Tax Act, 1958, as also under the Central Sales Tax Act, 1956, for each of these years. Besides this, for the year 1967-68, two separate reference applications (annexures U and V) were subsequently submitted on 17th June, 1971, on behalf of the Commissioner of Sales Tax whereby it was prayed to refer yet one more question as to "whether hessian cloth is exempt from tax". Accordingly, the Tribunal for the reasons given in paragraph 10 of the reference order has referred the aforesaid question No. (2) also. The Board of Revenue has sent a common statement of case.

3. The Board of Revenue by order dated 13th May, 1970 (annexure D), decided the two second appeals preferred by the assessee which relate to the assessment period 1965-66. In this order, the learned Member, Board of Revenue, found as follows : It is true that in the bills of sale of bidis by the appellant, the selling rate is quoted in terms of thousands of bidis and the price of packing material has not been separately and expressly charged. But from the trading account, it is disclosed that the price of hessian, bardana and crates and other packing materials are taken into account in fixing the price of the bidis. It is also admitted by the appellant that the bidis had to be supplied to the purchaser duly packed in crates. The purchasers will not pay the price of bidis as settled if they were supplied loose or without packing material. It is, therefore, clear that the sale of packing material along with the bidis was implied in the contract of sale. It is also admitted that the property in the packing material, i. e., hessian and bamboo frame, etc., passed from the assessee to the purchasers. The point regarding the in-significant price of the packing material does not affect the main issue on considerations discussed above. Besides, the price of Rs. 4 per crate containing bidis worth about Rs. 500 cannot be said to be insignificant altogether, particularly when it had resale value, the price of which may vary from Rs. 2 to Rs. 3 per crate. I have, therefore, no reason to differ from the decision already taken by this Tribunal on this point in the earlier case of the same assessee. No other point was pressed by the appellant.

4. For the assessment year 1966-67, the assessee preferred an appeal against the assessment to the Deputy Commissioner and thereafter filed appeals before the Board of Revenue. The learned Member, Board of Revenue, by his order dated 4th January, 1971 (annexure K), decided the two appeals of the present assessee for the assessment year 1966-67 as also two other appeals of another assessee who is not before us. In this order, the learned Member referred to "a typical bill of the appellant" and has reproduced the same as follows : Khanchas 8, Bharti 50,000; 4,00,000 at Rs. 4.88 per 1,000 total Rs. 1,952.

The learned Member after a discussion found that there was "nothing to distinguish the present case from those decided earlier" and, consequently, dismissed the appeals.

5. For the period 1967-68, the assessee had preferred two separate appeals before the Board of Revenue which dismissed both of them by its order dated 6th March, 1971 (annexure R). As regards the question whether the crates, in which bidis are packed, are liable to tax, the learned Member, while referring to his earlier orders of this assessee for the earlier years, held that there was an implied sale of packing material liable to tax. However, for this year a further point was also raised as to whether hessian pieces are exempt from tax. On this question, following the decision of this court in Commissioner of Sales Tax, M.P. v. New Bhopal Textile Ltd. Bhopal 1970 Vikrikar Nirnay (3) 234, it was held that hessian cloth is cloth covered by entry No. 6 of Schedule I of the Act and thus decided this question in favour of the appellant. Consequently, these two appeals were partly allowed only to the extent that hessian cloth used in the packing of the bidis shall be exempted from the tax.

6. Learned counsel for the assessee relied on a decision of this court in Ishag M. Gulam Bidi Merchants, Katni v. Commissioner of Sales Tax, M.P. M.C.C. No. 179 of 1970 decided on 21st September, 1971 (Madhya Pradesh High Court), as also on a decision of their Lordships of the Supreme Court in Hyderabad Deccan Cigarette Factory v. State of Andhra Pradesh [1966] 17 S.T.C. 624 (S.C) and contended that in view of these decisions the packing material would not be liable to sales tax. In M. Ishag M. Gulam's case M.C.C. No. 179 of 1970 decided on 21st September, 1971 (Madhya Pradesh High Court), the Division Bench observed as follows : But the material consideration, in our opinion, would be whether the sale price is inclusive of such packing materials. If it be found that the seller has charged for the packing material as well, in that event, the sale price may be held to be inclusive of the price of the packing material. But the difficulty arises where there is no indication on record whether the sale price is inclusive of the price of the packing material.

This decision does not lay down any absolute rule that in every case packing material shall be exempted.

7. Their Lordships of the Supreme Court in Hyderabad Deccan Cigarette Factory's case [1966] 17 S.T.C. 624 (S.C.) have laid down the tests as follows :

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 container 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 visualized 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.

8. In State of Madras v. Gannon Dunkerley & Co. A.I.R. 1958 S.C. 560, their Lordships pointed out the essentials of sales as follows :

According to the law both of England and of India, in order to constitute a sale it is necessary that there should be an agreement between the parties for the purpose of transferring title to goods which of course presupposes capacity to contract, that it must be supported by money consideration and that as a result of the transaction property must actually pass in the goods. Unless all these elements are present, there can be no sale. Thus, if merely title to the goods passes but not as a result of any contract between the parties, express or implied, there is no sale. So also if the consideration for the transfer was not money but other valuable consideration, it may then be exchange or barter but not a sale. And if under the contract of sale, title to the goods has not passed, then there is an agreement to sell and not a completed sale.

9. In Commissioner of Taxes, Assam v. Prabhat Marketing Co. Ltd. [1967] 19 S.T.C. 84 (S.C), their Lordships of the Supreme Court have, in relation to the containers in which hydrogenated oil was sold, held that the value of the containers was assessable to sales tax under the 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 the assessment of sales tax. It was further held that

"the question as to whether there is an agreement to sell packing material is a pure question of fact depending upon the circumstances found in each case"

. In this Judgment, their Lordships had referred to both the cases, i. e., State of Madras v. Gannon Dunkerhy & Co. (Madras) Ltd. [ 1958] 9 S.T.C. 353 (S.C.) and Hyderabad Deccan Cigarette Factory v. State of Andhra Pradesh [ 1966] 17 S.T.C. 624 (S.C.).

10. A Division Bench of this Court in Vimalchand Prakashchand v. Commissioner of Sales Tax [1968] 22 S.T.C. 22, while considering the question with regard to the hessian cloth fastened with iron hoops over compressed cotton bales relied on a Full Bench decision of this Court in Nimar Cotton Press v. Sales Tax Officer, Nimar Circle, Khandwa [1961] 12 S.T.C. 313 (F.B.), wherein it was pointed out that even in the absence of the agreement for the sale of packing material as such there would be a sale of the material in a contract of pressing cotton and delivery of compressed cotton in bales covered with hessian cloth and fastened with iron hoops for a consolidated charge of pressing and packing ; for, in such a contract, it is implicit that there would be a sale of the 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.

11. In Patel Volkart Private Ltd. v. Commissioner of Sales Tax, M.P. 1972 M.P.L.J. 221, a Division Bench of this Court laid down as follows :

Whether an implied contract of sale of packing material can be drawn or not depends on the facts of each case.

Where there is a simple contract to sell cotton or cloth and the seller supplies the cotton or cloth in bales for convenience of delivery, an inference may be possible that there was no contract to sell the packing material also. But where the contract specifically speaks of the cloth or cotton being delivered packed in the manner prescribed, an inference can be legitimately drawn that there was also an implied contract of sale of the packing material, as in the case of a contract for sale of cotton bales duly pressed which made it essential that the cotton was to be supplied with the packing material. 16 S.T.C. 240; 17 S.T.C. 624; (1971) 2 S.C.C. 587; 1961 M.P.L.J. 814; 1968 M.P.L.J. 582 and 11 S.T.C. 321 Rel. Misc. C. C. 198/70 D/- 2-8-71 and 1968 M.P.L.J. 665 Ref.

12. It is thus clear that the question whether there is an implied contract of sale of packing material is a pure question of fact depending upon circumstances found in each case. In the instant case before us, the Tribunal has found that the price of the packing materials have been taken into account in fixing the price of bidis. On behalf of the assessee it was also admitted, as has been mentioned by the Tribunal in its order, that the bidis had to be supplied to the purchaser duly packed in crates and the purchaser will not pay the price of bidis as settled if the bidis were supplied in loose or without the packing material. It has also been recorded in the order that the property in the packing material passed on from the assessee to the purchasers. It is apparent that the packing material did form part of the bargain. Although the value of the packing material as compared to the value of the bidis in a particular crate is not a deciding factor one way or the other yet the Tribunal has considered that also to be a circumstance and in our opinion rightly. Thus, applying the tests and the principles laid down by their Lordships of the Supreme Court and by this court in the decisions referred to above to the facts and circumstances as found in the present case, there is absolutely no difficulty in presuming an implied contract of sale of packing material.

13. On the second question learned counsel for both sides agreed that it stood concluded by a decision of this court in Commissioner of Sales Tax, M. P., Bhopal v. Bharat Kala Bhandar, Khandwa [1971] 28 S.T.C. 387. A Division Bench of this Court in Commissioner of Sales Tax, M.P. v. New Bhopal Textile Ltd. 1970 M.P.L.J. 607 held that the word "cloth" was wide enough to include hessian cloth and hessian cloth would therefore be exempt. Thereafter, the M. P. General Sales Tax (Amendment and Validation) Act, 1971, was passed. Section 9 of the Act is as follows :

Amendment of Schedule I.-In Schedule I to the principal Act, in entry 6, for the words 'but excluding silk fabrics and articles made thereof, the words 'but excluding silk fabrics, articles made thereof and hessian cloth' shall be substituted.

Section 10 of this Amendment Act is as follows:

Amendments made by certain sections to have retrospective effect.-(1) The amendments made by Clause (i) of Section 2 and Section 5 and by Section 9 in so far as it relates to hessian cloth shall be deemed to have formed part of the principal Act, from the commencement thereof.

(2) The amendment made by clause (ii) of section 2 shall be deemed to have formed part of the principal Act from 15th August, 1962.

14. As a result of this amended provision the decision of this court in New Bhopal Textile's case 1970 M.P.L.J. 607 became obsolete. By this amendment, which has been given a retrospective effect, hessian cloth has been exempted from entry No. 1 of Schedule I and, consequently, is not exempt from sales tax. A similar question came to be considered in Patel Volkart's case 1972 M.P.L.J. 221 and there the answer given, as a result of this amendment, was that hessian cloth used in packing material did not fall in the category of "cloth" for purposes of entry No. 6, Schedule I, to the State Act.

15. We would, therefore, answer the questions referred to us as follows:

(1) In the facts and the circumstances of the case, an implied sale of packing material taxable to State and Central sales taxes can be presumed.

(2) As a result of the amendment giving retrospective effect, vide Sections 9 and 10 of the M. P. General Sales Tax (Amendment and Validation) Act, 1971 (Act No. 13 of 1971), hessian cloth will be treated as outside entry No. 6 of Schedule I and would therefore be held liable to State and Central sales taxes for the period prior to 6th May, 1971, as a retrospective effect was given to the said amendment.

16. A copy of this Judgment under the seal of this court and signature of the Registrar shall be sent to the Tribunal for disposing of the case accordingly.

17. In the circumstances of the case, we shall leave the parties to bear their own costs.