TMI Blog1992 (2) TMI 341X X X X Extracts X X X X X X X X Extracts X X X X ..... ded over to the customer only as a bailee to be returned after consumption of the liquor. It was also the case of the assessee that no sale of bottles was involved; and as such, the amounts accepted from the customers as deposit to secure return of the bottles could not form part of the turnover. The other submission was regarding value of packing materials like, cardboard boxes, cartons, labels, etc., in which the bottled liquor was packed. According to the assessee, the turnover involved in packing charges was not liable to be taxed; and if at all, it shall not be taxed at higher rate applicable to the beverages. The assessing authority rejected all these contentions and included the sale price of beer covered by sale bills, bottle deposits covered by debit note and price of packing charges as turnover in respect of beer. That turnover was assessed to tax at 10.5 per cent with surcharge at 10 per cent in addition. The assessee filed an appeal before the Deputy Commissioner (Appeals) urging that there was no sale of bottles or packing materials and in any case, bottles and packing materials being general goods taxable at a lower rate, the turnover involved in those two items shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year 1981-82. The facts are almost similar as in the previous case. The Commercial Tax Officer in his order dated August 25, 1982, for the assessment year 1981-82 accepted the gross and net turnover of Rs. 1,84,67,946.50. The Deputy Commissioner (Commercial Taxes) revised the order of assessment in his proceedings dated February 10, 1988. He brought an additional amount of Rs. 43,42,329 representing bottle deposits to tax at 10.5 per cent and surcharge at 10 per cent. A further amount of Rs. 19,38,630 representing turnover of packing materials was also assessed to tax at a higher rate of 10 per cent by adding 6 per cent more to the tax already assessed. The Deputy Commissioner had considered the objection of the assessee with reference to almost the same decisions as were referred before the Deputy Commissioner (Appeals) in respect of the previous year. Emphasis was laid on the facts that the assessee was obliged to sell bottled beer in accordance with the provisions of law and such sale could not be split up into three-sale of beer, bottles and packing materials. Assessee filed T.A. No. 911/88 before the Sales Tax Appellate Tribunal which by its order dated January 22, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de the order of the revisional authority in respect of the bottle deposits amounting to Rs. 18,21,140 so as to give an opportunity to the assessee to place such material as it deemed fit to take advantage of the guidelines pointed out in Raj Sheel v. State of Andhra Pradesh [1989] 74 STC 379 (SC). The Tribunal also affirmed the order of the revisional authority in so far as it concerned the turnover of packing materials to an extent of Rs. 9,94,220. The assessee has filed T.R.C. No. 262 of 1990 raising almost the same questions as in the previous case. T.R.C. No. 316 of 1990 arises out of T.A. No. 108/88 which the Sales Tax Appellate Tribunal disposed of by its order dated January 31, 1990. The assessment year concerned is the same as in T.R.C. No. 262 of 1990. From the order of assessment dated May 21, 1985, the assessee had filed an appeal before the Appellate Deputy Commissioner, who affirmed the order, whereby, the bottle deposits and packing materials were taxed at the rate of 6.5 per cent and 4.5 per cent, respectively for the period from April 1, 1983 to July 7, 1983. This created an anomalous situation. The Deputy Commissioner (Appeals) had affirmed the levy of tax at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could have shown that the sale transaction involved bailment of bottles. He submits further that the entire gamut of this controversy has been covered by a number of decisions of various High Courts in India, as also the Supreme Court; and it is too late in the day now for the assessee, to claim that the nomenclature it gave for separate parts of the sale price, shall be, without anything more, determinative of exigibility or otherwise of the turnover. He also invited our attention to the detailed observations in the orders of the appellate and revisional authorities dealing with every aspect of the transactions and submitted that in the absence of any further material even at this stage to make out the assessee's case that there was only a bailment and not a sale of the bottles, the orders of the Appellate Tribunal cannot be faulted. Counsel for the assessee referred us to a number of decisions bearing on the first question; Punjab Distilling Industries Ltd. v. Commissioner of Income-tax [1959] 35 ITR 519 (SC), Raj Sheel v. State of Andhra Pradesh [1987] 64 STC 398 (AP). Reliance was also placed on the decision of the Kerala High Court in Deputy Commissioner of Sales Tax v. McDo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement and other materials. The court found that there was in fact a sale of the bottles though the price thereof was entered in a separate "empty bottles return security deposit account". The court also found that there was a simultaneous offer to refund the bottle deposits whenever the bottles were returned. It was on those facts that the court observed that there was no right in the assessee to claim return of the bottles; and therefore, there could not have been any security deposit for such return. On those facts, the court further held that the record indicated an intention on the part of the assessee to repurchase the bottles. In the nature of the contentions which the assessee has raised in this case, we would have expected it to produce the agreements and other supporting documents to make out its case that there was no such sale of the bottles. In the absence of the agreements, it is not possible to go entirely by the description of a part of the sale price as bottle deposit. This is more particularly so, because the assessee had not even pleaded that the customer was obliged to return the bottles within a specified time and that it did return the identical bottles invol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he company when beer was vended. The customer purchased bottles and crates with the contents of receptacles. When bottles and crates are returned (to the extent shown by the company) in law, there was a resale of bottles and crates in favour of the company." In Raj Sheel v. State of A.P. [1987] 64 STC 398, a Division Bench of this Court considered the same question and held that according to the provisions of the Excise Act and the Rules, bottled beer alone could have been sold and that transfer of property in the containers was incidental and unavoidable and the sale transaction had to be regarded as composite and not independent sales of containers. In that view, the Division Bench held that consideration paid by the purchasers to the dealer consisted not only of the price for beer, but also, included the price of the bottles. That decision was challenged before the Supreme Court. (Raj Sheel v. State of Andhra Pradesh [1989] 74 STC 379). The. Supreme Court affirmed the finding on this aspect emphasising that whether there was an agreement to sell the packing material, is a pure question of fact and that question could not be decided on fictions or surmises. The Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the bottles were entrusted to the customer as a bailee, that he had an obligation to return the same within a specified period and the amount of deposit collected was retained as a security for the due performance of such obligation to return the bottles. We also find that there was wide divergence between the amount collected as bottle deposits and the amount alleged to have been refunded when the bottles were returned. These features militate against entrustment of the bottles to the customers as bailees with an obligation to return the bottles, to secure which obligation, "bottle deposits" were collected. In view of the above and in view of the fact that identical transactions were treated as sales as disclosed in United Breweries Ltd. [1988] 68 STC 214 (AP), Raj Sheel v. State of Andhra Pradesh [1987] 64 STC 398, Arlem Breweries Ltd. [1983] 53 STC 172 (Bom), Punjab Distilling Industries Ltd. [1959] 35 ITR 519 (SC) and Raj Sheel [1989] 74 STC 379 (SC) we hold that the Appellate Tribunal was right in holding that the assessee had sold the bottles along with beer and that the sale price of bottles was also assessable to tax. On the question of rate of tax applicable, we agre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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