The main legal point established in the judgment is the interpretation of the definition of 'turnover' and the determination of an implied contract for the sale of bottles in the context of the imposition of sales tax on bottling charges.

Judgment

S.B. SINHA, J. - Leave granted.

2. The appellant is a cooperative society registered under the U.P. Cooperative Societies Act. It carries on business of manufacture and sale of India - made foreign liquor (for short "IMFL") and country liquor.

3. In respect of Assessment Year 1989 - 90, the books of accounts maintained by it were rejected by the assessing authority, inter alia, on the premise that tax would be payable in respect of bottles being containers of the country liquor. An appeal was preferred thereagainst by the appellant before the Deputy Commissioner (Appeal) and by reason of an order dated 11 - 1 - 1994, the said appeal was allowed in part holding that no sales tax could be imposed on the bottling charges for country - made liquor. A second appeal thereagainst was preferred before the Trade Tax Tribunal by the Revenue, which was dismissed. A revision was preferred before the High Court against the said judgment of the Tribunal and by reason of the impugned judgment, the High Court opined that bottling charges are part of the turnover and are liable to tax.

4. Mr K. Radhakrishnan, the learned Senior Counsel appearing on behalf of the appellant, would submit that the High Court committed a serious error in passing the impugned judgment insofar as it failed to take into consideration:

(1) The assessee is not a dealer in bottles as it does not carryon any business therein.

(2) There being no other alternative, bottles are used as a cheap and convenient mode of transport and sale of country - made liquor.

(3) Amounts of Rs 2.60, Rs 2.30 and Rs 1.57 represent only the a charges for PP caps, seals and filling charges, which are collected under the head of bottling charge and, thus, the same is a payment for the job work undertaken for packing the country - made liquor.

(4) Neither there is any sale of bottles nor is any price charged therefor.

(5) There is no express or implied agreement to sell bottles.

(6) The department has not discharged its burden to prove that there was an implied agreement to sell the bottles.

(7) The purchasers were purchasing only country - made liquor and the appellant had only been selling the same.

(8) Cost of packing material is very less and insignificant as compared to the cost of country - made liquor and price of the goods is the same with or without bottles.

(9) Tax on bottling charges is sought to be recovered only from tax - free country liquor, and in the course of sale of IMFL, the sale of bottles has not been held to be a separate sale and, thus, double standards adopted by the department is not justified.

(10) Section 3 - AB inserted in the U.P. Trade Tax Act, 1948 (for short "the Act") on 1 - 8 - 1990, being clarificatory/declaratory has retrospective effect.

5. The learned counsel has placed strong reliance on a decision of the Allahabad High Court in Chhatta Sugar Co. Ltd. v. Commr., Trade Taxi in support of the said contention.

6. Mr Dinesh Dwivedi, the learned Senior Counsel appearing on behalf

of the respondent, on the other hand, would submit that as sale of bottles finds place in Entry 20 in the Schedule (sic) appended to the Act, despite the fact that no sales tax is payable on country liquor, the assessee would be liable therefor having regard to the definition of "turnover" as contained in " Section 2(i) of the Act.

7. A notification was issued on or about 7 - 9 - 1981 by the State of Uttar Pradesh in exercise of its power conferred upon it under the proviso appended to clause (e) of sub - section (1) of Section 3 - A of the U.P. Sales Tax Act, 1948, in terms whereof glass bottles and phials, other than handmade glass phials are exigible to tax @ 4% have been included in Entry 20 thereof.

8. The appellant herein is a dealer of country liquor. It also carries on business in IMFL. Curiously, whereas in respect of IMFL, no sales tax has been levied on bottles, such a levy is sought to be made on bottles for sale of country liquor. Business in country liquor is re