Exempt goods and packing materials are not separately taxable absent clear statutory language creating an independent levy.

Packing materials used with exempt goods were held not separately taxable under the Assam General Sales Tax Act, 1993, because the statute did not clearly impose tax on such containers apart from the goods themselves. The Court applied the deeming fiction in Explanation 2 to section 2(34), under which packing may be treated as sold with the goods and included in the sale price where statutory conditions are met, but found that this did not create an independent charge on packing for exempt goods. As fiscal imposition must rest on clear statutory language, the levy on the containers could not be sustained and the assessment was set aside.

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Issues: Whether containers and packing materials used for exempt goods could be subjected to sales tax under the Assam General Sales Tax Act, 1993 when the goods themselves were exempt and the packing formed part of the sale price.

Analysis: The statutory scheme exempted the goods under section 9(1), while section 8 imposed tax on taxable turnover. Explanation 2 to section 2(34) created a deeming fiction that where goods are sold in containers or packing materials of small value, or where such packing is essential or customary, the packing shall be deemed to have been sold with the goods and its value included in the sale price. The text of the Act did not expressly state that packing materials used for exempt goods would independently attract tax. Applying the rule that fiscal imposition must rest on clear and unambiguous language, and giving the deeming provision its logical effect, the Court held that if the goods are not taxable, the packing materials contained with them are also not taxable when the statutory conditions for the deeming provision are satisfied.

Conclusion: The levy on the containers could not be sustained; the assessment on packing materials was set aside and the appeal was allowed.

Ratio Decidendi: Where a taxing statute deems packing materials to form part of the sale price of goods, and the goods are exempt from tax, the packing materials are not separately taxable in the absence of clear statutory language creating such liability.

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