1983 (2) TMI 267 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of imposing sales tax on the total price of beer and bottle.
2. Whether the deposit for bottles constitutes the sale price.
3. Classification of beer as Indian-made foreign liquor.
4. Applicable tax rate on the sale of bottles.

Issue-Wise Detailed Analysis:

1. Legality of Imposing Sales Tax on the Total Price of Beer and Bottle:
The court examined whether sales tax could be levied on the total price of beer and bottles as bottled beer under Item 22 of the First Schedule to the Goa, Daman and Diu Sales Tax Act, 1964. The court found that Item 22 pertains to "Foreign liquor and Indian-made foreign liquor" and does not mention bottled beer. The contract between the petitioners and wholesalers indicated separate sales and billing for beer and bottles. Therefore, assessing sales tax on the total price of beer and bottles was deemed improper and illegal.

2. Whether the Deposit for Bottles Constitutes the Sale Price:
The court addressed whether the deposit taken for bottles was actually the sale price, thus subject to sales tax. The court referenced the Supreme Court decision in Punjab Distilling Industries Ltd. v. Commissioner of Income-tax, which established that the nature of the transaction should be examined. The court found that the agreement between the petitioners and wholesalers did not obligate the return of bottles nor set a return time. The deposit was considered the price of the bottles, making the transaction a sale of bottles liable for sales tax under section 7(1)(c) of the Act.

3. Classification of Beer as Indian-made Foreign Liquor:
The court considered whether beer could be classified as "Indian-made foreign liquor" under Item 22 of the First Schedule to the Act. Although the Sales Tax Act did not define the term, the Goa, Daman and Diu Excise Duty Act defined it to include beer. The court concluded that beer, being a liquor of foreign origin and lower alcohol percentage, could be classified as Indian-made foreign liquor under Item 22.

4. Applicable Tax Rate on the Sale of Bottles:
The court determined that the sale of bottles should be taxed under section 7(1)(c) of the Sales Tax Act. The petitioners were liable to pay sales tax only on the unrefunded amount of the deposit. The petitioners were required to provide evidence from their books of account to the Sales Tax Officer regarding the unrefunded amount.

Conclusion:
- Question (1): Affirmative.
- Question (3) (as reframed): Negative.
- Question (6): Sale of bottles liable to tax under section 7(1)(c), with tax payable on unrefunded amounts.
- Question (8): Affirmative.

The court did not find it necessary to answer the remaining questions. No order as to costs was made, and an oral application for leave to appeal to the Supreme Court was rejected.