Separate taxation of gunny bags sold with rice upheld where the bags were independently sold, valued, and paid for.

Gunny bags sold with levy rice to the Food Corporation of India were held taxable on their own footing because they were treated as new unused bags, separately sold and separately paid for under the contract. The court applied the principle that packing material is not assessed by reference to the principal goods when it is an independent commodity with separate contractual and commercial treatment. The rate applicable therefore depended on the bags' own character as a jute product, not on the rate applicable to rice, and tax was held payable at 8% against the assessee.

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Issues: Whether gunny bags sold along with rice to the Food Corporation of India were exigible to tax at 4% or 8%.

Analysis: The assessee was a registered dealer under the Orissa Sales Tax Act, 1947 and had sold levy rice to the Food Corporation of India with gunny bags. The decisive fact was that the gunny bags were not merely used as incidental packing; they were treated as new unused bags, separately sold and separately paid for by the buyer. Applying the principle that packing material is taxable on its own footing when it is an independent commodity, separately dealt with under the contract and separately valued, the earlier view allowing the assessee could not stand. The rate applicable to the gunny bags depended on their own character as jute product and not on the rate applicable to rice.

Conclusion: The question was answered against the assessee and in favour of the Revenue. The gunny bags were exigible to tax at 8%.

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