Taxability of packing containers hinges on factual sale of the bags, and an assessment notice to verify records was valid.

Taxability of gunny bags used in packing salt depended on whether the containers were sold as such or were merely packing material, and that issue turned on the factual existence of an express or implied agreement for sale in each case. The trade circular did not impose a tax; it only reflected the administrative position on taxation of containers. A notice under section 14(1) seeking books of account, supporting records, final accounts and balance sheet to determine the factual basis of taxability was a legitimate step in assessment. The notice was therefore not without jurisdiction and did not call for interference under article 226.

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Issues: Whether the notice issued under section 14(1) of the Bengal Finance (Sales Tax) Act, 1941, calling upon the petitioner to produce accounts and supporting records for determining the taxability of gunny bags used in packing salt was without jurisdiction or otherwise liable to be quashed under article 226 of the Constitution.

Analysis: The liability to sales tax depended on whether the gunny bags were sold as such, or whether they were merely packing material used for sale of salt. That enquiry turned on whether there was an express or implied agreement for sale of the containers, which is a question of fact to be decided on the materials of each case. The trade circular did not create a tax; it only clarified the administrative position in the light of the Supreme Court's view on taxation of containers. A notice seeking books of account, supporting documents, final accounts and balance sheet for the relevant period was therefore a legitimate step for the assessing authority to ascertain the facts.

Conclusion: The notice was not in excess of jurisdiction and did not warrant interference under article 226.

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