9911796707
TMI Blog2020 (7) TMI 469X X X X Extracts X X X X X X X X Extracts X X X X ..... e respondents undertook not to take any action towards recovery of the outstanding demand emerging from the said order. The petitioner had also filed supplementary affidavit contesting the order dated December 21, 2018 passed by the respondents in suo motu revisional proceeding. The petitioner had, accordingly, prayed for setting aside the order dated December 21, 2018. 2. The main issue relates to demand raised against the petitioner on account of levy of purchase tax against return of empty bottles from unregistered dealers under section 12(1) of the WB VAT Act, 2003. 3. Pursuant to the application filed by the petitioner as well as supplementary affidavit filed by the petitioner, the petitioner has prayed for setting aside the adverse report dated March 24, 2018 drawn up Bureau of Investigation, notice in form 70 dated April 2, 2018 for suo motu review proceeding and orders passed in suo motu revisional proceedings on December 21, 2018. Notice dated April 2, 2018 issued in form 70 was already set aside in course of hearing and, hence, the said prayer stands disposed of. 4. The learned advocate for the petitioner made submissions with reference to application, supplementary af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hases during various financial years. Copy of the said report was placed at annexure A of the petition. Learned advocate for the petitioner submitted that the said liability of purchase tax under the VAT Act does not arise because the said transaction is neither a sale nor a purchase of the bottles and payment towards the empty bottles returned from the customers is only release of the caution money. It was emphatically submitted that the said transaction cannot be treated as "sales simpliciter". 7. It was also submitted that provisions of section 12 of the VAT Act, 2003 get attracted only when the unregistered purchase of goods are not meant for purpose specified in clauses (a) to (i) of section 22(4) of the VAT Act and the petitioner is not covered by the said provisions. Learned advocate also submitted that provisions of section 22 are to be read with in conjunction with section 17 of the VAT Act. It was also submitted that as per provisions of section 17 the dealer will pay tax at the rate specified under section 16(2) of the VAT Act. It was also submitted that provisions of section l6(2A) of the Act override provisions of section 16(2) of the Act, which provides that the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that the said transactions were composite sale of goods and return of empty bottles constituted sales return. It was also submitted that there was no scope to treat such sales returns as "purchase simpliciter" as also stated in para 5 of supplementary affidavit. 13. The learned advocate for the petitioner also drew attention to para 5(vii) of the supplementary affidavit and explained difference between sales simpliciter and sales return in support of his contention that the said transactions were sales returns. 14. The learned advocate for the petitioner also submitted that para 15 of the judgment rendered by the WB Taxation Tribunal in the matter of Kalyani Breweries Limited v. State of West Bengal [1990] 78 STC 441 (WBTT), had been misquoted by including parts of other paras in the judgment and reflecting the judgment in a different manner altogether as also submitted in the written note by learned advocate for the petitioner. Learned State Representative submitted that this was an error on the part of the concerned officials of Bureau of Investigation who prepared the report and expressed his regrets. 14.1. We have gone through entire judgment and analysed the same in its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the retail vendors but constituted sales return and/or rebate or discount. 17. We have also gone through the orders passed in suo motu revisional proceeding. After narrating various facts of the case, revisional authority has passed a reasoned order. Reliance was also placed on the judgment of Kalyani Breweries Limited v. State of West Bengal rendered by this Tribunal [1990] 78 STC 441 (WBTT) as well as the provisions of the WB VAT Act, 2003 including definition of purchase. 17.1. It is also recorded that it was evident that the dealer being registered under section 24 of the WB VAT Act, 2003 had to purchase goods from another registered dealer by payment of tax on the sale price and under prescribed tax invoice, i. e., in case of anything not done other wise the dealer had to pay tax on his purchase. 18. The learned State Representative also submitted a written note in support of his contention in course of hearing. The last comprehensive note was submitted on March 15, 2019. 18.1. The learned State Representative also relied upon the judgment of Richardson Hindustan Limited v. State of Maharashtra [1995] 99 STC 1 (Bom) in support of his contention that return of the emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice of the goods. We have also referred to section 16(2B), which states that sale of any goods which are exempted from tax, when sold in packed conditions with containers or any packing material such containers or packing materials shall also be exempted from tax. 19.1 In our considered opinion the provisions of section 16(2A) apply when there is a composite sale of goods under the VAT Act. Similarly, pro visions of section 16(2B) apply only when goods exempted under the VAT Act are sold along with packing material, i. e., composite sale of the goods exempted under the VAT Act. We are of the considered view that provisions of section 16(2A) and section 16(2B) override that of section 16(2) of the Act and the rate of tax will be determined with reference to provisions of section 16(2) of the Act only when provisions of section 16(2A) and section 16(2B) are not applicable. In this case, where rate is to be ascertained only for packing materials, i.e., empty bottles, provisions of section 16(2A) and section 16(2B) do not apply. Hence, for levy of purchase tax in case of computation of purchase tax on such turnover of purchases from un-registered dealers in the case of packing mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of return of goods made by the applicants before the Sales Tax Officer was not sustainable ?' .... 3.... The Assistant Commissioner, however held that by taking back the goods sold by it the assessee had violated the terms of the declaration on the strength of which it had purchased the goods without payment of tax for use in manufacture of the goods in question for sale and hence it was liable to purchase tax under section 14 of the Act. Against the above order of the Assistant Commissioner, both the assessee and the Revenue went in appeal to the Maharashtra Sales Tax Tribunal ('the Tribunal'). The assessee was aggrieved by the order of the Assistant Commissioner in so far as it had held that the assessee was liable to purchase tax under section 14 of the Act. The Revenue was aggrieved by the above order in so far as the entitlement of the assessee for deduction of the value of the goods returned by the distributors from its turnover is concerned. The Tribunal rejected the appeals of both the assessee as well as the Revenue and held that the assessee was not entitled to deduction of the value of the goods returned by the distributors because it was not a return but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;return of goods' or 'repurchase of goods', would be of no relevance because return of goods falling under section 2(36) of the Act envisages purchase of the goods earlier sold by the asses see-dealer to the purchaser. On return of goods, the purchaser would naturally be entitled to the refund of the price of the goods, if already paid, or to credit for the same, if it had been debited for the price thereof at the time of sale. The return of goods envisaged by clause (36) of section 2 of the Act, therefore, in all cases will be preceded by a sale of goods and in effect, would be repurchase of the goods by the dealer. The Tribunal was therefore not justified in rejecting the claim of the assessee on the ground that the return of the goods amounted to repurchase of the goods by the assessee-dealer. In that view of the matter, we are of the clear opinion that the assessee is entitled to deduction of the sale price of the goods refunded by him to the purchaser in respect of goods purchased and returned by such purchaser. ...... 8. Our attention was also drawn to the order of the Assistant Commissioner as well as the Tribunal dealing with the applicability of section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of law. Thus, goods which were returned but were not allowed to deducted from turnover of sales, were again subjected to tax under the relevant provisions of law at the time of sale. 20.2 The relevant parts of Kalyani Breweries Ltd. v. State of West Bengal the Supreme Court of India, dated September 15, 1977 [1997] 107 STC 190 (SC) read as below (pages 191-195 in 107 STC) : "The assessment year with which we are concerned is the assessment year 1974-75. The assessee, the appellant, brewed and sold beer in beer bottles. For the beer it gave to its purchasers one invoice and another for 'the deposit on bottles'. On record are two such corresponding invoices. On the invoice which relates to 'deposit on bottles' there is another item, of 'truck charge'. It was the case of the assessee that the rate per bottle of the deposit was adjusted so as to cover the cost of the bottles that were purchased by it..... The amounts received as such deposit were credit to an account entitled 'deposit on bottles' in the assessors ledger. When the empty bottles were returned by customers, refunds were made at the same rate. There was no time-limit for the return a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt came to the conclusion that the intention of the brewer did not appear to have been to sell the beer bottles ; on the contrary, the brewer was trying to ensure that the bottles in which the beer was supplied to customers through its customers were brought back to it so that they could be used again. It was in this context that it was said, 'It does not appear that any time limit was fixed for return of bottles in this case. But, even if such limit was fixed, it is well-settled that time is not of the essence of the contract unless the parties specifically make it so'. In Raj Sheel v. State of Andhra Pradesh [1989] 74 STC 379 (SC) ; [1989] 3 SCC 262, this court was again concerned with brewers who sold beer in bottles and the question was whether the bottles were exigible to sales tax. Learned counsel for the assessee relied upon the following observations therein : '7. It is commonly accepted that a transaction of sale may consist of a sale of the product and a separate, sale of the container housing the product with respective sale considerations for the product and the container separately ; or it may consists of a sale of the product and a sale of the contai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere communicated to the assessee's customers. There is no suggestion that there was an oral communication of such terms to the customers or that there was any trade usage in this behalf, it is difficult to visualise a bailment the terms whereof are not made known to the bailee. The forfeiture of amounts in the assessee's 'deposit on bottles' account does not appear to bear out of the assessee's case that the empties were returnable at any time. This must also be taken into account that the customers were required to deposit for the beer bottles a rate which was exactly equal to the cost of the bottles ; this would suggest the sale thereof more strongly than the intention to get them back upon bailment. It seems to us upon these facts and circumstances that there was really a sale of the bottles to the customers, the assessee buying back the empties from some customers. It is, therefore, that the asses see could show a refund of Rs. 11,62,974 out of the total amount of deposits, namely, Rs. 30,57,143. Had there been a bailment which necessarily pre-supposes that the bailee was aware of the terms thereof, a large refund would have been shown. The judgment in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efor, the transaction remained a transaction of sale. The refund in such cases must have to be treated as a rebate or discount. Consequently, the amount refunded will be excluded from sale price ; but the amount forfeited must have to be treated as part of sale price, and, therefore, liable to levy of sales tax." 20.3.1 We would most respectfully like to interpret para 15 of the judgment as "the amount refunded will continue to be excluded from sale price", in the facts and circumstances of the case. 21. The main prayers for adjudication before this Tribunal in this application is as to whether return of empty bottles would constitute purchase of empty bottles by the petitioner, with incidental prayers regarding setting aside of the report of Bureau of Investigation. 21.1 The prayers are based on various alternative grounds that : (i) The country liquor is sold in glass bottles and the money charged by the petitioner for country liquor includes the price of bottles as packing materials, as per the relevant provisions of West Bengal Excise Rules. It is also stated that money is refunded to the buyers of goods for empty bottles and such transaction is nothing but that of a sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd. Since it is a composite sale price, which is in this case is included in the invoice value as well as Maximum Retail Price (i. e., MRP ), sales tax is also paid at the rate applicable for the main product, i. e., country spirit. We do not find any agreement to the effect that buyer of the goods is under an obligation to return empty bottles. We are also of the considered view that sales return would normally denote return of the entire goods sold with reference to the terms of sale, i. e., invoice in this case or a separate agreement in this regard. If the country spirit bottle, i. e., bottle filled up with country liquor, is returned for whatever, reason, it would certainly amount to sales return and will be accounted for accordingly under the West Bengal Sales tax Act, 1994. However, this is not the position in this case. 22.4 The petitioner has accepted composite sales as sales as per invoice value in the concerned year and has not accounted for payments made for return of empty bottles as sales returns, i. e., reduced from the turnover of sales in the concerned period. After considering various facts and circumstances of the case, including the agreements between the vend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue of credit notes having cross reference to the original invoice and predetermined value would not change the nature of the transaction amounting to sale, particularly because only empty bottles are being returned for a price and there is no compulsion on the part of purchasers nor is there any agreement to that effect. In our considered view, transaction of sale having been completed with composite sale, return of empty bottles after consumption of main product cannot be treated as sales return, when the amount was not realised separately as "deposits or caution money" and also not accounted for accordingly. 23. It would be relevant to refer to provision of section 2(34) of the WB VAT Act, which reads as below : "'purchase' means any transfer of property in goods to the person making the purchase for cash or deferred payment or other valuable consideration, but does not include a transfer by way of mortgage, hypothecation, charge or pledge." 23.1 We are also of the considered view that return of empty bottles, in the peculiar facts and circumstances of the case, amounts to purchase of goods under WB VAT Act, 2003 under section 2(34) of the Act since there has been ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
