Packing materials bought for sale packing were not diverted goods, so their value stayed outside taxable turnover.

Packing materials purchased tax-free for use in packing snuff were not treated as goods bought for resale merely because the local registration certificate described them under the resale column; the Central registration certificate expressly showed them as materials for packing goods for sale or resale. The second proviso to section 5(2)(a)(ii) of the Bengal Finance (Sales Tax) Act, 1941 was therefore not attracted, because the items were not genuinely purchased for resale and then diverted to another use. The later statutory amendment did not apply to the relevant period, so the value of the containers and packing materials could not be included in taxable turnover.

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Issues: Whether the second proviso to section 5(2)(a)(ii) of the Bengal Finance (Sales Tax) Act, 1941 was attracted so as to include in the taxable turnover the price of containers and other packing materials purchased tax-free under the registration certificate and used for packing snuff.

Analysis: Sales to a registered dealer of containers and other materials for packing goods specified for sale formed an independent deductible category under section 5(2)(a)(ii). The materials in question were shown in the local registration certificate under the column for resale only because the prescribed form did not provide a separate column for packing materials, whereas the same items were expressly described in the Central registration certificate as materials for packing goods for sale or resale. On that basis, the goods were not truly purchased for resale and then diverted to some other purpose. The later statutory amendment did not govern the period in question.

Conclusion: The second proviso to section 5(2)(a)(ii) did not apply, and the packing material value could not be added to the assessee's taxable turnover.

Ratio Decidendi: Where packing materials are intended for packing goods for sale and are not genuinely purchased as goods for resale, the second proviso governing diversion of purchased goods to another purpose is not attracted.

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