Sale versus bailment for beer bottles: security deposit treated as sale price and made subject to sales tax.

Amount collected as a so-called security deposit for beer bottles was treated as part of the sale price because the surrounding arrangement showed a sale, not bailment. Property in the bottles passed to the purchaser, there was no obligation or fixed time for return, no bottles were actually returned, and fresh deposits were taken on each consignment. The statutory scheme requiring beer to be supplied in sealed bottles reinforced that the billing description as a security deposit did not reflect the real nature of the transaction. The amount was therefore liable to sales tax.

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Issues: Whether the amount collected as a security deposit for bottles supplied with beer was in substance part of the sale price, and consequently liable to sales tax, or whether the transaction was one of bailment.

Analysis: The distinction between sale and bailment depended on whether property in the bottles passed to the purchaser and whether there was any obligation to return the bottles. The surrounding statutory scheme required beer to be sold only in sealed bottles, the L1 licensee was under no obligation to return the bottles, no time limit for return was fixed, no bottle was in fact returned, and fresh deposits were taken on each consignment. On these facts, the billing device describing the amount as security deposit did not reflect the true nature of the transaction. The transaction was treated as a sale of bottles and not as bailment.

Conclusion: The amount received as security was part of the sale price, and the assessee was liable to pay sales tax on it.

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