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TMI Blog2007 (4) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of P.P. caps, seal level and filling, etc. Total amount realised in this regard was Rs. 91,19,705.20, which was called as bottling charges. Dealer had admitted the liability of tax on the said bottling charges in the return but during the course of assessment proceedings, denied the liability on such amount. Assessing authority included the such bottling charges in the turnover and levied the tax thereon. First appeal filed by the dealer was allowed. First appellate authority relied upon the decision in the cases of Hyderabad Deccan Cigarette Factory v. State of Andhra Pradesh reported in [1966] 17 STC 624 (SC), Lal Chandra Shyam Sunder v. Commissioner of Sales Tax, Madhya Pradesh reported in [1988] 68 STC 225, Commissioner of Sales Tax v. Bhopal Sugar Industries Ltd. [1981] 48 STC 45, Commissioner of Sales Tax v. Swadeshi Cotton and Flour Mills Ltd. reported in [1980] 46 STC 138, Binod Mills Co. Ltd., Ujjain v. Commissioner of Sales Tax reported in [1972] 29 STC 413, Commissioner of Sales Tax v. Gopal Rai Sai Ram, Ghaziabad reported in [1983] UPTC 91, Shamsuddin Akbar Khan and Co. v. State of Orissa reported in [1970] 26 STC 280, and held that the bottling charges were not cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and immediately disposes of the same without profit to the customer, the sale in respect of such goods shall be included in the turnover of the latter dealer alone." In the present case admittedly the liquor was sold in packed form. Liquor could not be sold without packing. The contract for sale of the liquor was for sale in bottle. Therefore, there was an implied contract for the sale of packing material. Merely because the bottling charges were charged separately it cannot be said that there was no contract for the sale of packing material. Section 2(i) defines "turnover" which contemplates the inclusion of "any sums charged for anything done by the dealer in respect of the goods sold, at the time of or before the delivery thereof". The bottling was done before the delivery of the goods thus, the bottling charges are liable to be included in the turnover being "any sums charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof". In the case of Commissioner of Sales Tax v. Rai Bharat Das & Bros. reported in [1988] 71 STC 277 (SC); AIR 1989 SC 315, dealer was carrying on the business of silica sand. Silica sand could be sold in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition to claim a deduction in respect of these charges by virtue of rule 6(cc) of the Tamil Nadu General Sales Tax Rules. In our view, this position has been correctly set out, applying the decision in the case of Rai Bharat Das and Bros. [1988] 71 STC 277 (SC); AIR 1989 SC 315 in State of Tamil Nadu v. Vanniaperumal and Co. [1990] 76 STC 203 (Mad)[FB], Dalmia Cement (Bharat) Ltd. v. State of Tamil Nadu [1991] 81 STC 327 (Mad) and Dalmia Cement (Bharat) Ltd. v. State of Tamil Nadu [1991] 83 STC 442 (Mad). We are, therefore, of the opinion that the packing charges and excise duty thereon cannot also be deducted in computing the taxable turnover for the purposes of the Tamil Nadu Acts. We, therefore, hold- (i) that the freight charges should be included in arriving at the taxable turnover for the purposes of C.S.T. and T.N.S.T.; and (ii) that packing charges and excise duty thereon should also be included in arriving at the taxable turnover for purposes of both C.S.T. and T.N.S.T." In the case of Dyer Meakin Breweries Ltd. v. State of Kerala reported in [1970] 26 STC 248, appellant-company was manufacturing the liquor at various places in U.P. and Haryana and transported the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any sums charges for anything done by the dealer in respect of the goods at the time of or before the delivery thereof" and thus, it is the part of turnover. Bottling of liquor is an integral part of the process of manufacturing. Liquor becomes marketable only after bottling. Liquor cannot be sold without packing. Thus, the packing charges are liable to be included in the turnover and liable to tax. I do not agree that bottling charge is a delivery charge. For the reasons stated above, order of the Tribunal is liable to be set aside so far as it relates to deleting the tax on the bottling charges is concerned. In the result, revision is allowed. Order of the Tribunal is set aside in part so far as it relates to deleting the tax on bottling charges is concerned. Appeal filed by the Commissioner of Trade Tax before the Tribunal is allowed and it is held that the bottling charges are part of the turnover and are liable to tax accordingly." The judgment of the court was delivered by S. B. SINHA J.-Leave granted. Appellant is a co-operative society registered under the U. P. Co-operative Societies Act. It carries on business of manufacture and sale of Indian-made foreign liquor (f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 3AB inserted in the U.P. Trade Tax Act, 1948 (for short, "the Act") on August 1, 1990, being clarificatory/declaratory has retrospective effect. The learned counsel has placed strong reliance on a decision of the Allahabad High Court in Chhata Sugar Co. Ltd. v. Commissioner, Trade Tax, U.P., Lucknow [2001] 124 STC 33, in support of the said contention. Mr. Dinesh Dwivedi, the learned Senior Counsel appearing on behalf of the respondent, on the other hand, would submit that as sale of bottles finds place in entry 20 in the Schedule appended to the Act, despite the fact that no sales tax is payable on country liquor, the assessee would be liable therefor having regard to the definition of "turnover" as contained in section 2(i) of the Act. A notification was issued on or about September 7, 1981, by the State of Uttar Pradesh in exercise of its power conferred upon it under the proviso appended to clause (e) of sub-section (1) of section 3-A of the U.P. Sales Tax Act, 1948, in terms whereof glass bottles and phials, other than hand made glass phials exigible to tax at four per cent have been included in entry 20 thereof. Appellant herein is a dealer of country liquor. It al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o., [1958] 9 STC 353 the honourable Supreme Court has held that to constitute sale, the existence of two parties, transfer of goods and passing of consideration from purchaser to seller for this purpose is necessary. These all facts are present in the case under consideration and in view of the same the amount shown as the bottling charges, is the sale of label, cap and cork used on the bottle. Under the case under consideration, the assessee has shown the price of the bottles as bottling charges and has not admitted the sale of the bottles, while amount recovered in the form of bottling charges is the clear cut sale of bottles . . ." The appellate authority, on the other hand, held: "It is clear on the basis of the aforesaid principles that the bottling charges have not been taken due to the sale because in this case, the cost of the packing material is very less than the price of the main material and the appellant had no other business alternative that he could sell and transport the liquor without packing materials and there was no relaxation in price for the purchaser of the liquor in case of absence of the packing materials. Therefore, the sale of packing material could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not be sold without packing, a contract of sale of bottles would be presumed, holding: "The aforesaid two decisions of the apex court clearly hold that in case where the goods are sold in packed form, there is implied contract for sale of material even if the price is separately charged for. It has been further held that the packing charges charged for the packing material and for labour charges, etc., fall within the purview of 'any sums charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof' and thus, it is the part of turnover. Bottling of liquor is an integral part of the process of manufacturing. Liquor becomes marketable only after bottling. Liquor cannot be sold without packing. Thus, the packing charges are liable to be included in the turnover and liable to tax. I do not agree that bottling charge is a delivery charge." There is no finding by the High Court that there was an implied condition of sale in regard to sale of bottles. The High Court while arriving at the said finding did not deal with the question as to whether the charges levied by appellant from its customers, which admittedly stand approved by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho appeared for the department, however, submitted that the other facts stated by the Tribunal lead to the inference that there was an implied sale of gunny bags. It is this argument which we have to examine. The property in the gunny bags no doubt passed to the purchasers of sugar and the gunny bags did not become useless in the hands of the purchasers. But from this alone it is not possible to hold that there was an implied sale of gunny bags. When goods packed in containers are sold, the property in the containers no doubt is transferred to the purchaser. But before holding that there was an implied sale of containers, one has to exclude the possibility that the containers were used by the dealer as a convenient and cheap mode of transporting the goods to the purchaser without charging any price for them. It has also to be kept in mind that the burden of proof that there was an implied sale of packing material or container is on the department and the assessee is not required to prove the negative. Viewed on these principles, in our opinion, the facts do not warrant the conclusion of implied sale of gunny bags. It is not practicable for a manufacturer of sugar like the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that price was separately charged for the packing material. The contention advanced on behalf of the assessee before the Board that the price charged by the assessee for the cloth was either on the basis of meterage or on the basis of weightage was impliedly upheld by the learned Member as he relied upon the decision reported in Binod Mills Co. Ltd. v. Commissioner of Sales Tax [1971] MPLJ 1009, where a similar finding had been given. It must, therefore, be held that the Board had found that the burden to prove that there was sale of the packing material was not discharged by the department. In our opinion, therefore, the Board rightly relied upon the decision reported in Binod Mills Co. Ltd. v. Commissioner of Sales Tax [1971] MPLJ 1009 See [1972] 29 STC 413(MP)., for coming to the conclusion that there was no implied sale by the assessee of the packing materials." This court in Hyderabad Deccan Cigarette Factory v. State of Andhra Pradesh [1966] 17 STC 624, observed: "This passage indicates that the Tribunal rejected the contention on the ground that the value of the packing materials must have been taken into consideration in fixing the price of the cigarettes. But that reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is the subject-matter of the contract of sale may have to be taken into consideration for the purpose of arriving at the total turnover, but even for that purpose there has to be an element of ad idem of mind between the purchaser and seller. If by reason of express contract or implied contract, the containers are also sold, indisputably the same would be exigible to tax, as has been held in Commissioner of Taxes, Assam v. Prabhat Marketing Co. Ltd., Gauhati AIR 1967 SC 602, but it is difficult to accept the contention of Mr. Dwivedi that even in absence of such a contract, sales tax would be leviable. Reliance has been placed by Mr. Dwivedi on Jamana Four & Oil Mills (P.) Ltd. v. State of Bihar [1987] 3 SCC 404, wherein this court was not dealing with a situation of the present nature. It was held: "3. The dealer filed a revision before the Tribunal and contended that the demand of sales tax payable at different rates on the calculated turnover of gunny bags was not at all warranted as no price had been charged for the containers. The Tribunal found: (1) The dealer transferred the property in the gunny bags, the packing material, to the purchasers for price. (2) The pric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fferent commodities, it may be permissible to levy tax at different rates, but not when the definition of "turnover" includes a wide range of subjects including the package. Only for the purpose, the concept of implied contract of sale would assume significance. We, however, are not impressed with the arguments of Mr. Radhakrishnan that section 3AB of the Act introduced in the statute by reason of the U.P. Trade Tax (Amendment) Act, 1991 is clarificatory in nature. The said amendment came into force with effect from April 25, 1990. The assessment year, as noticed hereinbefore, is April 1, 1989 to March 31, 1990. The Act having been brought into force from a particular date, no retrospective operation thereof can be contemplated prior thereto. The said provision furthermore contains a substantive provision which is itself a pointer to the fact that for the earlier period packing materials would not be exempted merely because main commodity is exempted from tax, but albeit subject to the condition that there was an agreement to sell in respect thereof. The amendment sought to deal with a matter which created some problem in implementation of the Act. We, therefore, are of the opini ..... X X X X Extracts X X X X X X X X Extracts X X X X
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