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TMI Blog1975 (9) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... d Rs. 10,06,823.05 at 12 per cent for asst. yr. 1972-73. 3. The appellant is primarily a distributor of liquor for United Broweries Ltd. whose registered office is lat Bangalore. We will first deal with the transaction in respect of product of United Breweries. It has been customary for the bills issued by the principals (United Breweries) to the appellant to show the price, tax thereon and the deposit, separately. The appellant also similarly charges his customers. The rate of deposit at which the appellant is charged by his principals and the rate at which it charges its customers in the same. This has been followed for years. From time to time there has been an increase in the rates of deposits due to extreme shortage of empty bottles. Circulars are periodically issued and such circulars dt. 8th May, 1970, 3rd Jan., 1971 and 11th Jan., 1971 are filed. One of the circular letters dt. 18th Aug., 1971 issued to excise licensees with a view to introduce its products issued by United Breweries sets down the conditions which has been applied to all sales by them. Relevant extract reads as under :-- 1. Price :-- . . United Breweries Export 22.15 per . f.o.r. Bangalore…& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... number of bottles returned. Specimen copies of the invoices issue by the United Breweries Ltd. on the appellant and the appellant to his buyer were filed. Specimens of credit notes for the bottles returned to the manufacture as well as the credit notes for the empty bottles of the appellant from his customers have been filed on record. A specimen bill issued by the United Breweries Limited on the appellant and extract from the bill issued by the appellant on one of his customers are reproduced as (a) and (b) below :-- (a) United Breweries Ltd. . The Brewery, PO. Box. Nos. 5104 Bangalore-1 Telegraphic Address : "Brewery" Code : AAC 5th Edition Telephone No. 53636 Telex 259. . Registered office : 24, Grant Road, Bangalore-I Mc. Dowell and Co. Ltd. 1-6, Second Line Bench, Madras-1. Your Indent No. Madras/3-72. Invoice No. OS-8 (Mc. 3) Dated : 3/4/1972 . Our sales-tax Registration Nos. STAT Bn/CT.VII/AI-12 dated 1/10/57 Central BN/CT/VII-404 dt. 2/7/57 Date…………. . Product & Packing Qty. Price Amount Kingfisher Lager Qts. in bags ex-duty for. Bangalore 12960 1-60 20,736.00 Central Sales Tax at 3% . . 622.09 Deposit on 12960 Qts. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deposit account representing the forfeited deposits for non return of bottles. However the issue has been sought to be revived after a decade without any fresh material while the modus operandi adopted by the appellant, it is claimed, has all along been the same. It is the contention of the learned counsels Thiru K Srinivasan and R. Gangadharan, who appeared for the appellant that actually the system has been found to be all the more necessary in view of the greater scarcity of the empty bottles. Besides the matter had come up before the Alahabad High Court in the case of Dyer Meakin Breweries vs. Commr. of ST reported in 29 STC 69 wherein the Uttar Pradesh authorities tried to tax the receipts on account of bottle deposits to the extent they remained unrefunded by claiming that this value represented the turn-over on sales of empties. The High Court however, found that such amount could not be treated as sales after going through the English case law relating to bailment. He claimed that the decision of the Allahabad High Court and other English decisions relied upon by the said High Court are all in appellant's favour. According to the appellant, the facts found by the Allahaba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition to Rs. 11,192.25 for asst. yr. 1971-72 since this amount alone represented the surplus taken and credited in the accounts. For asst. yr. 1972-73 the entire deposits collected were added. Hence there was no uniform approach on the part of assessing authority. In appeal for asst. yr. 1971-72, it was the AAC who actually enhanced the assessment to bring the entire deposits to tax. Deposits against crates to the extent of Rs. 1,58,655 were also brought to tax. This resulted in the substitution of figure to Rs. 5,44,084.78 in the place of Rs. 11,192. The addition for asst. yr. 1972-73 is Rs. 10,086,823.05. The appellant's alternative contention that even if there is a case for including bottle deposits as sale of empties of rate of tax could only be at multipoint rate on the logic of the authorities themselves, and not the rate applicable to the contents of the bottle also did not find favour with the authorities though no reasoning for the same is available in their orders. Hence this has been as an alternative ground before us also. 4. The learned State Representative tried to pursuade us to take a different view than what has been adopted by this Tribunal in T.A. No. 1158/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s though the liquor is sold without the container. No body takes his own container to a liquor shop. Liquor is not sold loose. Again bottles do not contain identifying marks of the "dealers" but only of the Breweries and there may be more than one dealer for the same Breweries in the same place, so much so the bottle got from one dealer could well be returned to another. Actually United Breweries themselves had more than one dealer in the city itself. This certainly according to him, makes the concept of bailment inapplicable, since there is no guarantee that the same container will come back. He asked us to see the substance of the transaction, which according to him was entirely in Revenue's favour. He contended that these factors have not been considered in the decision relied upon by the learned Counsel. He further claimed that the decision of the Allahabad High Court in Dyer Meakin's case presumed statutory, bailment with reference to certain provisions under the U.P. Excise Rules while no such provision has been pointed out in appellant's case. He also pointed out that the appellant had treated and argued his case as though distribution arrangement for United Breweries Limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forfeited for non-return of containers, the appellant stands to gain nothing as the amounts forfeited by him is at the same rate per bottle as the amount which is has paid, notwithstanding the surplus his bottle deposit account would show. It is only because the amount paid by the appellant is debited in the trading account on payment, while the forfeited amount appears a credit in the Trading and Profit and Loss Account. Hence the impression of the learned State Representative that the appellant makes abnormal profit in the transaction is not correct. There is no material, as pointed out earlier, brought on record to cause even suspicion about the arrangement. We have therefore to take the transactions at their face value, as far as the transactions with United Breweries Ltd. are concerned. The appellant had charged bottle deposit at the same rate at which it was liable. The periodical circular issued by the principles clearly shows that the arrangement in respect of bottle deposits was not only between the appellant and his customer but also between the Breweries and the appellant. By collecting the deposits, the property in the bottles and crates were retained by the breweries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. But such cases may be rare, since the customer is ordinarily likely to go to the same supplier for fresh supplies. At any rate, we are unable to agree that there is sale of empties merely on the possibility of this diversion. In substance we must agree with the learned counsel that there has been only bailment. Such is the view of the English Courts and also by the Allahabad High Court on similar facts. In view of the same we have no doubt that it not possible to take a different view now. As pointed out earlier even if there is no bailment our conclusion cannot be different. However our remarks are confined to the deposits for crates and bottles supplied by the United Breweries as we have materials for our conclusion. As for the case law cited by the learned State Representative, we are unable to find any comparable basis on facts. The cases dealing with Sales tax are under separate category of their own. Sales tax no doubt, is part of consideration and it cannot be split up between cost, profit and tax. But sales tax is not a deposit. Supreme Court in Sinclair Murray and Co. P. Ltd vs. CIT held that the surplus in sales tax account will be taxable as income for income tax purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refunds were actually obtained, the periodical despatches of bottles collected etc. clearly suggest that it is not a disguise as it was in A.S. Kassam's case. The authorities haven not brought any materials for exposing such disguise, if any exited. We are also not impressed by the learned State Representative's argument that the fact that the moneys in the bottle deposits were utilised in business would make the receipts into sale proceeds by taking into consideration certain observations in some decisions. Unless the amount is shown to be sale proceeds, the question of taxing them as sale would not arise, even if the amount is meanwhile utilised in business. A deposit is a deposit unless it is shown to be some other. To treat a deposit as a sale we should have much more materials than what has been sought to be suggested. Hence, in respect of amounts received as deposits as against bottles and creates in respect of supplies from United Breweries Limited. Bangalore, the appellant has to succeed. 6. As regards supplies made by Tvl. Ruttanjee and Company Calcutta it is common ground that the said company did not collect bottle deposit from its purchasers till the first week of Augu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, the breweries themselves were charging deposits. No such charge was made by Ruttanjee and Co. till 3rd Aug., 1972 and hence their bill prima facie shows that the entire consideration was for liquor along with the bottle. In absence of collection of deposit in the Bill of the Breweries no stipulation to refund any amount or to accept or return the bottles can be inferred. The appellant has also not pointed out any material for any such collateral agreement or arrangement. Even as between the appellant and his customers, there is no evidence of any actual arrangement for return of bottles. Bills also are relied upon. It appears that the amount was split up between price and alleged deposit merely out of habit as was done for other products. We are therefore not in agreement with the argument of the learned counsel that we should exclude the money collected allegedly through "bottle deposits" even before the arrangement for the return of bottles entered into between the appellant on one hand and Tvl. Ruttanjee and Co. on the other. Just because something was called as deposit. It has not become deposit. Surrounding circumstances unlike in the arrangement discussed in the preceding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y after 3rd Aug., 1972 in respect of distribution of liquor manufactured by Ruttanjee and Co. Ltd. Calcutta, we are not in a position to say that "deposit" in the sale bill before 3rd Aug., 1972 relates to sale of empties only. We consider the amount charged in the bill including the so called deposit before 3rd Aug., 1972 in respect of sales of products of Ruttanjee and Co. represents the price of liquor. It is not the appellant's case also, that the container is separately sold. There is no divisible sale involved. The split up between price and deposit without "bailment" or any other arrangement to indicate real "deposit" during the period, in our opinion can only be ignored. 8. It is established that where the value of container is insignificant, there is no implication of an independent sale of container even in general law as held by the Supreme Court in M.A. Razack and Co. vs. State of Madras in 19 STC 135 and other cases. 9. In the result both the appeals are partly allowed. The appellant will be entitled to a relief on a turnover of Rs. 4,80,484.78 at 12 per cent for 1971-72 and Rs. 8,22,085.65 at 12 per cent for 1972-73. The appellant will also be entitled to relief in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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