Packing material tax follows the rate of the packed goods when no separate packing charge is made.

Where packing material is sold with cereals without a separate charge, the Rajasthan Sales Tax Act treats the packing at the same rate as the goods packed therein. Because section 8 of the Central Sales Tax Act links inter-State rate liability to the tax payable under the relevant State law, the concessional State rate also governs Central sales tax in such cases. The stated principle is that, when the State statute fixes the packing material rate by reference to the packed goods and no separate packing charge is made, that State rate applies for Central sales tax computation as well.

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Issues: Whether the tax on packing material sold along with cereals was chargeable at the rate applicable to the goods packed therein under the State Act and, by virtue of that rate, under the Central Sales Tax Act as well.

Analysis: The proviso to section 5 of the Rajasthan Sales Tax Act, 1954 provides that where goods are sold packed in materials and the packing is not separately charged, tax on the packing materials is leviable at the same rate as applies to the goods themselves. Section 8 of the Central Sales Tax Act, 1956 treats inter-State sales, for rate purposes, with reference to the tax payable under the appropriate State law, and section 8(2A) operates where the goods are generally exempt or generally taxable at a lower rate under that law. Since the packing material was not separately charged and was taxable under the State provision at the rate applicable to the packed goods, the concessional State rate governed the Central sales tax liability as well.

Conclusion: The rate applicable to the packing material was correctly taken as the rate applicable to the goods packed therein, and the challenge by the assessing authority failed.

Ratio Decidendi: Where packing material is not separately charged and the State sales tax law fixes its rate by reference to the goods packed therein, that State rate governs the Central sales tax liability under section 8 of the Central Sales Tax Act, 1956.

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