Sales tax on packing material requires proof of a separate sale; mere packing in bardana does not establish taxable turnover.

Sales tax on packing material can be levied only where the packing material itself is shown to have been separately sold under an express or implied agreement supported by consideration and transfer of property. The department bears the burden of proving taxable turnover, and an adverse inference for non-production of material does not replace proof of the actual sale. On the facts, no separate finding existed that bardana was sold independently of the bidis, so the Tribunal could not infer a sale merely because the goods were packed in bardana. The levy on bardana was therefore not sustainable.

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Issues: Whether sales tax could be levied on the price of bardana on the basis of an inferred implied sale without any evidence of a separate contract or consideration.

Analysis: Liability to tax on packing material depends on proof that the packing material itself was the subject of an agreement of sale, express or implied, supported by consideration and resulting in transfer of property. Such a finding cannot rest on conjecture or surmise. The burden lies on the department to establish the taxable turnover, and while adverse inference may be drawn for failure to produce material, the crucial factual issue of sale must still be proved. In the absence of any factual finding that bardana was separately sold, the levy could not be sustained merely because the bidis were packed in bardana.

Conclusion: The Tribunal was not justified in inferring sales of bardana on a conjectural basis, and the question was answered against the revenue and in favour of the assessee.

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