2000 (2) TMI 805 - AT - VAT and Sales Tax

Issues Involved:
1. Levy of tax on bottle deposit.
2. Exemption on bottle deposit.
3. Nature of bottle deposit as sale or refundable deposit.
4. Refund of bottle deposit.
5. Application of Supreme Court decisions on similar cases.

Detailed Analysis:

1. Levy of tax on bottle deposit:
The primary issue in these tax revision cases is the levy of tax on bottle deposit amounts collected by the petitioner. The assessing authority revised the assessment and included the bottle deposit in the taxable turnover, arguing that there was no agreement for the return of bottles and no evidence of refunds. The amounts in question were Rs. 3,33,440 for 1981-82 and Rs. 1,91,316 for 1982-83, both taxed at 10%.

2. Exemption on bottle deposit:
Initially, the petitioner had been granted an exemption on the bottle deposit. However, this exemption was later deemed incorrect by the assessing authority due to the lack of an agreement for the return of bottles and the absence of evidence showing that the bottle deposit was refunded. The appellate authorities upheld this view, stating that without an agreement or obligation for the return of bottles, the amount collected could not be considered a deposit but rather a sale.

3. Nature of bottle deposit as sale or refundable deposit:
The petitioner contended that the bottle deposit was not a sale but a refundable deposit, as indicated in the invoices. They argued that they maintained separate accounts for the bottle deposit and refunded it when bottles were returned. However, the Appellate Tribunal found no proof of such refunds and observed that the invoices did not specify any condition for the return of empty bottles. Thus, the Tribunal concluded that the bottle deposit should be assessed as taxable turnover.

4. Refund of bottle deposit:
The petitioner argued that they refunded the bottle deposit upon the return of bottles and that the absence of a time-limit for the return did not alter the nature of the deposit. They also claimed that the amount was included under "others" in the liability side of their balance sheet. However, the Tribunal noted that there was no evidence of refunds, especially after the petitioner closed their liquor division on September 29, 1982. The Tribunal held that the unrefunded bottle deposit amounts were utilized in the trading activities and thus taxable.

5. Application of Supreme Court decisions on similar cases:
The petitioner cited Supreme Court decisions in United Breweries Ltd. v. State of Andhra Pradesh and Kalyani Breweries Ltd. v. State of West Bengal, which dealt with similar issues of bottle deposits. In United Breweries, the Supreme Court found that the bottle deposits were not sales but refundable deposits, as evidenced by clear terms of bailment. In Kalyani Breweries, the Supreme Court upheld the tax on forfeited bottle deposits. The Tribunal distinguished these cases by noting that in the present case, the bottle deposits were not refunded and were used in trading activities, making them taxable.

Conclusion:
The Tribunal concluded that the levy of tax on the bottle deposit amounts collected by the petitioner for the assessment years 1981-82 and 1982-83 was in order. The Tribunal found no evidence of refunds and noted that the amounts were used in trading activities, thus making them taxable. The petitioner's reliance on Supreme Court decisions was found to be inapplicable to the present case. Consequently, the tax revision cases were dismissed, and the levy of tax on the bottle deposit was upheld.

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