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TMI Blog2020 (7) TMI 469X X X X Extracts X X X X X X X X Extracts X X X X ..... on the point of law that the petitioner is not liable to pay tax on return of bottles from the dealers. Since report of Bureau of Investigation has been independently considered by the respondent authorities while undertaking suo motu revision, we are of the considered view that the said report of bureau of investigation cannot also be set aside. Application disposed off. - Case Nos. RN - 590 and 591 of 2018. - - - Dated:- 17-6-2020 - Malay Marut Banerjee (Judicial Member) And Chanchalmal Bachhawat (Technical Member) For the Applicant : B. Bhattacharyya and A. Bagchi, Advocate For the Respondent : A. Chakraborty, State Representative JUDGMENT CHANCHALMAL BACHHAWAT (TECHNICAL MEMBER) .- 1. In course of hearing on August 20, 2018 learned State Representative admitted that form 70 issued to the petitioner for taking up suo motu review proceedings cannot be defended. Hence, notice dated April 2, 2018 was set aside and leave was granted for considering proposal for re-opening of the matter by Senior Joint Commissioner in accordance with law and disposal of the same by December 31, 2018. Meanwhile, orders in the suo motu revisional proceedings were pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the petitioner also submitted that the petitioner in general had no liability under the W. B. Value Added tax Act, 2003. However, the petitioner had made sale of certain old assets during the financial year 2012-13 and therefore the petitioner was assessed with liability of ₹ 59 during the said financial year. Copy of the assessment order dated April 27, 2015 was also enclosed with the petition (annexure B). 6. The learned advocate for the petitioner also submitted that an enquiry had been done by the Bureau of investigation, Unit III, at the manufacturing place of the petitioner and the concerned officers had raised a question of law as to the nature of the transaction with reference to return of empty bottle used for selling the country liquor, which the petitioner does not sell but simply doles out as a container of the country liquor upon caution money as also stated in para 2(ii) of the petition. Learned advocate also submitted that the officers of the Bureau of Investigation had drawn up a report dated March 24, 2018 and had held that the dealer was liable to pay tax under section 2(1)(a) of the WB VAT Act, 2003 on his taxable turnover of purchases under section 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B VAT Act, 2003, as embodied under section 16(2A) of the WB VAT Act, 2003, and, that the packing materials will be taxed at the same rate as that of the parent material, as also stated in the petition. 10. The learned advocate also submitted that paper containers in which cigarette is packed is also not charged separately under the WB Value Added tax Act, 2003 as also stated in para 4(x) of the petition. 11. The learned advocate for the petitioner also submitted that notice for suo motu revision under section 85 of the VAT Act, 2003 were issued to the petitioner, and the petitioner had filed a detailed objection to the said notice along with copy of all sale invoice and corresponding credit notes (named as bottle refund receipt) and copy of the party ledgers in support of the claim that the empty bottles were not purchases from unregistered dealers but were obtained by way of sales returns from the corresponding dealers. 12. It was submitted that the respondents did not accept the said submissions and had passed an order on December 21, 2018 treating the said transactions as purchases from unregistered dealers and raising a demand of ₹ 29,67,236.25 vide order dated D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id not dispute the said liability and the assessment order had attained finality. 15.1. It may be noted that from the applications and submissions made by the petitioner, it is not clear as to how the assessments for previous financial years were completed or whether the petitioner was assessed for the first time. 16. We have also gone through the reply of the petitioner dated 20th December, 2018 against the notice (annexure Q) issued on 15th November, 2018 for undertaking suo motu revisional proceedings. It is submitted by the petitioner that price of empty glass bottles used for manufacturing of country spirit is mandatorily to be declared on the label of the country spirit bottle under the relevant provisions of the Bengal Excise Act, 1909 read with relevant rules. It is also stated that the said sum is required to be refunded when empty bottles are returned in good condition. It is also stated that the maximum retail price (MRP) includes the price of bottles and is one of the components of MRP. The petitioner also relied upon judgments in the case of Kalyani Breweries Limited v. State of West Bengal [1990] 78 STC 441 (WBTT), as delivered by this Tribunal and honourable Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reme Court of India had stated, ... it seems to us upon these facts and circumstances that there was really a sale of the bottles to the customer, the assessee buying back the empties from some customers... (part of para 9, page 195 in 107 STC of the judgment). 18.4 Accordingly, learned State Representative defended the orders passed in the suo motu revisional proceedings by concerned respondent officer. 19. We have referred to the provisions of section l2(1)(a) regarding contingent liability to pay tax on purchase. It is stated in the said part of the section that the liability arises for purchase of goods which are not meant for purposes specified in clause (a) to clause (i) of section 22(4) of the VAT Act. We have also referred to the provisions of section 17(1)(b) where it is stated that rate of tax on such turnover of purchase shall be at the rate as applicable to sale of such goods under section 16(2) of the VAT Act. We have also referred to the provisions of section 16(2) which specifies rate of tax applicable for various goods. We have also referred to section 16(2A) which provides that rate of tax applicable for taxable goods sold together with containers or pac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... STC 1 (Bom), read as below (pages 1-7 in 99 STC) : '1. Whether, on the facts and circumstances of the case and on a proper interpretation of section 2(36) of the Bombay Sales tax Act, 1959, read with rule 4 of the Bombay Sales tax Rules, 1959, the Tribunal was right in concluding that as in pursuance of clause 4 of Part C of the distributorship agreement executed by the applicants with Muller Phillips (India) Pvt. Ltd. in which parties have consciously provided for repurchase of the goods and not return of goods, it was a case of a resale by the buyer to the seller, the sale price being the very same amount which the buyer had paid to the seller and, therefore, the claim of return of goods made by the applicants before the Sales Tax Officer was not sustainable ? 2. Whether, on the facts and circumstances of the case and on a proper interpretation of section 8A(1)(b) of the Central Sales tax Act, 1956, the Tribunal was right in concluding that as in pursuance of clause 4 of Part C of the distributorship agreement executed by the applicants with Muller Phillips (India) Pvt. Ltd. in which parties have consciously provided for repurchase of the goods and not return of go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which reads as follows : '4. Goods returned to a dealer.-The period for return of goods for the purposes of clauses (35) and (36) of section 2 shall be twelve months from the date of their purchase : Provided that, if in any particular case the Commissioner is satisfied that the purchaser could not return the goods within the said period on account of circumstances beyond his control, the Commissioner may, in such case, extend the said period by a further period not exceeding three months.' 5. On a conjoint reading of clause (36) of section 2 and rule 4, it is clear that while computing the turnover of sales for the purpose of assessment under the Bombay Act, the assessee is entitled to claim deduction of the amount of sale price of the goods refunded by the dealer to the purchaser in respect of any goods purchased and returned by the purchaser within a period of 12 months from the date of their purchase. The benefit of deduction under this provision, however, may be given to the dealers even for amounts refunded in respect of goods purchased and returned beyond the period of twelve months but not exceeding three months thereafter, on the satisfaction of the Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned State Representative that the goods returned were treated as repurchase in this case does not hold relevance in this case, since the goods which were treated as repurchase were allowed to be deducted from turnover of sales as per judgment of the honourable Bombay High Court in the matter of Richardson [1995] 99 STC 1 (Bom) and also it was recorded in the said judgment that nomenclature (i.e., used in the agreement, as understood by us) was immaterial. We would also submit that reference was made to the terms of agreement and also the goods were returned in entirety in this case and not merely empty bottles or other packaging material. It may also be noted that deduction was allowed from turnover of sale, subject to satisfying the required conditions laid down under the Bombay Sales tax Act, i. e., return of the goods within 12 months from date of purchase, etc. It may also be noted that orders of assessing officer regarding levy of purchase tax under section 14 of the Act were also set aside. However, we do not consider the said part of judgment also relevant since the provisions of section 14 of the Bombay Sales tax Act were applicable subject to certain conditions which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16,55,355 Balance on 31.3.1975 Rs. 9,22,966 The Commercial Tax Officers treated the amount of ₹ 16,55,355, being the forfeited deposit amount aforestated, as a part of the asses see's sales realisations and taxed it. The Assistant Commissioner confirmed the order, as did the West Bengal Commercial Taxes Tribunal. The matter was carried to the West Bengal Taxation Tribunal, whose order is under appeal. Both Tribunals placed emphasis upon the fact that it had been admitted by the assessee that there was no time-limit for the return of the empty bottles. They found that the transaction in respect of the beer bottles was not one of a bailment as contended by the assessee but one of sale. .... Great emphasis was laid by learned counsel on the judgment of this court in United Breweries Ltd. v. State of Andhra Pradesh reported in [1997] 105 STC 177 (SC) ; [1997] 3 SCC 530 and Raj Sheel v. State of Andhra Pradesh [1989] 74 STC 379 (SC) ; [1989] 3 SCC 262. In learned counsel's submission, what had to be seen was whether the transaction in respect of the beer bottles was a sale. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction. For example, the circumstance that the price of the product and the price of the container are shown separately may be evidence that two separate transactions are envisaged, but that circumstances alone cannot be conclusive of the true character of the transaction. It is not unknown that traders may, for the advantage of their trade, show what is essentially a single sale transaction of product and container, or a transaction of a sale of the product only with no consideration for the transfer of the container as divisible into two separate transactions, one of sale of the product, and the other a sale of the container, with a distinct price shown against each. Similarly where a deposit is made by the purchaser with the dealer, the deposit may be pursuant to transaction where there is no sale of the container and its return is contemplated, and in the event of its not being returned the security is liable to forfeiture. Alternatively, it may be a case where the container is sold and the deposit represents the consideration for the sale, and in the event of the container being returned to the. dealer the deposit is returned by way of consideration for the resale. In every cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s tax. 20.2.1 After going through the said judgment, we are of the considered view that honourable Supreme Court of India had adjudicated on the question of law as to whether the amounts forfeited for non-return of bottles amounted to sale and it was held, while confirming judgments of various authorities including that of the West Bengal Taxation Tribunal, that amount forfeited was liable to be treated as sale of goods and was, therefore, exigible to sales tax. However, it may be noted that while beer was being sold in bottles, there was no levy of sales tax on the money received towards price of empty bottles and amount realised for the empty bottles was shown separately in deposit account. 20.2.2 It is also clear that empty bottles returned were adjusted against the account entitled deposit on bottles by issuing refunds. No questions raised by the concerned officers regarding levy of purchase tax on such return of empty bottles. Hence, this aspect regarding applicability of purchase tax was not required to be adjudicated in the peculiar facts and circumstances of Kalyani Breweries Ltd. 20.3 The relevant parts of Kalyani Breweries Limited, West Bengal Taxation Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r will be non-taxable since the country spirit is non-taxable under WBST Act. It is also submitted that provisions of the said section override that of section 16(2) read with section 17(1)(b) of the Act. (vi) Country liquor is sold on MRP basis under WBST Act and tax is remitted on such MRP value under the relevant provisions of law, at the option of petitioner. 22. We have considered various alternative grounds or submissions for adjudication of the questions of law raised in this application. 22.1 In our considered opinion, basis of levy of excise duty under the Bengal Excise Act and Rules made thereunder, i. e., determination of price does not have any relevance under WBST Act,1994 since the two Acts are different and levy of tax is made under the respective Acts. 22.2 On going through various submissions and documents such as copy of invoices produced at the time of filing, we do not find any evidence that any money was collected separately as caution money or security deposit. We do not find any averment to the effect that accounts were maintained separately for bottles or that money was collected separately. In fact, sales tax has been paid on the entire sales pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act. The honourable Bombay High Court had also noted that nomenclature used was immaterial in this respect. It is reiterated that the judgment ruled that such return of entire goods would reduce turnover of sales, subject to return of the goods within the period laid down under the pro visions of law. 22.5 In our considered opinion, once the goods are sold as composite sales and accounted for accordingly, without any specific agreement and accounting according to the agreement, return of empty bottles (or, for that matter any other packaging material) would not amount to return of goods and reduce the sale consideration, on which sales tax has already been paid. Any such return of goods would certainly amount to purchase of goods and will be liable to being dealt with under the concerned law applicable. Thus, in this case, if the petitioner-dealer is not a registered dealer under W. B. VAT Act, such petitioner-dealer would not be liable to be dealt with under W. B. VAT Act, unless such petitioner-dealer is required to be registered under W. B. VAT Act. It may be recalled that in the case of Kalyani Breweries, the money realised as security deposit or caution money was not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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