Packing material in exempt commodity sales is not taxable without separate consideration or independent sale.

Gunny bags used only to pack and transport exempt sugar were not treated as separately sold goods because there was no evidence of a distinct agreement or independent consideration for the bags. In the absence of a separate sale within section 2(h) of the U.P. Sales Tax Act, 1948, the value of the packing material could not be included in the dealer's taxable turnover. The High Court therefore held that the price of the gunny bags was not taxable and could not be added to the sugar turnover.

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Issues: Whether the price of gunny bags used for packing sugar could be included in the dealer's turnover and taxed along with the price of sugar.

Analysis: The assessment year concerned was one in which tax on sugar stood exempted. The sugar was sold in gunny bags because packing was necessary for storage and sale, but mere sale of sugar in packed condition did not by itself establish a separate sale of the gunny bags. There was no material showing any direct agreement between the assessee and the purchaser for sale of the bags for a distinct consideration. In the absence of any price being paid for the gunny bags, the transaction could not be treated as a sale within the meaning of section 2(h) of the U.P. Sales Tax Act, 1948.

Conclusion: The price of gunny bags was not taxable and could not be added to the turnover of the dealer; the revision failed.

Final Conclusion: The High Court held that the packing bags were not separately sold and therefore no tax could be levied on their price as part of the sugar turnover.

Ratio Decidendi: Where packing material is used merely for transporting or storing an exempt commodity and no separate consideration or independent sale of the packing material is shown, its value cannot be included in the taxable turnover.

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