Tax-paid packing material can be deducted from taxable turnover when resold with manufactured goods under the sales tax statute.

Tax paid on packing material is deductible in computing taxable turnover where the material is resold along with manufactured goods or otherwise becomes part of goods sold in the market under section 2(r)(ii) of the M.P. General Sales Tax Act, 1958. The High Court applied its earlier view that the statutory scheme permits deduction of tax-paid goods at the stage of working out taxable turnover, and rejected the contrary approach adopted by the Tribunal. It held that the definition of sale price and the omission to raise the point at assessment did not displace the deduction available under the provision.

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Issues: Whether tax paid on packing material, when such material is resold along with manufactured goods, is deductible in computing taxable turnover under section 2(r)(ii) of the M.P. General Sales Tax Act, 1958.

Analysis: The packing material was admittedly tax-paid. The provision relating to taxable turnover allowed deduction of tax-paid goods when they were used or became part of another finished product sold in the market. The Court followed its earlier view that such relief is available while working out taxable turnover. The Tribunal's contrary view, based on the definition of sale price and on the fact that the point had not been raised at the original assessment stage, was held to be incorrect in light of the statutory scheme.

Conclusion: The assessee was entitled to deduction of the tax paid on the packing material from the taxable turnover.

Ratio Decidendi: Tax paid on packing material is deductible in computing taxable turnover where the packing material is resold or becomes part of goods sold in the market under the statutory provision permitting deduction of tax-paid goods.

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