Exemption for sale of salt does not extend to gunny bags; packing value remains taxable under sales tax law.

Exemption for sales of salt under the State sales tax notification was confined to the commodity itself and did not extend to gunny bags used as packing, because the bags retained their separate commercial identity and their value remained part of taxable turnover. Section 8(2-A) of the Central Sales Tax Act, 1956 could not be invoked for the gunny bags, since the State notification did not exempt that turnover and the statutory condition of corresponding State-level exemption was not met. The assessments including the value attributable to the gunny bags were restored, and the contrary view of the Tribunal was set aside.

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Issues: (i) Whether the exemption granted for sales of salt under the State sales tax notification extended to the gunny bags in which the salt was packed and sold; (ii) whether section 8(2-A) of the Central Sales Tax Act, 1956 could be invoked to exempt the value of the gunny bags from tax.

Issue (i): Whether the exemption granted for sales of salt under the State sales tax notification extended to the gunny bags in which the salt was packed and sold.

Analysis: The exemption under the notification issued under section 17 of the Tamil Nadu General Sales Tax Act, 1959 was confined to sales of salt. The sale of salt in gunnies was treated as a composite transaction, but the packing material did not lose its separate commercial identity merely because it was sold along with the exempt commodity. An exemption granted to the commodity itself cannot be stretched by implication to the packing material unless the notification expressly so provides. The earlier authority on exempt salt and the line of cases on containers and gunny bags supported the view that the value of the packing material remains taxable when it forms part of the turnover of the sale.

Conclusion: The exemption did not extend to the gunny bags, and the value of the gunny bags was liable to tax.

Issue (ii): Whether section 8(2-A) of the Central Sales Tax Act, 1956 could be invoked to exempt the value of the gunny bags from tax.

Analysis: Section 8(2-A) operates only where the same goods are exempt or taxed at a lower rate under the appropriate State sales tax law. Since the State notification did not exempt the gunny bags, the statutory condition for applying section 8(2-A) was not satisfied. The exemption for salt could not be transposed to the packing material, and therefore no nil-rate treatment could be claimed for the gunny value under the Central Sales Tax Act.

Conclusion: Section 8(2-A) could not be invoked to exempt the gunny bags.

Final Conclusion: The assessments including the turnover attributable to gunny bags were restored, and the Tribunal's contrary view was set aside.

Ratio Decidendi: An exemption granted for the sale of a commodity does not, by itself, extend to the value of packing materials sold with it, and section 8(2-A) of the Central Sales Tax Act applies only when the same turnover is exempt under the relevant State law.

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