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TMI Blog2009 (10) TMI 870X X X X Extracts X X X X X X X X Extracts X X X X ..... led from availing of the benefit of input tax credit on sale of packing material, including empty bottles, even when he fulfils the conditions prescribed under the Act and the Rules made thereunder. Levy of tax on sale of empty bottles at four per cent, under section 4(3) read with item 90 of the Fourth Schedule, is, therefore, valid. The writ petitions are, accordingly, dismissed. - Writ Petition Nos. 7773,7774,7779 of 2008 - - - Dated:- 8-10-2009 - GODA RAGHURAM AND RAMESH RANGANATHAN , JJ. ORDER:- The order of the court was made by RAMESH RANGANATHAN J. As common questions arise for consideration in these writ petitions, they were heard together and are now being disposed of by this common order. While the proceedings originally under challenge, in W.P. Nos. 12684, 12696, 12702 and 12725 of 2009, were orders rejecting stay pending disposal of the appeals before the Appellate Deputy Commissioner, in the other writ petitions the challenge is to the validity of the assessment orders levying tax on sale of empty bottles. Sri N. Venkataraman, learned senior counsel appearing for the petitioners in W.P. Nos. 12684, 12696, 12702 and 12725 of 2009, would submit that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at 70 per cent at the point of first sale in the State, that, in view of section 6, the rate of tax applicable to empty bottles was the same as the rate of tax on liquor, that bottles, containing liquor, were also liable to be taxed at 70 per cent and not at four per cent as prescribed in section 4(3) read with item 90 of the Fourth Schedule, that these bottles, of sizes and shapes specified in Explanation III to the Sixth Schedule, were peculiar only to the liquor industry, that sale of liquor to the A.P. Beverages Corporation Limited/Canteen Stores Department is deemed, under Explanation I to the Sixth Schedule, to be the first sale in the State and that sale of liquor, thereafter, is not liable to tax within the State of A.P. as levy of tax on the goods specified in the Sixth Schedule is at the point of first sale in the State. They would further submit that A.P. Beverages Corporation had already paid tax both on the liquor bottles and its contents, i.e., liquor, that the petitioners had purchased empty liquor/beer bottles, from hawkers and unregistered dealers, after the beer/liquor contained therein was consumed, that, as liquor and beer bottles had already suffered tax at 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uor bottles only once and that the turnover relating to second sale of used bottles cannot again be subjected to tax under the Fourth Schedule as it would amount to double taxation which is not authorized by law. Sri A.V. Krishna Koundinya, learned special standing counsel for Commercial Taxes, would submit that empty bottles fall under the category of packing material, that empty bottles supplied to breweries and distilleries, before tax was levied thereupon under section 6 read with item 1 of the Sixth Schedule, was subjected to tax at four per cent under item 90 of the Fourth Schedule, that, while the goods specified in item No. 1 of the Sixth Schedule was only liquor, item 90 of the Fourth Schedule dealt with all kinds of packing material including bottles which were liable to tax at four per cent, that levy of tax at 70 per cent on bottles, under section 6 read with item No. 1 of the Sixth Schedule, was only because its contents were liquor, that sale of liquor in bottles was not the same as sale of empty bottles and that section 6, which applied to packing material when sold along with its contents, was inapplicable to the sale of empty bottles. Learned standing counsel wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an enactment as is the section by which it is introduced. (Halsbury's Law of England, Fourth Edition, Volume 44, para 822). Section 4(3) requires every VAT dealer to pay tax, on every sale of goods taxable under the Act, on the sale price at the rates specified in the Third, Fourth and Fifth Schedules, subject to the provisions of section 13. The Fourth Schedule is the list of goods taxable at four per cent and item 90 therein relates to all kinds of packing material including hessian cloth and jute twine but excluding storage tanks made of any material. Empty bottles are packing material and, when sold, are liable to be taxed at four per cent under section 4(3) read with item 90 of the Fourth Schedule. Section 4(5) provides that every dealer shall pay tax, on the sale price of the goods specified in the Sixth Schedule, at the special rates and at the point of levy specified therein. The Sixth Schedule relates to goods subjected to tax at special rates and at item 1 thereof are All liquors, bottled and packed as per the provisions of the A.P. Excise Act 1968, (including imported liquor), but excluding toddy and arrack . The point of levy of tax on these goods is at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leries/breweries to the A.P. Beverages Corporation Limited/Canteen Stores Department is exempt from tax in view of Explanation II to the Sixth Schedule. Sale of bottled liquor by the A.P. Beverages Corporation Limited/Canteen Stores Department is the point of first sale and the rate of tax on these goods is 70 per cent. The second and subsequent sale of bottled liquor is exempt from tax within the State of A.P. The question which necessitates examination is whether, after liquor is removed from its container, i.e., bottles, purchase of these empty bottles from hawkers and unregistered dealers and their subsequent sale to breweries/distilleries, (to be used as containers for liquor), constitutes second and subsequent sale in the State of Andhra Pradesh exempt from tax under sections 2(38), 4(5) and 6 read with item 1 of the Sixth Schedule to the Act. Section 2(38) defines taxable turnover to mean the aggregate of the sale price of all taxable goods. Under Explanation II thereof, the sale price relating to second and subsequent sales of goods specified in the Sixth Schedule shall not form part of the taxable turnover. The expression in relation to (so also pertaining to ), is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re sold, the containers and the packing material will have to be taxed at the same rate at which the goods are liable to be taxed. (Premier Breweries [1998] 108 STC 598 (SC)). On a conjoint reading of section 6 with item 1 to the Sixth Schedule to the Act and, as the rate of tax on such goods is 70 per cent, the containers, i.e., empty bottles in which liquor is contained or packed is liable to be taxed at 70 per cent notwithstanding that it is liable to be taxed at four per cent, as packing material, under section 4(3) read with item 90 of the Fourth Schedule to the Act. As long as liquor continues to remain in bottles, and is not separated therefrom, no tax can be levied on the second and subsequent sale of such bottled liquor within the State of A.P. Both liquor and empty bottles separately, and on their own, constitute goods under section 2(16) of the Act. When liquor is removed/separated from its containers and, thereafter, liquor and the empty bottles are separately sold, they cease to remain liquor, bottled and packed as per the provisions of the A.P. Excise Act, 1968 and hence sale of such goods, i.e., liquor , and empty bottles separately are liable to be taxed u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provision applicable is section 4(9) after its amendment by Act 10 of 2006 with effect from November 24, 2005. Section 4(9) starts with a non obstante clause and, thereunder, every dealer running any restaurant, club, etc., who supplies drinks shall pay tax at 12.5 per cent on 60 per cent of the taxable turnover. A non obstante clause is generally appended to a section with a view to give the enacting part of the section, in case of conflict, an overriding effect over such other provisions of the Act as are mentioned in the non obstante clause. It is equivalent to saying that, inspite of the provisions of the Act, the provision following the non obstante clause will have full operation or the provisions of the Act will not be an impediment for the operation of the provision in which the non obstante clause occurs. (State of Bihar v. Bihar Rajya M.S. E.S.K.K. Mahasangh [2005] 9 SCC 129). Non obstante clauses are to be regarded as clauses which remove all obstructions which might arise out of the provisions of the Act coming in the way of the operation of the principal enacting provision to which the non obstante clause is attached. (Bihar Rajya M.S.E.S.K.K. Mahasangh [2005] 9 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve an overriding effect over the other provisions of the Act. Likewise empty bottles, which have ceased to retain the identity of bottles containing liquor, are liable to be taxed as packing material, under section 4(3) read with item 90 of the Fourth Schedule to the Act, at four per cent. Section 13 relates to credit for input tax and, under sub-section (1) thereof, subject to the conditions if any prescribed, input tax credit shall be allowed to the VAT dealer for the tax charged in respect of all purchases of taxable goods, made by that dealer during the tax period, if such goods are for use in the business of the VAT dealer. Section 13(1) further provides that no input tax credit shall be allowed in respect of the tax paid on the purchase of goods specified in the Sixth Schedule. Under section 13(4), a VAT dealer shall not be entitled for input tax credit in respect of purchase of such taxable goods as may be prescribed. Rule 20 of the Andhra Pradesh Value Added Tax Rules, 2005 relates to input tax credit. The items specified under rule 20(2) are not eligible for input tax credit. While input tax credit is to be allowed to a dealer for the tax charged in respect of purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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