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TMI Blog2013 (4) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... a transfer of the right to use the bottle or crate and there is no sale of the bottle or crate as the bottle is to be returned by the end-customer to the retailer and by the retailer to the wholesaler and by the wholesaler to the manufacturer. The Tribunal erred in distinguishing the said case simply on the ground that entry 118 of Schedule-I to the Act mentions "industrial gases other than petroleum gases and gases specified elsewhere in the schedules" i.e., only "gases" were mentioned and not "bottled gases". Admittedly, the sale invoices indicate the price of the soft drink separately and the rentals on bottles and crates separately. The Tribunal appears to have not noticed that even prior to 01-08-1996, the same entry was there from 01-09-1976 as entry 108 in Schedule-I to the Act taxable at the point of first sale. It was omitted w.e.f, 1-8-1996 from Schedule-I and introduced as entry 21 in Schedule-VI making soft drinks taxable at every point, such tax to be determined after deducting the tax levied on the turn over on such goods at the immediately preceding point of sale by registered dealer from the tax leviable on the turn over of the same goods at the point of sale by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel for respondent No.1: Sri Balaji Varma, Special Government Pleader for Commercial Taxes Counsel for respondent No.2: Sri M.V.J.K. Kumar ORDER 1. Since common issues of law and fact arise in these cases, they are being disposed of together. 2. Heard Sri S. R. Ashok, Senior Advocate, Sri K. Raji Reddy, Sri S. Dwarakanath, for the petitioners and Sri Balaji Varma, Special Government Pleader for Commercial Taxes and Sri M.V.J.K. Kumar for the impleaded respondents. 3. T.R.E.V.C Nos.43, 44 and 45 of 2007 are filed by M/s. Hindusthan Coco Cola Beverages (P) Limited (Formerly known as M/s.Bharat Coco Cola South East (P) Limited), Hyderabad (herein after referred to as assessee ) under Section 22 of the Andhra Pradesh. General Sales Tax Act, 1957 challenging the common order dated 17.10.2007 in T.A.Nos.1323 of 2003, 911 of 2003 and 912 of 2003 of the Sales Tax Appellate Tribunal, Hyderabad for the assessment years 1998-99 (APGST), 1997-98 (APGST) and 1997-98 (CST) respectively. 4. The petitioner is a manufacturer and dealer in Soft Drinks and aerated water having its factory at Moula Ali, Hyderabad. It is registered on the rolls of the Commercial Tax Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that the assessing authority rightly levied tax @ 5% and that the said order of the assessing authority did not warrant any interference. 8. The Deputy Commissioner overruled the objections and confirmed the proposed Revision by separate orders dated 6.2.2003 under the A.P General Sales Tax Act,1957 and the Central Sales Tax Act, 1956 for 1997-98. 9. The assessee filed appeals T.A.No.911 of 2003 and T.A.No.912 of 2003 before the Sales Tax Appellate Tribunal, Hyderabad (for short 'STAT')contending that the sale invoice evidenced two different transactions and the nature of the transactions cannot be changed contrary to the recitals of the contract and pleaded for assessment under Section 5E of the Act for crate and bottle rental. 10. For the assessment year 1998-99, the petitioner was assessed under the AP General Sales Tax Act,1957 by the Commercial Tax Officer, Malkajigiri Circle by order dated 30.03.2002. He held that with the substitution of Sl.No.19 of the First Schedule by Act 30 of 1997 with effect from 12.5.1997, packing material has to be taxed at the same rate as the content. 11. For the assessment year 1998-99, the assessee filed an appeal to the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to levy a differential tax of ₹ 1.76 crores for all the four months observing that the entire turnover of sales including the turnover on lease of packing material is liable to tax @ 12.5%, that the assessee had admitted liability of only 4% on the turnover relating to the lease of packing material and this is not permissible as the total consideration relates to sales only. The petitioner filed objections on 14.9.2005. By order dated 15.9.2005, the Deputy Commissioner (CT), Saroornagar Division rejected the objections of the petitioner and relying on Section 6 of the AP VAT Act, 2005 held that the rate of tax applicable for the container with content is the rate applicable to the content only; that the soft drink (content) is being sold with container (bottles and crates) and confirmed the tax demand as per the proposal in the notice dated 1.9.2005. Challenging the same, the petitioner filed W.P.No.21115 of 2005 inter alia contending that the Revenue cannot tax the entire turnover @ 12.5% ignoring the terms and conditions between the parties; that the dispute whether the bottles and crates were subject matter of lease or infact sold along with soft drinks and hence taxabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the return of the bottles by the end customers and the return of the bottles and crates by the retailers to the wholesale dealers and by the wholesale dealers to the manufacturers is not in dispute; that the manufacturers collected deposits and the deposits will be kept with them till the agreement is in force; the purpose of housing the soft drink in the bottle and sending the bottles in crates is only to serve the purpose of making the soft drink available to the end customers; that the end customer is not conferred with any right to use the crates and bottles; that the end customer consumes the soft drink and returns the bottles; and therefore, what is paid by the end customer is the consideration for soft drink and not for getting any bottles or crates; when the price of soft drink is collected from the end customers for the supply of soft drink in a sealed and duly carbonated bottle to enable the customer to consume the soft drink, the manufacturers are not justified in splitting of the price into cost of soft drinks and rental value of crates and bottles; that the same appears to be a colourable device adopted by the manufacturers to avoid payment of tax; that neither the wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les Tax dues of the petitioner. Challenging the same, the petitioner filed W.P.No.25588 of 2007 and sought directions to the said officer restraining him from taking any coercive steps for recovery of the said amounts pending disposal of the TRC Nos.43 and 44 of 2007. The said writ petition was admitted on 30-11-2007 and in W.P.M.P. No. 33332 of 2007, this Court granted interim stay of the notice dated 27-11-2007 issued u/s. 29 of the Andhra Pradesh VAT Act, 2005 by the Deputy Commissioner (CT)(LTU), Saroornagar Division. 20. As can be seen from the above fact, the three revisions TREVC Nos. 43 to 45 of 2007 have been filed by the manufacturer of soft drinks and beverages against the common order of the Larger Bench of the STAT, Hyderabad dated 17-10-2007 in a batch of appeals preferred by similarly placed manufacturers of soft drinks and beverages and by wholesale dealers as well. These revisions are restricted to the decision of the Tribunal insofar as it pertains to rejection of the appeals by the manufacturers. However, the decision of the Tribunal insofar as it allowed appeals preferred by the wholesale dealers, on interpretation of the same transactional documents has beco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not constitute the wholesale price for assessment of beverage. These decisions also provided evidence of trade practice to realize a rental on crates; the Tribunal erred in holding that splitting the charges on sale of soft drinks and rentals for crates and bottles is a device to defeat the law or to lower the tax due, whereas there were Apex Court rulings accepting a trade practice to deliver on bailment the glass bottles and crates on returnable basis while charging a rental on the investment; the Tribunal misdirected itself in placing reliance on Hindustan Sugar Mills Limited Vs. State of Rajasthan 43 STC 13 (SC) which dealt with a contract which was incompatible with the Cement Control Order whereas it was not even pleaded that charging crate rental was contrary to any law of the land; the Tribunal committed serious error of law in relying upon the self-serving case of the distributors that what was collected in the name of rental of bottles and crate was an integral part of the price of the soft drink, whereas the wholesalers had transacted accepting the invoice of the petitioners for a number of years and paid for crate rental for the use and return of the bottles and cra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the Revenue to show that the ostensible evidence of the invoice was untrue which was not done; the Tribunal had no material to state that the petitioners did not transfer right to use to the wholesalers of the bottles and crates, and the reasoning of the Tribunal that because allegedly the end-customer had no right of use, there was no transfer of right to use in the bottles and crates to the wholesalers is irrational. The petitioners therefore contended that the TREVCs and the W.Ps be allowed. 24. On the other hand, the counsel for the Revenue contended that the Tribunal had rightly held that there is no separate sale of soft drink without bottles and crates; that the amount collected towards rental charges is in fact a part of the sale price; that the segregation from sale price of the rental charges was only done as a device to escape sales tax from that part of the turn over; that there is no transfer of right to use bottles and crates; that S.5-E is not applicable to the transactions between the manufacturers and wholesale dealers/distributors; that the decisions cited by the petitioners are inapplicable to the facts of the case; that the Tribunal rightly drew adverse in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration, in the course of his business shall, on the total amount realized or realizable by him by way of payment in cash or otherwise in such transfer or transfers of the right to use such goods from the lessee or licencee (pay a tax at the rate of eight paise on every rupee) of the aggregate of such amount realized or realizable by him during the year; (b) the transfer of right to use any such goods entered into by any dealer, shall be deemed to have taken place in this State whenever the goods are used within the State, irrespective of the place where the agreement whether written or oral for such transfer of right is made. (provided that no such tax shall be levied if the total turnover of the dealer including such aggregate is less than Rs. two lakhs) 29. The petitioners are manufacturers of beverages and in the course of their business, they purchased and used crates and bottles with their respective brand names; they put the soft drinks in the standard bottles of 200 ml, 300 ml and 350 ml and transport the same to the Wholesale Dealers in the crates housing 24 bottles in each crate; the Wholesale Dealers in turn sell the same to the retailers; the retail dealer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We are unable to appreciate the above reasoning of the Tribunal. In our view the bottle is used only for storing the contents (soft drinks), and when the bottle is returned to the retailer by the customer and so on to the manufacturer, the cost of the bottle cannot be said to get included in the cost of the soft drink. The Tribunal has not explained how on the basis of entry 21 of Schedule-VI to the AP General Sales Tax Act, 1957 it can be said that the cost of the soft drink would include the cost of the bottle also. In our view, entry 21 of Schedule-VI to the AP General Sales Tax Act,1957 imposes Sales Tax only on the soft drinks which are bottled and sold under a brand name and merely because the words bottled soft drinks under a brand name are used in the entry, it does not follow that the bottle has to be taken as sold along with the soft drink. Merely because the soft drinks and bottles cannot be separated till they reach the end-customer, in the absence of sale of the bottle, it cannot be said that there is no transfer of the right to use the bottle. In our view there is a transfer of the right to use, such use being for storing the contents , thereby attracting S.5-E o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ler and by the retailer to the wholesaler and by the wholesaler to the manufacturer. The Tribunal erred in distinguishing the said case simply on the ground that entry 118 of Schedule-I to the Act mentions industrial gases other than petroleum gases and gases specified elsewhere in the schedules i.e., only gases were mentioned and not bottled gases . 36. We are also of the view that the decision of this Court in Sri Satya Winery Distillery Private Limited's Case (2 Supra), Amrut Distilleries's case (3 Supra) and Premier Breweries's case (4 Supra) relied on by the Tribunal would not apply because it was admitted in those cases that there is a sale of the bottle along with the content whereas in the present case, it is a case where glass bottles and crates were delivered on returnable basis on bailment. 37. The Tribunal at para 29 of its order extracted certain portions from the minority judgment in 20th Century Finance Corporation Limited's Case(5 Supra) in coming to a conclusion that a transfer within the meaning of Art. 366 (29-A) (d) would be complete when the contract is executed and the control/ domain of the goods which are the subject of the contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .f., 1-8-1996. 39. In Commissioner of Sales Tax vs Gill Company Limited (1973) 33 STC 536 (M.P) and in Government of Madras vs Simpson Co., Limited (1968) 21 STC 16 (SC), it was held that in the absence of any other material, recitals in invoices will furnish good proof of the intention of the parties relating to the terms of the agreement and that by themselves, they will be inclusive piece of evidence. The Revenue, in the present case, has not adduced any evidence to rebut the contents of the invoices filed by the manufacturers nor did the Revenue dispute the correctness of the contents of the invoices by pleading that they are fabricated and not genuine. Therefore, in our opinion, the invoices filed by the manufacturers, which show clearly the separate charge on the sale of soft drinks and rental charges on crate and bottles indicate a contract between the parties to treat both as separate categories( to be charged at the rate of 12 %(u/s. 5 of the Act) and 5 % (u/s. 5-E of the Act) respectively ) have to be accepted and tax levied accordingly. The statement in the grounds of appeal before the STAT that there is a written contract between the manufacturers and the distrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation to the facts of these cases. 44. Therefore, the TREVCs No.43 to 45 of 2007 are allowed and the order dated 17-10-2007 passed therein by the STAT is set aside. 45. Coming to the Writ Petitions, where order dated 15-09-2005 for assessment for the period April to July, 2005 passed by the assessing officer under the Andhra Pradesh VAT Act, 2005 and the order of assessment dated 08-12-2005 for assessment for September, 2005 is questioned, the assessing officer purported to rely on S.6 of the Andhra Pradesh VAT Act, 2005. 46. S.6 of the Andhra Pradesh VAT Act, 2005 states as follows:- 6. Tax on packing material:- Where goods sold or purchased are contained in containers or are packed in any packing material liable to tax under the Act, the rate of tax applicable to such containers or packing material shall, whether the price of the containers or packing material is charged for separately or not, be the same as the rate of tax applicable to such goods so contained or packed, and where such goods sold or purchased are exempt from tax under the Act, the containers or packing material shall also be exempted. 47. We have already held that in the business of sale of soft ..... X X X X Extracts X X X X X X X X Extracts X X X X
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