Packing material tax rebate allowed where retrospective amendment brought containers within goods used in manufacture.

A manufacturer was held entitled to adjustment or rebate of sales tax paid on packing material used to pack manufactured goods under Haryana sales tax law. The court noted that the packing material had been purchased on payment of tax and used to make the goods marketable and fit for transit, and that the retrospective explanation inserted in section 15A brought containers and packing materials within goods used in manufacture. The restrictive view taken by the revisional and appellate authorities was therefore unsustainable, and the denial of benefit was unjustified. The impugned orders and recovery proceedings were quashed, and the assessing authority was directed to recompute the admissible adjustment in accordance with law.

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Issues: Whether a manufacturer is entitled to adjustment or rebate of sales tax paid on purchase of packing material used for packing its manufactured goods under the Haryana General Sales Tax law.

Analysis: The packing material was purchased after payment of tax and was used for packing the manufactured crockery so that it could be made marketable and withstand transit. The statutory scheme under rule 24(j) allowed deduction of the purchase value of goods subjected to tax at the first stage and used in manufacture. The retrospective explanation inserted in section 15A expressly brought containers and packing materials used for packing manufactured goods within the expression goods used in manufacture. In view of that amendment, the restrictive view taken by the revisional and appellate authorities could not be sustained.

Conclusion: The manufacturer was entitled to the benefit of adjustment or rebate on the tax paid for packing material, and the denial of such benefit was unjustified.

Final Conclusion: The impugned orders and the recovery proceedings based on them were quashed, and the assessing authority was directed to recompute the admissible adjustment in accordance with law.

Ratio Decidendi: Where a taxing statute is retrospectively amended to include packing materials within goods used in manufacture, a dealer is entitled to the corresponding tax adjustment or rebate on eligible first-stage purchases.

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