Advertising materials and packing charges may qualify for exemption, but sales-promotion booklets need not as reading books.

Promotional materials integral to advertising may qualify for exemption where the governing notification covers them, as Nirodh containers bearing family planning symbols and publicity matter were treated as exempt. Printed booklets and folders used mainly for sales promotion did not meet the test of "reading books," which applies to books meant for public education, knowledge, enlightenment or recreation, so exemption was denied. Packing charges were treated as excludible from taxable turnover where the relevant exemption remained operative for the assessment period, making them fall within the exempted category.

---

---

Issues: (i) whether Nirodh containers formed part of the advertisement and publicity materials eligible for exemption; (ii) whether the printed booklets and folders were "reading books" entitled to exemption; and (iii) whether packing charges were includible in taxable turnover or were exempt as delivery-related charges.

Issue (i): whether Nirodh containers formed part of the advertisement and publicity materials eligible for exemption

Analysis: The exemption was claimed under the relevant Government Order and section 8(2)(b) of the CST Act. The container was examined and found to bear family planning symbols and advertising matter. On that basis, it was treated as an integral part of the publicity material and not as a separable commodity outside the scope of the exemption.

Conclusion: In favour of the assessee. The turnover relating to the Nirodh containers was directed to be deleted from the taxable turnover.

Issue (ii): whether the printed booklets and folders were "reading books" entitled to exemption

Analysis: The expression "reading books" was applied in the sense of books meant for public education, knowledge, enlightenment or recreation. The booklets and folders were issued free of cost, were not meant for public sale, and were primarily promotional literature intended to increase sales. They did not satisfy the test of reading books and were therefore not covered by the exemption.

Conclusion: Against the assessee. The disallowance of exemption on the booklets and folders was upheld.

Issue (iii): whether packing charges were includible in taxable turnover or were exempt as delivery-related charges

Analysis: The dispute turned on the interaction between the definition of sale price under section 2(h) of the CST Act and the exemption granted by the relevant Government Order under section 8(5), in the context of section 8A. The applicable exemption was held to have been in force during the assessment year, and the packing charges were treated as falling within the exempted category for that period.

Conclusion: In favour of the assessee. The addition of packing charges to the taxable turnover was set aside.

Final Conclusion: The appeal succeeded only in part, with relief granted on the Nirodh containers and packing charges, while the denial of exemption for the printed booklets and folders was sustained.

Ratio Decidendi: Promotional materials that are integral to advertising may qualify for exemption when the governing notification so covers them, but literature issued primarily for sales promotion and not intended as books for public reading does not qualify as "reading books"; packing charges are excludible where the applicable exemption remains operative for the assessment period.

---