Refundable deposit for tins treated as sale on non-return, making the appropriated amount taxable as sale price.

A refundable deposit arrangement for tins was treated according to its substance, not the assessee's accounting entries. Because customers had only a right to return the tins within a stipulated period and no enforceable obligation existed to return them, the arrangement was not a pure bailment. It operated as a composite transaction akin to sale on approval or sale or return, so property in the tins passed on non-return. The amount appropriated from the deposit account for unreturned tins therefore represented sale price and formed part of taxable turnover; the High Court's view was reversed in favour of the Revenue.

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Issues: Whether the amount written off from the deposit account in respect of unreturned tins constituted sale price and was exigible to sales tax; and whether the tins were held under bailment or as part of a composite transaction that became a sale on non-return.

Analysis: The deposit arrangement and the invoice or price-list endorsements did not create an enforceable obligation on customers to return the tins. The customers had only a right to return the tins within the stipulated period and obtain refund of the deposit, while the assessee had no corresponding obligation after expiry of that period. The matter had to be judged by the true nature of the transaction and not by the assessee's book entries. On the facts, the arrangement was not a pure bailment; it was a composite arrangement akin to a sale on approval or sale or return, under which property in the tins passed on non-return within the prescribed time. The amount appropriated as trading receipt therefore represented the price of tins not returned.

Conclusion: The amount written off in respect of unreturned tins was sale price and formed part of taxable turnover; the finding of the High Court was reversed and the answer was in favour of the Revenue.

Ratio Decidendi: Where goods are supplied on a refundable deposit basis without an obligation to return and the arrangement provides that non-return within the stipulated period results in retention of the goods, the transaction is to be treated according to its substance as a sale on non-return, and the amount appropriated on such non-return is sale price.

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