1971 (8) TMI 186 - HC - VAT and Sales Tax

Issues Involved:
1. Jurisdiction of Additional Deputy Excise and Taxation Commissioner to assess escaped turnover after the expiry of the period prescribed under section 11-A of the Punjab General Sales Tax Act, 1948.
2. Liability of the price of bottles to sales tax when bottled liquor is sold.
3. Sale of packing material (bottles) in light of the Punjab Excise Act, 1914, and relevant rules.
4. Volition in the sale of goods ordered to be delivered to a particular licensee and whether such delivery constitutes a sale under the Sale of Goods Act.
5. Liability of the company to pay sales tax on the value of straw covers used for packing.

Issue-wise Detailed Analysis:

1. Jurisdiction of Additional Deputy Excise and Taxation Commissioner:
The court held that the Additional Deputy Excise and Taxation Commissioner could not assess escaped turnover after the expiry of the period prescribed in section 11-A of the Punjab General Sales Tax Act, 1948. The court observed that the revisional authority must confine itself to the record called for and cannot consider fresh material to come to a different conclusion than the one reached by the assessing authority. Consequently, the order of the revisional authority under section 21 for the assessment years 1956-57 and 1957-58 was deemed without jurisdiction. However, for the year 1958-59, the matter was taken notice of by the Assessing Authority, and thus, the order was valid.

2. Liability of the Price of Bottles to Sales Tax:
The court referred to Supreme Court decisions which established that whether there is an agreement to sell packing material is a pure question of fact depending on the circumstances of each case. The Sales Tax Tribunal concluded that the bottling process did not form part of the manufacture of liquor, and the containers (bottles) were not an integral part of the finished product. The court agreed with this conclusion, stating that the price of bottled liquor included the price of the bottle, and thus, the sale of bottles was liable to sales tax. However, this conclusion was subject to the answer to Question No. 4 regarding the nature of the sale.

3. Sale of Packing Material (Bottles):
The court examined whether the sale of liquor and bottles constituted a sale within the meaning of the Sale of Goods Act. It was held that the entire production and sale of liquor were regulated under the Excise Act, and the producer was not free to sell to whomsoever they liked. The sale was to permit-holders at a fixed price, with no volition left to the distillery. Therefore, there was no sale of liquor or bottles under the Sale of Goods Act.

4. Volition in the Sale of Goods:
The court determined that there was no voluntary contract for the sale of liquor, as the sale was regulated and controlled by the Excise Act. The distillery was bound to supply liquor as per the permits issued, and the mere provision of discounts did not constitute a contract of sale. Consequently, there was no sale of liquor or bottles under the Sale of Goods Act.

5. Liability to Pay Sales Tax on Straw Covers:
This issue was not pressed by the counsel for the assessee. The court answered this question in the affirmative, holding that the company was liable to pay sales tax on the value of straw covers used for packing.

Conclusion:
- The first question was answered against the department for the years 1956-57 and 1957-58 and in its favor for the year 1958-59.
- The second question was answered in favor of the department, but this was immaterial due to the answers to questions 3 and 4.
- Questions 3 and 4 were answered against the department, indicating no sale of liquor or bottles.
- Question 5 was answered in favor of the department.
- No order as to costs was made.

← Previous Next →