There was an implied agreement between the assessee and the FCI for the sale of the gunny bags, and therefore the sale of the gunny bags was taxable.

ABDUL HADI, J.

In these revision petitions filed by the Revenue under section 38(1) of the Tamil Nadu General Sales Tax Act, 1959 read with section 9(2) of the Central Sales Tax Act, 1956

Assessment vear No. of gunnies Rate per bag Total

1978-79 73, 492 bags x Rs.8 Rs. 5, 87, 936

1979-80 65, 448 bags x Rs. 8 Rs. 5, 23, 584

In the absence of "C" forms for the above sales, the assessing officer assessed the assessee to tax at 10 per cent on the aforesaid turnover. The assessee appealed to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner remanded the matter back to the assessing authority to find out whether there is any implied contract for the sale of the above said gunnies and then to fix the turnover of the assessee according to law.

2. Against the order of the Appellate Assistant Commissioner the assessee preferred a second appeal to the Tribunal. The Tribunal inter alia observed thus :-

"The Food Corporation of India supplied wheat packed in gunny bags to the appellants.

The appellants converted it, into flour, ravai, etc., packed them in gunny bags and sold them locally and outside the State on consignment basis. For packing the wheat products appellants utilised the same gunny bags in which the wheat was received. No tax was paid by the appellants for the wheat got from Food Corporation of India.

A perusal of the record namely invoices, receipts in this case show that the offer and acceptance for the appellants refer only the value of the wheat per bag and no reference is made in any of the correspondences or in the invoice to the value of the gunnies. The sale invoices shows that they have charged only the value of wheat. Simply because there is an instruction to the branch depot that not more than eleven gunny bags should be used it does not mean that there was a contract for the purchase of gunnies..........

In the present case there is no agreement to sell the packing materials between the Food Corporation of India and the appellants. The packing materials were not the subject of agreement of sale 'express' or 'implied'. The parties did not intend to sell or buy the packing materials and the packing materials did not form part of the bargain at all, but were used by the sellers as a convenient and cheap vehicle of transport."

So, observing, the Tribunal set aside the order of the Appellate Assistant Commissioner.

3. Learned counsel for the Revenue in his submissions very much relied upon our judgment dated January 22, 1997* in T.C.No. 885 of 1984 (R.P. No. 85 of 1984) which also related to inter-State sales of groundnut kernel, and rice (whose sales were also exempted from tax) as in the present case, relating to wheat products in gunny bags. In the said decision, the tax levied by the assessing authority on the footing that there was sale of the said packing materials also viz., gunny bags, was upheld.

4. On the other hand, learned counsel for the respondent sought to distinguish the said judgment. He also contended that the decision reported in A. Prakasam Pillai and Sons v. State of Tamil Nadu 1993 (91) STC 95, 1992 (2) MTCR 117 (Mad.) which was distinguished in the above referred to our judgment dated January 22, 1997*, would only apply to the facts of the present case.

5. We have considered the rival submissions. In our view our judgment dated January 22, 1997* and the reasoning therein would apply to the facts of the present case also and the above referred to decision viz., A. Prakasam Pillai and Sons v. State of Tamil Nadu (supra) would not actually apply to the facts of the present case and these revisions have only to be allowed, as was done in the above said judgment dated January 22, 1997* in relation to the above referred T.C.(R) No. 885 of 1984. The detailed reasons are as follows :

We are only to hold in the present case that there is an implied agreement between the relevant parties to sell the above said gunny bags. As already mentioned, the value of each of the above said gu