1971 (4) TMI 90 - HC - VAT and Sales Tax

Summary

Issues:
1. Treatment of unrefunded deposit for containers as turnover in the regular course of business.
2. Determination of the nature of transactions regarding deposit for beer, rum, and country liquor containers.
3. Analysis of agreements between the assessee and purchasers regarding containers.
4. Examination of whether the transactions constitute a sale or bailment.
5. Comparison of relevant legal precedents to determine the nature of the transactions.
6. Consideration of rules and agreements governing the supply of country liquor and rum.

Analysis:
The judgment by the Allahabad High Court addressed the issue of whether the unrefunded deposits for containers could be considered as turnover in the regular course of business. The assessment year in question was 1958-59, involving M/s. Dyer Meakin Breweries Ltd., a dealer in beer, rum, and country liquor. The court highlighted discrepancies in the description of deposits as "price" by the Judge (Revisions) and emphasized the importance of ascertaining the parties' intentions from the agreement terms.

Regarding the agreements between the assessee and purchasers, the court examined the deposit of the probable cost of containers, noting that the cost was separately charged in bills, and sales tax was levied on contents but not on containers. The court analyzed a circular regarding the supply of rum and rules under the U.P. Excise Act governing the supply of country liquor to determine the nature of transactions and agreements between the parties.

The court delved into the distinction between sale and bailment, emphasizing that property in goods passes in a sale, while in bailment, possession is transferred for a specific purpose with an obligation to return the goods. Analyzing the cases of wooden casks and country liquor bottles, the court concluded that the transactions resembled bailments due to the absence of fixed time limits for return and the nature of agreements between the parties.

Legal precedents such as Manders v. Williams and Beecham Fords Ltd. v. North Supplies were cited to support the court's interpretation that the deposits were taken as security for loss of containers, not as the price of containers. The judgment rejected the argument for a conditional sale and ruled in favor of considering the transactions as bailments, not sales.

In conclusion, the court answered the referred question in the negative, indicating that the unrefunded deposits should not be treated as turnover. The Commissioner of Sales Tax was directed to pay costs to the assessee, assessed at Rs. 100. The judgment provided a detailed analysis of the agreements, legal principles, and precedents to determine the nature of transactions involving container deposits in the assessed year.