Composite sale tax treatment bars separate entry tax on packing material already included in VAT valuation.

Separate entry tax on packing material was held unsustainable where tea was sold as a packaged product and VAT had already been collected on the composite sale price including the packing material. The court treated the packing material as part of the taxed sale under the VAT scheme, so an additional levy on the same material was not justified on these facts. The impugned orders were quashed and the challenge to the entry tax demand on the packing material succeeded.

---

---

Issues: Whether packing materials sold along with tea were liable to entry tax when VAT had already been collected on the composite sale price including the packing material.

Analysis: Section 10(2) of the VAT scheme treated goods sold in packing materials as deemed sold along with the goods, and tax was levied on the sale of the container or packing material at the rate applicable to the goods themselves. On the facts, VAT had been collected on the sale price of the packaged product, which necessarily included the value of the packing material. Since the packing material was itself a specified good, separate levy of entry tax on that packing material was not justified in the circumstances.

Conclusion: The levy of entry tax on the packing material was unsustainable and the petitioners succeeded.

Final Conclusion: The impugned orders were quashed and the challenge to the entry tax demand on the packing material was set aside.

Ratio Decidendi: Where a packaged product is sold on which VAT is collected on the composite sale price including the packing material, separate entry tax on the packing material is not attracted if the material is already treated as part of the taxed sale.

---