I've never heard this phrase. Is it in the context of one person giving a serious beating to another person? If so, there are many words that could go after 'the', none of them as mild as bag eg beat the hell out of someone, beat the cr*p out of someone, beat the sh*t out someone etc.

I agree with Su.ki. Somebody probably used "bag" as a polite way to say an aggressive statement. Bag is usually replaced with expletives, like hell, crap, sh*t, f*ck, etc