Packing material tax requires proof of a separate sale of containers, not just sale of goods in bottles.

Bottles used to contain liquor were treated as packing material for sales tax purposes because they remained distinct commercial articles and did not lose that character merely because bottling also made the liquor marketable. However, a taxable sale of the bottles could not be presumed from delivery of liquor in single-price bottles; the Revenue had to prove an actual agreement, consideration, and transfer of the bottles as such. As no separate or implied sale of the containers was established, the levy on the bottles failed and the assessments, interest, and penalty were unsustainable.

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Issues: (i) whether bottles used for containing liquor could be treated as packing material so as to attract tax under the last proviso to section 5(1) of the Rajasthan Sales Tax Act, 1954; (ii) whether, on the facts, there was any sale of packing material at all when liquor was sold in bottles under a single price.

Issue (i): Whether bottles used for containing liquor could be treated as packing material so as to attract tax under the last proviso to section 5(1) of the Rajasthan Sales Tax Act, 1954

Analysis: The statutory scheme taxed packing material when goods were sold packed in such material. The expression "packing" was construed broadly, and bottles were held to be ordinary containers used to hold and sell liquids. The Court distinguished the excise-law concept of marketability from sales-tax liability and held that the container did not lose its character as packing material merely because bottling might also be part of making the product marketable. The liquor and the bottle remained distinct commercial articles, and the bottle was not an inseparable component of the liquor.

Conclusion: Bottles are packing material for the purpose of the Act, and if their sale is otherwise proved, the last proviso to section 5(1) can apply.

Issue (ii): Whether, on the facts, there was any sale of packing material at all when liquor was sold in bottles under a single price

Analysis: The Court held that a sale of packing material cannot be presumed merely because goods are delivered in containers. A sale requires an agreement, consideration, and passing of property in the very goods sold, and the Revenue had to establish that the parties intended to sell and buy the bottles as such. Section 2(p) dealing with sale price did not create a fiction of a separate sale of packing material, and section 2(s) did not dispense with proof of an actual transfer of the packing material for consideration. On the record, no separate or implied agreement to sell the bottles was proved, and no factual basis existed to split the single price into two sales.

Conclusion: No taxable sale of packing material was proved, so levy on the bottles could not stand.

Final Conclusion: The impugned assessments and the Tribunal's affirmance of tax, interest, and penalty were unsustainable because the Revenue failed to prove a separate taxable sale of the bottles as packing material.

Ratio Decidendi: Where goods are sold in containers, the container is not taxable as packing material unless the Revenue proves, on facts, an actual transfer of the container for consideration as part of a sale of that very material; the sale price of the principal goods cannot be artificially split to create a separate taxable turnover for the container.

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