Packing material in rice sales cannot be excluded from turnover absent a separate sale agreement.

For rebate under Explanation III to the Third Schedule to the Andhra Pradesh General Sales Tax Act, 1957, the value of packing gunnies used for rice cannot be excluded from rice turnover where the rice is sold in packed condition and no separate agreement, express or implied, exists for the sale of the packing material. The provision operates in line with section 15(c) of the Central Sales Tax Act, 1956 and reduces tax on rice procured from paddy by the tax levied on the paddy, but it does not permit dissection of the packing value from the taxable turnover on the facts stated.

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Issues: Whether, for computing rebate under Explanation III to the Third Schedule to the Andhra Pradesh General Sales Tax Act, 1957, the value of gunnies used for packing rice could be excluded from the rice turnover on the footing that gunnies were separately sold.

Analysis: Explanation III reduces the tax leviable on rice procured out of paddy by the amount of tax levied on the paddy, and is in line with section 15(c) of the Central Sales Tax Act, 1956. The assessing authority itself treated the gunnies as not having been the subject of a separate second sale and no separate contract for sale of gunnies was found, expressly or by implication. Where rice is sold in packed condition and there is no separate agreement for the sale of the packing material, the value of the gunnies cannot be dissected from the rice turnover for rebate computation.

Conclusion: The value of the gunnies was part of the rice turnover and could not be excluded; the revision failed.

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