1983 Supreme(Bom) 35

IN THE HIGH COURT OF BOMBAY
D.M. Rege, G.F. Couto, JJ.
ARLEM BREWERIES LTD.
Versus
THE ASSISTANT COMMISSIONER OF SALES TAX, PANAJI
Civil References Nos. 4, 5, 6, 7, 8 and 9/B of 1979
Decided On: Decided On : 02-02-1983

The amount taken by the assessee from its purchasers towards the bottles, though termed as "deposit", was the sale price thereof, the transaction constituting the sale of bottles by the assessee to the purchasers liable to be assessed for sales tax.

Headnote:

SALES TAX - Assessment - Sale of beer and bottles - Whether sale of bottled beer or sale of beer and bottles separately - Whether deposit for bottles is sale price - Whether beer is Indian-made foreign liquor - Goa, Daman and Diu Sales Tax Act, 1964 (4 of 1964), Sec. 2(1), 7(1)(a), 7(1)(c), First Schedule, Item 22.

Fact of the Case:

The assessee, a manufacturer of bottled beer, sold its beer to wholesalers on an understanding that the price included the cost of the bottle, which was refundable on return of the bottle. The Sales Tax Officer assessed the assessee to sales tax on the total price of beer and the bottle as falling under item 22 of the First Schedule to the Goa, Daman and Diu Sales Tax Act, 1964, which levied tax on foreign liquor and Indian-made foreign liquor. The assessee challenged the assessment, contending that the sale of beer and bottles was separate and that the deposit for bottles was not the sale price.

Finding of the Court:

The Court held that the sale of beer and bottles was separate and that the deposit for bottles was the sale price thereof, constituting the sale of bottles by the assessee to the purchasers liable to be assessed for sales tax under section 7(1)(c) of the Act. The Court also held that beer could be classified as Indian-made foreign liquor liable for sales tax under item 22 of the First Schedule to the Act.

Issues: 1. Whether, on the facts and circumstances of this case, was the Tribunal justified in law in holding that the applicant effected sale of bottles? 2. Whether, on the facts and circumstances of this case, was the Honourable Tribunal justified in law in holding that the deposit lodged by the customers against the bottles loaned amounted to sale price within the meaning of section 2(1) of Act 4 of 1964? 3. On the facts and circumstances of this case, was there a sale of beer alone or sale of beer and bottle or sale of bottled beer? 4. Was there any material or evidence before the Honourable Tribunal to hold that the applicant sold bottles and that the deposit received amounted to sale price within the meaning of section 2(1) of Act 4 of 1964? 5. Was there any material or evidence to hold that the deposit corresponds to the cost of the bottle so that when the cost increased the deposit is enhanced? 6. In case if it is held that there is a sale of bottles then what is the rate of tax applicable to it? 7. Was the Honourable Tribunal justified in law in holding that the rate of tax applicable on the sale of bottles was that which was applicable on Indian-made foreign liquor? 8. Whether beer is Indian-made foreign liquor within the meaning of entry 22 of the First Schedule to the Act 4 of 1964 and what is the rate of tax payable on it?

Ratio Decidendi: 1. The expression "sale" under the Sales Tax Act has to be understood with reference to the definition of "sale of goods" under the Sale of Goods Act. 2. In order to constitute a sale under the Sales Tax Act, the following elements should be present: (i) an agreement between the parties for the purposes of transferring title to the goods, (ii) supported by money consideration, and (iii) property must actually pass in the goods. 3. The amount taken by the assessee from its purchasers towards the bottles, though termed as "deposit", was the sale price thereof, the transaction constituting the sale of bottles by the assessee to the purchasers liable to be assessed for sales tax. 4. Beer could be classified as Indian-made foreign liquor liable for sales tax under item 22 of the First Schedule to the Act.

Final Decision: The Court answered the questions as follows: 1. In the affirmative. 2. Need not be answered. 3. As reframed. In the negative. 4 and 5. Need not be answered in view of our answers to the above questions. 6. The sale of bottles was liable to tax under section 7(1)(c) of the Sales Tax Act. But the assessee be held liable to pay sales tax only in respect of the unrefunded amount. The assessee to satisfy the Sales Tax Officer from its books of account as to the amount unrefunded. 7. Not necessary to be answered. 8. In the affirmative.