TMI Blog1971 (8) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... ries Limited, Hamira. The assessee is engaged in distilling liquor. For purposes of sale, the liquor is either sold in bottles or in barrels. In the present case, we are concerned with the sale of liquor in bottles. The Assessing Authority brought to tax the price of bottles. Its plea was that when liquor was sold in bottles, there was a sale of the bottles as well and that sale was liable to sales tax under the Act. This stand of the department was controverted by the assessee but without success either before the Assessing Authority or the Appellate Authority or the Sales Tax Tribunal. The department took the view that when liquor is sold in bottle there is a sale of the bottle as well and the sale price of the bottle is liable to sales tax. The plea of the assessee that there was no sale of the bottle was negatived. The following questions of law now fall for determination: "(1) Whether the Additional Deputy Excise and Taxation Commissioner exercising the powers of the Commissioner under section 21(1) of the Punjab General Sales Tax Act, 1948, could not assess escaped turnover after the expiry of the period of four years from the expiration of the assessment year as provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of any turnover which had escaped assessment or which had been under-assessed in consequence of any definite information which comes into his possession after the original order of assessment was made. The revisional authority has to confine itself to the record which is called for by it. It cannot take into consideration any fresh material in order to come to a different conclusion than the one to which the assessing authority came on the material before it. The assessing authority did not take into account the price of the bottles while dealing with the gross turnover of the dealer. This is clear from the order of the Assessing Authority dated 26th February, 1960. It was only while acting under section 21(1) that the Deputy Excise and Taxation Commissioner ruled that the respondents were liable to pay sales tax on the sales of bottles as containers. This happened after the period prescribed in section 11-A. It is now conceded by Mr. Bhagirath Dass that this argument is only available to him with regard to the assessments for the years 1956-57 and 1957-58. So far as the year 1958-59 is concerned, the matter was taken notice of by the Assessing Authority, and for that year th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale was only the cigarettes and that the packing materials did not form part of the bargain at all, but were used by the seller as a convenient and cheap vehicle of transport. He may also have to consider the question whether, when a trader in cigarettes sold cigarettes priced at a particular figure for a specified number and handed them over to a customer in a cheap cardboard container of insignificant value, he intended to sell the cardboard container and the customer intended to buy the same? It is not possible to state as a proposition of law that whenever particular goods were sold in a container the parties did not intend to sell and buy the container also. Many cases may be visualised where the container is comparatively of high value and sometimes even higher than that contained in it. Scent or whisky may be sold in costly containers. Even cigarettes may be sold in silver or gold caskets. It may be that in such cases the agreement to pay an extra price for the container may be more readily implied." In Guntur Tobaccos' case[1965] 16 S.T.C. 240 (S.C.). again it was observed at page 258: "Whether a contract for service or for execution of work, involves a taxable sale of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of manufacture which shows that the department always thought that bottling was a process of manufacture. Under the circumstances it has been urged that it cannot be said that the petitionercompany is selling bottles as separate articles on which it is liable to pay sales tax; further that the essential containers of goods without which the contents cannot be sold are an integral and inseparable part of the finished product sold and no sales tax is leviable thereon. In rule 110 of the Punjab Distillery Rules, 1932, the following passage appears: 'Provided that not more than 2250 litres shall be supplied at one issue to a licensed vendor who desires an issue of bottled spirit and in case of bulk spirit who desires his issues to be made in casks of capacity of at least 225 litres each supplied by himself or by the distillery on his behalf and tendered at the time to be filled.' This shows that the spirit can be supplied both in casks and in bottles; the casks are to be of capacity of at least 225 litres each supplied by the licensed vendor or by the distillery on his behalf. I have seen a copy of the distillery licence in form D-2 granted to M/s. Jagatjit Allied Industrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ictly or rather severely limited in order to obviate unhealthy competition and thus safeguard the interests of the owners of the distilleries. A new licence is issued only if the existing distilleries cannot meet the requirements and demand of country spirit and liquor made upon them by the liquor licensees: this demand is determined at the time of the annual auction of liquor vends for which substantial payments are made by those licensees for the benefit of the State Exchequer which in the welfare State are used for the benefit of the people. The price at which liquor is to be supplied by the distilleries to the liquor licensees is determined and reviewed every year by joint deliberations between the representatives of the distilleries and the State Department. A representative of the Government of India who is a Senior Cost Accounts Officer in the Ministry of Finance is also invited to join the deliberations. During the course of these meetings the representatives of the distilleries place their points of view before the Committee and the cost factor of various items involved is taken into consideration. One of the important consideration will be that while the owners of the dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry contract as such for the sale of liquor, then there will be no question of sale of bottle as such. It is not that the bottle as such has been sold. It is the liquor of which bottle is the container that has been sold. Primarily, the sale is of liquor and if the sale of liquor is not sale within the meaning of that expression in the Sale of Goods Act, there would be no sale of the bottle. Questions Nos. (3) and (4).-Questions Nos. (3) and (4) are inter-connected. They depend on the answer to the question whether there was a sale of liquor and the sale of bottles within the meaning of that expression in the Sale of Goods Act. It was held in State of Madras v. Gannon Dunkerley and Co. (Madras) Ltd.[1958] 9 S.T.C. 353 (S.C.); [1959] S.C.R. 379. and New India Sugar Mills Ltd. v. Commissioner of Sales Tax, Bihar[1963] 14 S.T.C. 316 (S.C.)., that "the Legislature was competent to legislate for levy of tax only on transactions which were 'sales' within the meaning of the Indian Sale of Goods Act, 1930." The observations in New India Sugar Mills' case(2) are very pertinent and may be reproduced for facility of reference: "In popular parlance 'sale' means transfer of property from one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention to the Punjab Liquor Permit and Pass Rules, 1932, and form L-32 which leaves the total quantity of full strength and variety, sizes, grades and strength to the discretion of the permit-holder, but that does not bring about a contract between the permit-holder and the distillery. The distillery is bound to supply the liquor mentioned in the permit. In our opinion, this case is more or less analogous to the case that was before their Lordships of the Supreme Court in Chittar Mal Narain Das's case(1). For the reasons recorded above, we answer the third and the fourth questions in the negative, namely that there is no sale of liquor and consequently of the packing material, that is, the bottle. Question No. (5).-This question was not pressed by the learned counsel for the assessee. We answer this question in the affirmative, that is, in favour of the department and against the assessee. The net result, therefore, is that the first question is answered against the department with regard to the assessments for the years 1956-57 and 1957-58 and in its favour for the assessment year 1958-59. The second question is answered in favour of the department but its answer would be of n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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