Morven Woodcroft was walking with her husband and five-year-old grandson when they came across the gruesome scene.
The family thought they had stumbled across a severe instance of fly-tipping - before noticing that there were legs poking out of the bags, which were piled on the woodland trail at Achnamara.
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The grandmother says the smell from the carcasses almost made her sick and left the group traumatised.
She says she counted around 40 dead sheep in the bags and described the stench as 'overpowering'.
The 50-year-old reported the findings to the Scottish Environment Protection Agency (SEPA) and Argyll and Bute Council.
Authorities say a probe was immediately launched after the gristly find and that a local farmer has since been given guidance on correct practices around the disposal of waste.
A spokesperson for SEPA said: “SEPA received a report from a member of the public of sheep carcasses in a wooded area of Achnamara.
“This report was referred to animal health officers at Argyll and Bute Council in relation to fallen animals and carcass disposal, who advised that burial is permitted at this location.
“Other waste materials were identified alongside the sheep and guidance was provided to the land owner regarding the proper disposal of this.
“We would like to thank the member of the public who reported this to us on April 25."
A spokesperson for Argyll and Bute Council said their animal health inspector visited the location and spoken with the farmer. They added that 'appropriate action' has been taken and the matter is now considered closed.
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