Settled tax classification for packing materials barred reassessment at a higher general rate

Reassessment based on a higher general sales tax rate was invalid where binding precedent had already settled that waterproof paper used as packing material fell within the specific packing-material entry and was taxable at 4%, not 8%, under the Rajasthan Sales Tax Act. PVC sheets used as packing material were also treated as covered by the relevant plastic packing-material entry and taxable at the applicable 4% rate for the period. As the assessee's 1981-82 assessment had proceeded on that basis, the reassessment notice, reassessment order and demand notice were quashed as unsustainable.

---

---

Issues: Whether the reassessment notice and consequent demand could be sustained where waterproof paper and PVC sheets were treated as taxable at 8% instead of 4% under the Rajasthan Sales Tax Act.

Analysis: The Court noted that the question was no longer res integra because an earlier Division Bench had already held that waterproof paper used as packing material falls within the relevant packing-material entry and is taxable at 4%, not at the general rate of 8%. The Court also noted that PVC sheets used as packing material are covered by the entry for plastic packing material and attract tax at the applicable 4% rate for the relevant period. Since the petitioner's assessment for 1981-82 had already proceeded on the footing that both items were taxable at 4%, the reopening based on a higher rate was held to be erroneous.

Conclusion: The reassessment notice, reassessment order, and demand notice were unsustainable and were quashed.

Final Conclusion: The writ petition succeeded because the impugned levy was based on an incorrect tax rate for the goods in question.

Ratio Decidendi: Where the applicable rate of tax for goods has already been settled by binding precedent and the goods fall within a specific packing-material entry, reassessment to levy a higher general rate is invalid.

---