Taxability of separately billed packing materials in inter-State sales after exemption withdrawal upheld on implied sale reasoning.

Packing materials separately specified and charged in inter-State sale bills remained taxable after the exemption for such materials was withdrawn by Government order published in the State Gazette. The fact that the principal goods were exempt did not preserve exemption for the packing materials once the specific exemption was revoked, and separate billing supported an implied contract of sale for the packing materials. The assessment was therefore rightly exigible to tax, and the Tribunal erred in setting it aside.

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Issues: Whether packing materials separately charged in the sale bills for exempt goods sold in inter-State trade could be subjected to tax after the exemption for such packing materials had been withdrawn.

Analysis: The exemption originally available for packing materials in inter-State sales had been revoked by a subsequent Government order, and the withdrawal had been published in the State Gazette. Once the exemption stood withdrawn, packing materials specified and charged separately could no longer claim exemption merely because the principal commodity was itself exempt. The separate billing of the packing charges also supported the inference that the packing materials were themselves sold under an implied contract of sale.

Conclusion: The packing materials were taxable, and the Tribunal was wrong in setting aside the assessment.

Ratio Decidendi: Where exemption for packing materials in inter-State sales has been withdrawn, and the materials are separately specified and charged, tax can be levied on their value as a separate sale supported by an implied contract.

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