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2013 (4) TMI 149 - ANDHRA PRADESH HIGH COURTValuation - inclusion of cost of bottles - sale price of the soft drinks - Taxability of Rental charges collected by the manufacturer from the distributors/ wholesalers for bottles and crates - Held that:- entry 21 of Schedule-VI to the AP General Sales Tax Act,1957 imposes Sales Tax only on the soft drinks which are bottled and sold under a brand name and merely because the words "bottled soft drinks under a brand name" are used in the entry, it does not follow that the bottle has to be taken as sold along with the soft drink. Merely because the soft drinks and bottles cannot be separated till they reach the end-customer, in the absence of sale of the bottle, it cannot be said that there is no transfer of the right to use the bottle. In our view there is a transfer of the right to use, such use being "for storing the contents", thereby attracting S.5-E of the Act. The decision of State of Orissa vs Asiatic Gases Limited [2007 (5) TMI 322 - SUPREME COURT OF INDIA] applies to this case and it has to be held that there is only a transfer of the right to use the bottle or crate and there is no sale of the bottle or crate as the bottle is to be returned by the end-customer to the retailer and by the retailer to the wholesaler and by the wholesaler to the manufacturer. The Tribunal erred in distinguishing the said case simply on the ground that entry 118 of Schedule-I to the Act mentions "industrial gases other than petroleum gases and gases specified elsewhere in the schedules" i.e., only "gases" were mentioned and not "bottled gases". Admittedly, the sale invoices indicate the price of the soft drink separately and the rentals on bottles and crates separately. The Tribunal appears to have not noticed that even prior to 01-08-1996, the same entry was there from 01-09-1976 as entry 108 in Schedule-I to the Act taxable at the point of first sale. It was omitted w.e.f, 1-8-1996 from Schedule-I and introduced as entry 21 in Schedule-VI making soft drinks taxable at every point, such tax to be determined after deducting the tax levied on the turn over on such goods at the immediately preceding point of sale by registered dealer from the tax leviable on the turn over of the same goods at the point of sale by the selling dealer. Only "mineral water sold under brand name" was added for the first time at the end of the entry w.e.f., 1-8-1996. As decided in Government of Madras vs Simpson & Co., Limited [1967 (5) TMI 58 - SUPREME COURT OF INDIA] that in the absence of any other material, recitals in invoices will furnish good proof of the intention of the parties relating to the terms of the agreement and that by themselves, they will be inclusive piece of evidence. The Revenue, in the present case, has not adduced any evidence to rebut the contents of the invoices or its correctness therefore, the invoices filed by the manufacturers, which show clearly the separate charge on the sale of soft drinks and rental charges on crate and bottles indicate a contract between the parties to treat both as separate categories ( to be charged at the rate of 12 %(u/s. 5 of the Act) and 5 % (u/s. 5-E of the Act) respectively) have to be accepted and tax levied accordingly. The rotation of the bottles and crates takes place about six times during their lifetime and the manufacturers are entitled to calibrate their charges keeping this in mind. Thus this cannot be said to be a colourable device adopted by the manufacturers to evade tax. Sec 6-C would apply only if the packing material is sold with the goods and as that is not the case here as bottles are returned to the retailer and ultimately to the manufacturer, thus S.6-C has no application to the facts of these cases. As already held that in the business of sale of soft drinks, there is a facility and practice of recycling the bottles and crates in which beverages are sold and that the charges for such limited user of bottles and crates is recovered separately. Since the bottles and crates constitute packing material,such turnover is liable to be taxed @ 4 % u/s. 4(8) of the Andhra Pradesh VATAct, 2005 r/w Item No.90 of Schedule-IV of the said Act. The Revenue thereforeis not entitled to treat the entire turnover as taxable @ 12.5 % by placing reliance on S.6 of the Andhra Pradesh VAT Act, 2005 which was not even mentioned by the assessing authority in the show cause notice issued by him to the petitioner.
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