Packing materials tax under unamended sales tax law depends on actual taxability of the goods packed, not a notional general rate.

Under the unamended section 15A of the Bombay Sales Tax Act, 1959, packing materials are taxable only at the rate actually applicable to the sale or purchase of the goods in the particular transaction. The provision does not permit a notional general rate where the packed goods are not taxable in the dealer's hands. It was intended to avoid separate valuation of containers and to treat the sale of containers with the goods as part of the same transaction, but not to create tax liability when no sales tax was payable on the contents. The levy on tins used for oil was therefore held unsustainable.

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Issues: Whether, under section 15A of the Bombay Sales Tax Act, 1959, tax on packing materials used for tins carrying oil was leviable at the rate applicable to the goods packed even when no tax was payable on the sale of the goods themselves by the assessee.

Analysis: Section 15A was enacted to provide for levy on packing materials at the same rate as the goods packed, but its language ties the applicable rate to the tax actually leviable on the sales or purchases of those goods in the particular case. The provision was intended to remove controversy about separate valuation of containers and to deem the sale of containers with the goods as part of the same transaction, but it does not authorise taxation of packing materials when the contents are not taxable at all in the hands of the dealer. The later amendment substituting a reference to the rate set out in the relevant Schedule showed that the unamended provision did not contemplate adoption of a merely general rate divorced from the dealer's actual liability on the goods sold.

Conclusion: The levy on the tins was not sustainable because, where no sales tax was payable on the oil sold by the assessee, no tax could be imposed on the packing materials at a rate linked to that non-taxable sale.

Final Conclusion: The reference was answered in favour of the assessee and the Tribunal's view on taxability of the tins was rejected.

Ratio Decidendi: Under the unamended section 15A of the Bombay Sales Tax Act, 1959, packing materials are taxable only at the rate actually applicable to the sale or purchase of the goods in the particular transaction, and not at a notional general rate where the goods themselves are not taxable in the hands of the dealer.

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