Packing materials used with sugar sales are not separately taxable when they comply with prescribed packing requirements.

Gunny bags used to sell sugar in conformity with the prescribed packing standards were not separately liable to sales tax on their estimated value. Applying the earlier binding Division Bench view on identical transactions, the Court treated the packing material as part of the sale process for the principal commodity and not as a distinct taxable sale of the bags themselves. The reference was answered in favour of the assessee and against the Revenue, with no separate sales tax exigible on the estimated value of the gunny bags.

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Issues: Whether the assessee was liable to sales tax on the estimated value of gunny bags used in selling sugar when the bags conformed to the packing standards prescribed under the sugar packing order.

Analysis: The reference concerned an assessment year in which the same issue had already been decided in an earlier Division Bench decision involving identical transactions. Following that binding view, the Court held that where gunny bags are used in conformity with the prescribed packing requirements while selling sugar, the estimated value of such bags does not give rise to separate sales tax liability in the hands of the assessee.

Conclusion: The issue was answered in favour of the assessee and against the Revenue; the assessee was held not liable to sales tax on the estimated value of the gunny bags.

Ratio Decidendi: Packing materials used in conformity with the prescribed packing order, in the course of sale of the principal commodity, are not separately taxable unless there is a distinct taxable sale of those materials.

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