Packing materials sold with goods are separately taxable when priced separately and not covered by incidental packing deductions.

Where kerosene is sold in sealed tins under a contract for packed goods, an implied sale of the packing materials may be inferred, so the tin turnover is includible in taxable turnover and is not deductible under rule 6(cc)(i). The deduction for incidental packing charges does not apply when the tins themselves form part of the sale and are separately priced. The rate applicable to kerosene cannot be mechanically extended to the tins; separately priced packing materials must bear the separate applicable rate rather than the single-point rate for the principal commodity.

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Issues: (i) Whether the turnover representing the price of tins in which kerosene was sold was liable to be included in the taxable turnover or deductible under rule 6(cc)(i) of the Tamil Nadu General Sales Tax Rules, 1959. (ii) Whether the turnover relatable to the tins could be taxed at the same rate as kerosene.

Issue (i): Whether the turnover representing the price of tins in which kerosene was sold was liable to be included in the taxable turnover or deductible under rule 6(cc)(i) of the Tamil Nadu General Sales Tax Rules, 1959.

Analysis: Rule 6(cc)(i) applies where packing materials are merely used incidentally in delivering the sold goods and the packing charges are shown separately without being included in the price of the goods. Here, the kerosene was purchased and resold in sealed tins, and the contract was for sale of kerosene as packed goods. In such a case, an implied agreement to sell the packing materials can readily be inferred, and the tins themselves form part of the sale.

Conclusion: The turnover relating to the tins was liable to tax and was not deductible under rule 6(cc)(i).

Issue (ii): Whether the turnover relatable to the tins could be taxed at the same rate as kerosene.

Analysis: Kerosene alone was covered by the single-point rate under entry 35 of Schedule I, while the tins were separately charged. Where the goods and the packing materials are separately priced, the rate applicable to the principal commodity cannot be mechanically extended to the packing materials. The taxing authority had proceeded on an erroneous assumption of a composite price, although no such composite price existed.

Conclusion: The turnover relatable to the tins could not be taxed at the same rate as kerosene and had to bear the separate applicable rate.

Final Conclusion: The appeal succeeded, the revisional order was set aside, and the appellate authority's order was restored.

Ratio Decidendi: Where goods are sold in packed condition under a contract that implies sale of the packing materials, the packing materials are separately taxable if separately priced, and a deduction meant for incidental packing charges does not apply.

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