Composite price exemption for packing material fails when liquor and packing are separately charged under trade tax law.

Section 3AB of the U.P. Trade Tax Act applies only where goods and packing material are sold for a composite price; where invoices separately show the value of country liquor and the packing material, the exemption is unavailable and the packing material remains taxable. The later circular dated 30 September 2003 was treated as consistent with that legal position, so the challenge to it failed. On that basis, the reassessment notices under section 21 were not quashed and the proceedings were left undisturbed.

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Issues: Whether, for sales of country liquor where the price of the liquor and the price of the packing material were separately charged, the packing material was exempt under section 3AB of the U.P. Trade Tax Act and the reassessment notices under section 21 of the Act were liable to be quashed.

Analysis: The Court followed the earlier Division Bench view that section 3AB applies only where a composite price is charged for the goods and the packing material. Where the invoices separately disclose the value of the liquor and the packing material, the statutory benefit of section 3AB is unavailable. The Court also held that the later circular dated 30 September 2003 correctly reflected the legal position under the Act and that there was no reason to reopen the settled view.

Conclusion: The packing material was held taxable when separately charged, the challenge to the circular failed, and the reassessment proceedings were not interfered with.

Ratio Decidendi: Section 3AB of the U.P. Trade Tax Act grants exemption only when the goods and the packing material are sold for a composite price, and it does not apply where their values are separately charged.

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