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TMI Blog1990 (8) TMI 381X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 3.. Writ Appeal Nos. 275 and 276 of 1984 have been filed by the Deputy Commissioner of Commercial Taxes, Bangalore City Division, Bangalore, against the judgment and order of the learned single Judge in Writ Petitions Nos. 18690 and 23015 of 1980. The Mysore Breweries Ltd. (respondent herein), was the petitioner in the two writ petitions. The aforesaid Mysore Breweries Ltd., is engaged in the business of manufacture and sale of liquor, and is a registered dealer under the Karnataka Sales Tax Act, 1957 ("the Act" for short). The liquor manufactured by it is sold in bottles and crates, using packing materials. For ensuring safe return of bottles and crates, it receives deposits from the purchasers. The deposit is refunded on return of bottles. It filed returns for the period from October 1, 1975 to December 31, 1975 and from January 1, 1976 to December 31, 1976, claiming certain sums representing packing materials as not forming part of the taxable turnover and, therefore, deductible under rule 6(4)(ff) of the Karnataka Sales Tax Rules (hereinafter called "the Rules"). Likewise the petitioner also disclosed certain amounts received by it as bottle and crate deposits made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstances under which the deduction for bottle deposits was claimed by the dealer and the deduction allowed on such deposits as not forming part of the sale price are similar. Respondent, M/s. Canara Liquor Agencies, have been dealing in liquor as second and subsequent dealer and the taxable turnover related to the supposed sale of empty beer bottles in respect of which certain deposits were taken by the sellers (manufacturers) from the respondent so as to ensure return of the empty bottles. The Commercial Tax Officer, III Circle, Mangalore, assessed the appellant for the financial year 1979-80 on May 7, 1982, on gross and taxable turnover of Rs. 54,059, surcharge of Rs. 5,406 and additional tax. This included the amount representing bottle deposits. Respondent preferred an appeal before the Deputy Commissioner of Commercial Taxes, Mangalore, contending that the empty bottles were returned by it to the seller and were, therefore, not sales. Relying on the judgment of the Allahabad High Court in Dyer Meakin Breweries [1972] 29 STC 69, and of the Kerala High Court in McDowell's case [1980] 46 STC 79, it claimed that the deposits given in respect of the bottles was to en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces of the case, the deposit collected by the respondent-dealer formed part of the sale turnover exigible to tax under the Central and the Karnataka Sales Tax Acts. 8.. In the writ appeals, the learned Government Pleader submitted that the learned Single Judge has misread rule 6(4)(ff) of the Rules in holding that the charge for packing materials charged separately would not form part of the sale price. He also contended that the learned Judge ought to have held that the amount taken by the dealers from the purchasers towards bottle deposit formed part of the sale price and the transaction included sale of bottles and crates by the dealer to the purchaser and as such was liable to be assessed to sales tax under the Act. He also contended that the learned Judge ought not to have allowed the writ petitions but ought to have remitted the matter for finding out whether there was a written agreement as to the deposit of amount towards bottles and crates for ensuring return of the same. In any event, the Deputy Commissioner had issued only show cause notices and at that stage it was prematurely challenged, though necessary materials were not available for purpose of finding out whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he relied upon the decision in Rayalaseema Enterprises v. State of Andhra Pradesh [1990] 78 STC 121 (AP). This decision is inapplicable to the facts of this case for the facts borne out in this case do clearly establish that there was no sale of the bottles and crates, and the very fact that deposits were made for ensuring returns of the bottles and crates, support an implied agreement between the seller and purchaser that there was no transfer of title in such bottles and crates which were required to be returned. 11.. A perusal of the show cause notices also discloses that they contain statement of facts which are not in dispute, and further establish that there was implied contract between the dealer and the purchaser, that bottles and creates were not sold along with the liquor. The Deputy Commissioner in the said show cause notices states as follows: "Purchasers such as wholesaler/retailers and the consumers are aware of the fact that they were paying the cost for the beer contained in the bottle and not for the bottle itself. There is no implied or express contract between the seller and the purchaser for the sale of bottle along with the beer. Price received by the deal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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