TMI Blog1986 (2) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... reas cement is sold in gunnies. Section 5 of the Act which is the charging section provides that every dealer whose total turnover for an year is not less than Rs. 25,000 shall pay a tax for each year at the rate of five paise on every rupee of his turnover. Under subsection (2) the tax is leviable in the case of goods mentioned in the First Schedule at the rates and only at the point of sale specified therein and in the case of the goods mentioned in the Sixth Schedule at the rates and at the points specified therein. Item 19 of the First Schedule relates to "containers other than gunnies and bottles" and these goods are subject to tax at the rate of five paise in the rupee at the point of first sale in the State. The goods "glass and glassware including" enumerated in item 123 of the First Schedule are subjected to levy of sales tax at the point of first sale in the State at the rate of nine paise in the rupee. Tax at the rate of ten paise in the rupee at the point of first sale in the State is leviable on cement under item 18 of the First Schedule. "Gunnies" which were formerly enumerated under item 67 of the First Schedule are now included in item 157 of the First Schedule su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1970, the excise duty on beer at the specified rate is chargeable on the total quantity actually brewed. The duty becomes due immediately after the account of brewing has been taken by the Inspector or at the end of each month whichever is later and the time for its payment shall not be later than the fifteenth day succeeding the month in which the duty is chargeable. It is further provided in that rule that no stock of beer shall be removed from the brewery except on pre-payment of the excise duty and if the duty payable by the licensee remains unpaid beyond the specified period, the Commissioner is competent to forfeit the sum guaranteed by the bank on behalf of the licensee who is the producer himself. The Andhra Pradesh Foreign Liquor and Indian Liquor Rules, 1970, regulate the granting of different kinds of permits for the purpose of import, export and transport of liquor from a distillery or a brewery as well as licences for sale of these liquors either wholesale or retail. Without a brewery pass issued by the officer-in-charge on pre-payment of excise duty, liquor cannot be removed from the brewery. As is provided in rule 23, the holder of a wholesale licence in form FL-15 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... containers in favour of the purchaser of the contents is incidental and unavoidable. Such a sale transaction would be a composite and integrated sale of the container and the contents. One is not divisible from the other. The transaction is understood by the seller and the purchaser as the sale of contents in those containers. The bottles are used as receptacles of beer. What the dealer intends to sell and the purchaser intends to purchase is the merchandise beer packed in the receptacle. That determines the character of the goods for the purpose of taxation. So is the case in respect of gunnies and cement. Under the Andhra Pradesh General Sales Tax Act, the "sale price" is not defined. What the charging section 5 refers to is the "turnover". It is defined in clause (s) of section 2 as the consideration for the sale or purchase of goods, including any sums charged by the dealer for anything done in respect of the goods sold at the time of or before the delivery of the goods. So, whatever amount the dealer received by way of consideration for the sale of goods from the purchaser would be subject to tax. The consideration paid by the purchaser may consist of various components suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arising under the Central Excises and Salt Act, 1944. "So far as the cost of packing is concerned, no deduction is permissible in respect of such cost from the wholesale cash price of the excisable article at the factory gate, whether the packing be primary packing or secondary packing and whether its cost is shown separately or is included in the wholesale cash price. Whatever packing is necessary for the purpose of putting the excisable article in a condition in which it is generally sold in the wholesale market at the factory gate, the cost of such packing cannot be deducted from the wholesale cash price of the excisable article at the factory gate...................... The price at which the excisable goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal as defined in sub-section (4)(b) of section 4 is the basis for determination of excisable value..........." By mere splitting of the consideration into the price of the contents and of the container, it will not have the effect of splitting a composite and integrated sale transaction into two transactions thereby attracting different rates of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 of the First Schedule to the Act on the basis of total price of beer and bottle was not proper and legal." In Hindustan Sugar Mills Ltd. v. State of Rajasthan [1979] 43 STC 13 at 23 (SC) the Supreme Court construed the term "sale price" occurring in the Rajasthan Sales Tax Act, 1954, and the Central Sales Tax Act, 1956. The definition given in the Rajasthan Sales Tax Act was: "..................the amount payable to a dealer as consideration for the sale of any goods, less any sum allowed as cash discount according to the practice normally prevailing in the trade, but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof other than the cost of freight or delivery or the cost of installation in case where such cost is separately charged." Interpreting these words, the Supreme Court observed: "This definition is in two parts. The first part says that 'sale price' means the amount payable to a dealer as consideration for the sale of any goods. Here, the concept of real price or actual price retainable by the dealer is irrelevant. The test is, what is the consideration passing from the purchaser to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchaser whenever the bottles were returned. In such a situation, according to the learned counsel, the transaction cannot be said to be a sale. From the nature of the sale transactions that took place between the petitioners and the purchasers it is evident that what was sold was bottled beer and the consideration paid by the purchaser consisted of the value of the beer and the value of the bottles may be paid in the form of deposit. Unless the amount was so paid by the purchaser, the petitioners would not have sold the bottled beer to them. There is nothing to show that the petitioners were under an obligation to pay back the amount whenever the bottles were returned. In similar circumstances, the Supreme Court held in Punjab Distilling Industries Ltd. v. Income-tax Commissioner AIR 1959 SC 346 arising under the Income-tax Act, that the deposits so received by the dealer at the time of the sale of the bottled beer was a trading receipt and as such assessable to tax. The Supreme Court categorically held that: "the amount which was called security deposit was actually a part of the consideration for the sale and therefore part of the price of what was sold." So, we do not find f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of tax exigible on the turnover relating to packing material. As we have already referred to, some of the High Courts had expressed the view that the turnover in respect of the containers was not exigible to the same rate of tax as was applicable to contents. So, with that object, the Act was amended by Ordinance No. 19 of 1983 introducing section 6-C in the Act with effect from 8th July, 1983. On a plain reading of the section, it is clear that it merely reflects the legal position existing prior to its insertion and does not introduce anything new. It is contended by the learned counsel that, by virtue of section 6-C, the rate of tax applicable to the containers will vary according to the rate applicable to the contents and this leads to arbitrariness and discrimination inasmuch as the same kind of containers would be subject to different rates of tax. As we have already mentioned, when the content was sold with the container, both the dealer as well as the purchaser treated the transaction as the one involving the sale of the merchandise (the content) only. Then the sale of the container, if any, would get merged in the sale of the content itself. Thus, it is always treate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... radesh General Sales Tax Act. However in a subsequent decision in Hindustan Sugar Mills Ltd. v. State of Rajasthan [1979] 43 STC 13 at 23 (SC), the Supreme Court again considered the same question whether excise duty payable by a dealer who was a manufacturer formed part of the sale price, exigible to tax. Answering that question in the affirmative, the learned Judges observed at page 27: "Take for example, excise duty payable by a dealer who is a manufacturer. When he sells goods manufactured by him, he always passes on the excise duty to the purchaser. Ordinarily, it is not shown as a separate item in the bill, but it is included in the price charged by him. The 'sale price' in such a case could be the entire price inclusive of excise duty because that would be the consideration payable by the purchaser for the sale of the goods. True, the excise duty component of the price would not be an addition to the coffers of the dealer, as it would go to reimburse him in respect of the excise duty already paid by him on the manufacture of the goods. But, even so, it would be part of the 'sale price' because it forms a component of the consideration payable by the purchaser to the dealer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udges observed that the excise duty would form part of the turnover and was exigible to tax. It is, however, submitted by the learned counsel for the petitioners that when rule 29 of the Andhra Pradesh Brewery Rules, 1970, was not amended as in the case of A.P. Distillery Rules, fastening the liability on the licensee of the brewery to pay the excise duty, then, on the basis of the decision of the Supreme Court in McDowell Co. Ltd. v. Commercial Tax Officer [1977] 39 STC 151 (SC) it should be held that the excise duty paid by a purchaser directly to the excise authority at the time of removal of the goods from the brewery would not form part of the turnover of the manufacturer. We are unable to accept this contention in view of the two later decisions of the Supreme Court wherein it had been categorically laid down that the primary responsibility to pay excise duty was on the manufacturer and though it was paid directly to the Government by a purchaser, still it formed part of the turnover of the manufacturer. For the reasons stated above all the writ petitions fail and they are accordingly dismissed. But there shall be no order as to costs. Advocate's fee Rs. 150 each. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
