Brijesh Kumar, J.:— In the bunch of writ petitions mentioned above, a common question arises for consideration, hence, they have been heard together and they are being disposed of by a common judgment.

2. The grievance of the petitioners is about levy of trade tax on the gunny bags used as packing material for sale of sugar. The petitioners are manufacturers of sugar. The writ petitions have been filed at different stages, viz., some have been filed at the stage of issuance of notice under section 21 of the U.P Trade Tax Act read with section 9 of the Central Sales Tax Act, 1956, to assess the tax liability on the gunny bags which, according to the notice, had escaped the assessment. In some cases assessment proceedings are going on and in the remaining, assessment has already been made and the department has proceeded with the recovery of tax levied. The prayers made in some of the writ petitions are all-embracing, seeking suitable writ, order or direction restraining the opposite parties from assessing, imposing, levying, realising any sales tax on the value of gunny bags in respect of sale of sugar effected by the petitioners. A relief for quashing of a circular issued by the Commissioner, Trade lax, U.P, dated April 2, 1991, has also been prayed for. The circular is addressed to all Trade Tax Officers and Assistant Commissioners (Assessment), Trade Tax. It refers to a decision rendered by this Court, reported in 1991 UPTC 341 (Chhatta Sugar Company Ltd., Mathura v. Commissioner of Sales Tax) wherein it has been held that the assessees are liable to pay sales tax on gunny bags used for packing sugar. The circular in the end desired the officers of the department to ensure compliance of the decision in the above noted Chhatta Sugar Company's case, 1991 UPTC 341, in the interest of the State. In the circular, it is also mentioned that this Court in Chhatta Sugar Company's case, 1991 UPTC 341 followed the decision of the honourable the Supreme Court, reported in [1987] 65 STC 462; 1987 UPTC 861 [Jamana Flour & Oil Mill (P.) Ltd. v. State of Bihar]. It is submitted that on issuance of the said circular, notices have been issued and the assessment proceedings started.

3. We have heard learned counsel for the petitioners and the learned Standing Counsel.

4. In all the writ petitions almost similar facts have been averred. It will be convenient to indicate the facts as averred in Writ Petition No. 3270 (MB) of 1992. The petitioner's case is that the sugar is exempt from payment of sales tax. Earlier, no sales tax was being evied upon the gunny bags used for packing the sugar. It was imposed by the assessment order dated March 31, 1992, in respect of the assessment year 1988-89 and then by means of separate assessment orders, in respect of other assessment years as well. The case of the petitioners is that the circular issued by the Commissioner, Sales Tax, U.P, dated April 2, 1991, leaves no discretion on the part of the assessing authority, except to impose tax on gunny bags. It is also indicated that sugar is a declared commodity under the Additional Duties of Excise (Goods of Special Importance) Act, 1957. The additional excise duty is levied and collected according to the rates specified in the Schedule. It is also categorically averred that only price of sugar was being charged and nothing was being charged for the gunny bags. To substantiate this averment, some invoices have been annexed to show that only net weight of sugar was taken and price for the same was charged and nothing was charged for the gunny bags. It is further averred that at no time the sugar is kept loose and it is always packed in gunny bags before it is stored or is offered for sale otherwise quality, grade and colour deteriorates. It is always sold in packed condition. The contention of the learned counsel for the petitioners is that the decision in Chhatta Sugar Company, 1991 UPTC 341 does not lay down good law.

5. To find out the stand of the state, we may look into one of the counter affidavits filed on behalf of the State, viz., in Writ Petition No. 5122(MB) of 1992. The claim of the petitioners has been refuted. Levy of trade tax on gunny bags has been justified on the basis of the decision of a learned single Judge of this Court in Chhatta Sugar Company's case, 1991 UPTC 341. It is averred that the sale of gunny bags was included in the price of sugar and, therefore, the sale was liable to be taxed under the U.P Trade Tax Act as well as the Central Sales Tax Act. Issuance of the circular by the Commissioner, Sales Tax, has also been justified on the ground that, being the head of department, he could issue a circular informing the subordinate authorities about the legal position as held in a decision of this Court. It is denied that circular dated April 2, 1991, restricts the discretion of the assessing authority. It is also averred that the propositions laid down in the case of Raj Sheel v. State of Andhra Pradesh, [1989] 74 STC 379 (SC); 1989 UPTC 1393, are not applicable and since the price of gunny bag is included in the price of the sugar and is an integral part thereof, thus, it is liable to be taxed. The case of the State further is that special gunny bags are purchased from outside the State and the petitioners are to sell sugar in the said special type of gunny bags price of which was included in the fixation of price of sugar. Hence, there was an implied contract for sale of gunny bags. It was also averred that one Writ Petition No. 3303(MB) of 1994 was dismissed in limine by a Division Bench of this Court by order dated August 23, 1994, on the ground of availability of alternative remedy. Surprisingly, however, in the counter-affidavit, we do not find any reference of a Division Bench decision of this Court in Burhwal Sugar Mills Company Ltd. v. Sales Tax Officer, [1969] 23 STC 241, which is nearer to the facts of the case, rather, more direct on the point involved.

6. So far as the question of alternative remedy is concerned, we find force in the submission made on behalf of the petitioners that in view of the circular issued by the Sales Tax Commissioner, dated April 2, 1991, hardly any assessing authority would take a different view as the said circular leaves little discretion in them. It is submitted that the circular issued is invalid and is based on a decision which is not applicable and this argument cannot be advanced before the assessing authorities or the appellate authorities; hence, the petitioners are left with no other adequate, alternative and efficacious remedy. The circular requires the assessing authorities to follow it in the interest of the State. That is to say, the tax has to be imposed ignoring any other decision on the point. We feel that the above ground has force and it is appropriate to decide this point in this bunch of writ petitions.

7. The main thrust on behalf of the petitioners is against the circular dated April 2, 1991, issued by the Commissioner, Sales Tax, U.P, requiring the assessing authorities to decide the assessment matters in accordance with the decision rendered in the case of Chhatta Sugar, 1991 UPTC 341. It would, therefore, be appropriate to consider and examine the decision rendered in Chhatta Sugar Company's case, 1991 UPTC 341.

8. Chhatta Sugar Company case, 1991 UPTC 341 is a single Judge judgment. The learned single Judge has based his judgment on the decision of the honourable Supreme Court in Jamana Flour & Oil Mill case, [1987] 65 STC 462; 1987 UPTC 861 and on the findings recorded by the appellate court. It was observed that the appellate authority considered the Sugar Price Fixation Order of the year 1982-83 and the fact that the assessee was required to pack sugar in a special type of gunny bags. The Tribunal's finding was to the effect that price of gunny bags was included while fixing price of sugar, hence, there was an implied contract for sale of gunny bags. After narrating the findings recorded by the Appellate Tribunal, the learned Judge referred to the decision of the honourable Supreme Court in Jamana Flour & Oil Mill case, [1987] 65 STC 462; 1987 UPTC 861, and observed that the Sales Tax Tribunal had committed no error in holding that the sale of gunny bags was included in the price of sugar. The learned Judge also observed that in the case of Jamana Flour & Oil Mill (P.) Ltd., [1987] 65 STC 462; 1987 UPTC 861 it was held that the sale of gunny bags was implied in the sale of wheat products. There is no discussion whatsoever in the judgment except narration of the findings of the Appellate Tribunal and reference to the decision of the honourable Supreme Court in Jamana Flour & Oil Mill case, [1987] 65 STC 462; 1987 UPTC 861. It would thus be necessary to examine as to what has been held in Jamana Flour & Oil Mill case, [1987] 65 STC 462 (SC); 1987 UPTC 861.

9. The decision of the honourable Supreme Court in the case of Jamana Flour & Oil Mill, [1987] 65 STC 462; 1987 UPTC 861 is a Division Bench judgment presided over by the then Chief Justice, honourable R.S Pathak, J. The point related to taxability of gunny bags packing wheat. It was held that the price of gunny bags was included in the price charged by the dealers and there was, thus, an implied agreement for sale of gunny bags. The above finding was recorded in view of the provisions contained in clause 3 of the Roller Mills Wheat Products (Price Control) Order, 1964. Sub-clause (b), Explanation (ii) of clause 3 provided as follows:

“(ii) for net weight (inclusive of the cost of the bag), but where wheat products are sold in cloth bags in quantities of 40 kgs. net, 20 kgs. net and 10 kgs. net, a sum of 70 np, 37np. and 19 np. respectively, towards the cost of the cloth bag may be charged in addition to the said prices.”

10. The above sub-clause was taken into consideration along with the fact that the price of gunny bags was included in the fixation of price and that higher rate was permissible to be charged if cloth packing was used. It was, therefore, held that there was an implied contract to sell the bags along with the commodity. The gunny bag was, therefore, held to be taxable. There is no such provision in the case in hand as we will discuss about it a little later.

11. We may now consider a Division Bench decision of this Court in the Burhwal Sugar Mills' case, [1969] 23 STC 241. The bench consisted of Mr. Justice R.S Pathak, as he then was, and Mr. Justice R.L Gulati. It relates to sale of sugar. It has been observed that it is now settled that there should be an agreement between the parties for the purposes of transferring title supported by money consideration so as to amount to sale. Referring to a decision reported in [1965] 16 STC 240 (SC) (Government of Andhra Pradesh v. Guntur Tobaccos Ltd.), it has been observed that it was held in the above noted case that for mere passing of title to goods, either as integral part of or independent of goods, it cannot be inferred that the goods were agreed to be sold, and the price was liable to sales tax. As in the present case, it is not the case of the other side that there was any express contract for sale of gunny bags. In this circumstance, there could only be an implied contract which could be inferred from relevant facts and circumstances on the record and for this proposition the Bench has referred to a decision of the honourable Supreme Court reported in [1966] 17 STC 624 (Hyderabad Deccan Cigarette Factory v. State of Andhra Pradesh) and quoted the observation in the above noted decision, as follows:

“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.”

12. It has also been held that the burden lay upon the Sales Tax Officer to prove that the turnover was liable to tax and he could ask the assessee to produce relevant material, but this question must be decided whether there was an express or implied contract of sale. In the Burhwal Sugar Mill case, [1969] 23 STC 241 (All.), the revisional court had taken into consideration four items while holding that the gunny bags were liable to be taxed, first, that the gunny bags are items of commercial and marketable commodity; (2) They are included within the definition of goods; (3) There was transfer of property in such goods; and (4) The price of gunny bags is deemed to be included in the ex-factory price as prescribed by the Government of India. To this, the honourable Judge observed that the Sales Tax Officer omitted to consider the crucial question as to whether the transfer of property in gunny bags was as a result of any contract of sale either express or implied. One of the circumstances to be considered as to whether there was an implied contract or not, it was observed, that value of the container may have to be seen and if the container is costly as compared to the value of its contents, the inference of the sale of container may be drawn. The decision of the honourable Supreme Court in Hyderabad Deccan Cigarette Factory, [1966] 17 STC 624 was referred to for this proposition. It was then observed: “…………It is a matter of common knowledge that in a bag full of sugar the cost of a gunny bag is insignificant as compared to the value of sugar contained therein. Even according to the counter-affidavit filed on behalf of the opposite parties, the value of a gunny bag works out to 1.55 per cent of the value of a bag full of sugar. This proportion between the value of a gunny bag and a bag full of sugar, in our opinion, cannot be said to be so high as to lead to an inference of an implied sale of the gunny bag. Moreover, it is not the case of the department that the petitioner could employ any other packing material cheaper than a gunny bag.” Their Lordships further observed:

“The Sales Tax Officer as also the Judge (Appeals) appear to have presumed that the value of the gunny bags must have been included in the sale price of sugar. Admittedly the sugar was a controlled commodity at the material time and its price used to be fixed by the Government. There is no material whatsoever on the record to show that while fixing the sale price of sugar the Government took into consideration the value of gunny bags, nor indeed is there any indication as to the extent to which the sale price of the sugar was enhanced on that account. In the circumstances, it cannot be said that the property in the gunny bags was passed by the petitioner-company to its customers for money consideration.”

13. Their Lordships then observed t; that two important ingredients of a sale were missing, hence the gunny bags could not be taxed.

14. It is submitted that the above noted decision in the case of Burhwal Sugar Mills, [1969] 23 STC 241 (All.) is direct on the point based on several Supreme Court decisions and on facts also there is no difference. Hence, the Division Bench decision should be followed by the Commissioner and other assessing authorities.

15. The learned Standing Counsel has drawn our attention to the Sugar (Price Determination for 1988-89 Production) Order, 1988. He has placed a copy of the same before us. It has also been filed as annexure RA-1 along with the rejoinder affidavit in Writ Petition No. 5122(MB) of 1992. It says that the Central Government determines the prices payable for the Indian Sugar Standard (ISS) grades of sugar, packed in “‘A’ twill new gunny bags………”. The learned Standing Counsel submits that mentioning of the fact that the prices of the sugar have been fixed which are packed in “A” twill new gunny bag, leads to the inference that the price of the gunny bag is included in the fixation of the price. We, however, fail to appreciate as to how it is inferable. As a matter of fact, there is Sugar (Packing and Marketing) Order, 1970, which prescribes packing of sugar in “A” twill new gunny bag. In our view, it only describes the packing which is prescribed under the said Order. There is nothing to indicate that the price of the twill bag is included by the Central Government in fixing the price of the sugar. This position is further clear as in the explanation, it is clarified that the price does not include the duty of excise, additional duty of excise in lieu of sales tax, and the special duty of sales tax, etc. Then clauses (b), (c) and (d) indicate what is included in the price fixation and it mentions about transport from factory godowns and loading, at buyer's option. It nowhere indicates that the price of bag is also included in the price. There cannot be any presumption that the Centra! Government has fixed the price taking into consideration the value of gunny bags. In Burhwal Sugar Mills case, [1969] 23 STC 241 (All.) also it has been clearly observed that no such presumption can be made. Relevant facts will have to be considered for recording any such finding. In the case of Jamana Flour & Oil Mill, [1987] 65 STC 462 (SC); 1987 UPTC 861 the rule regarding fixation of price itself provided that it included the price of gunny bags and further that it was permissible to have a better packing of cloth and enhance the price by certain amount as given in the order, per bag of wheat. Such a provision in the rules may amount to an implied contract of sale of packing as well. In this view of the matter, in our view the decision in Jamana Flour & Oil Mill case, [1987] 65 STC 462 (SC); 1987 UPTC 861 is based on facts of its own, particularly, the provisions contained in the Wheat Price Fixation Order.

16. Yet another decision relied upon by the learned counsel for the petitioners is reported in [1989] 74 STC 379; 1989 UPTC 1393 (Raj Sheel v. State of Andhra Pradesh). This is also a Division Bench decision of the honourable Supreme Court rendered by a Bench consisting of honourable R.S Pathak, C.J and honourable M.H Kania, J. In this case also, the matter which came to be considered related to exigibility of packing material. It has been observed that a transaction of sale may consist of a sale of the product and a separate sale of container with respective sale considerations for both the product and the container separately or a sale may consist of the product and the container but both sales being conceived of as integrated components of a single sale transaction, and yet another kind of transaction which is referred to is where the product is sold with the transfer of the container but without sale consideration for it. It is further observed that the question in every case will be a question of fact as to what are the nature and ingredients of the transactions. It is further observed that in every case the assessing authority is obliged to ascertain the true nature and character of the transaction upon a consideration of all the facts and circumstances pertaining to the transaction. It requires factual investigation into the nature and ingredients of the transaction. A contract of sale, express or implied, will have to be there before packing material can be taxed and for coming to a conclusion whether there is or not an implied contract to sell the packing material, relevant facts and circumstances will have to be seen. It has been observed by the honourable Supreme Court that it is not right in law, to pick one ingredient only to the exclusion of others and deduce from it the character of the transaction. Their Lordships of the Supreme Court have also referred to the observations made in Hyderabad Deccan Cigarette Factory v. State of Andhra Pradesh, [1966] 17 STC 624 (SC) where it was observed that 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 it has not produced the same he may draw an 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 material used. While indicating several, factors to be considered to come to a conclusion whether the packing material was meant to be sold for consideration or not, it was observed that the mere fact that the consideration for packing was merged with the consideration of product would not make the sale jof packing an integrated part of the sale of the product.

17. What emerges from a perusal Of the judgment of the honourable Supreme Court in Raj Sheel, [1989] 74 STC 379 is that so as to be taxable, there must be an express or implied contract of sale of the packing as well. It is always a question of fact which depends upon the facts and circumstance of each case. It is the burden of the taxing authority to show that it is taxable.

18. The case of the petitioners is that the sugar is a commodity exempted from trade tax by virtue of notification issued under section 4(1) of the Trade Tax Act. In this connection, it is submitted that the State Government had issued a Notification No. ST/4486.X, dated December 14, 1957, directing that the turnover of certain articles including sugar was exempted from levy of sales tax if additional Central excise duty was leviable on those articles and proof furnished that additional excise duty has been paid. It is a question of fact as to whether additional excise duty as required under the said notification issued under section 4(1) of the U.P Trade Tax Act had been actually paid or not.

19. In view of the discussion held above, we come to the conclusion that the decision of the learned single Judge in the case of Chhatta Sugar Company, 1991 UPTC 341 is based on findings recorded by the Tribunal which had also taken into account Sugar Price Fixation Order, 1982-83. The provisions of the said Sugar Price Fixation Order have not been indicated in the judgment. The Tribunal had recorded a finding that price of sugar was fixed after taking into consideration the price of bags and there was no separate contract for sale of gunny bags. We have already discussed in the earlier paragraphs that the Sugar Price Fixation Order placed before us does not indicate that price of packing was to be taken into consideration while fixing the price of sugar. Packing material of sugar has been presented under the Sugar (Packing and Marketing) Order, 1970 but that would not lead to the inference that price of packing of sugar is included in the price of sugar. Many other considerations as indicated by different judgments have also to be taken into account. So far reference of the judgment of the honourable Supreme Court in Jamana Flour & Oil Mill, [1987] 65 STC 462; 1987 UPTC 861 is concerned, we have already indicated in the earlier part of this judgment that the provision of the Roller Mills Wheat Products (Price Control) Order, 1964 contained entirely different provision clearly indicating that the price of wheat is inclusive of cost of bag and higher charges could be charged if wheat was sold in cloth bags. We are, therefore, of the opinion, that judgment in Chhatta Sugar Company Ltd.'s case, 1991 UPTC 341 cannot have any general application to all or any kind of transaction ignoring other consideration on facts as well as provisions of particular Sugar Price Fixation Order.

20. In view of the above, the circular issued by the Commissioner, Trade Tax,. dated April 2, 1991, is not sustainable.

21. In view of the decision in the case of Raj Sheel, [1989] 74 STC 379 (SC), each case will have to be considered after factual enquiry into the matter. While deciding the question as to whether the packing material, namely, the gunny bags, is exigible to trade tax or not, the assessing authority will have to take into account factors which have been indicated in several decisions by this Court and by the honourable Supreme Court referred to above which cannot be ignored, merely, in view of the judgment rendered in the case of Chhatta Sugar Company, 1991 UPTC 341 or the circular issued by the Commissioner, Trade Tax, dated April 2, 1991. In the result, we quash the circular bearing No. NYAYA-91-92/PRA.AA (UNYA.NI)-54.BIKRIKAR, dated April 2, 1991 issued by the Commissioner, Trade Tax, U.P, and allow the writ petitions setting aside the assessment orders which have been passed by different assessing authorities in different writ petitions mentioned above as well as the recovery proceedings based thereon, and direct the assessing authorities to consider the question of exigibility of gunny bags to trade tax afresh taking into account the facts and circumstances of each case as well as the relevant considerations as laid down in different judgments referred to in the earlier part of this judgment. So far in those writ petitions mentioned above where assessment proceedings have been stayed, the assessing authorities shall resume the assessment proceedings and pass the orders, as indicated above. There would however, be no order as to costs.

22. Pronounced under Chapter VII, rule (2) of the Rules of the court.

23. Writ petitions allowed.