Taxability of empty liquor bottles turns on their separate sale as packing material once liquor is removed.

Empty beer and liquor bottles, once liquor has been removed, are treated as goods sold separately and therefore as taxable packing material under the Andhra Pradesh Value Added Tax Act, 2005. The special exemption for liquor bottled and packed under the A.P. Excise Act applies only while the liquor retains that character; once the contents are removed, the bottles no longer fall within that exempt category. The text also states that section 6 and the input tax credit restrictions for Sixth Schedule goods do not prevent separate taxation of the empty bottles, and that the amendment to section 4(9) confirms separate taxability after separation.

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Issues: Whether empty beer and liquor bottles, after removal of liquor, are taxable as packing material under the Andhra Pradesh Value Added Tax Act, 2005, or whether their sale falls within the exemption applicable to liquor, bottled and packed as per the A.P. Excise Act, 1968.

Analysis: Empty bottles are "goods" and, when sold by themselves, fall within the category of packing material taxable at the rate prescribed for item 90 of the Fourth Schedule. The special treatment under item 1 of the Sixth Schedule applies to liquor only so long as it remains bottled and packed as per the excise law, with tax at the point of first sale in the State. The exemption for second and subsequent sales under Explanation II to section 2(38) applies to such bottled liquor while it retains that character, but once liquor is removed from the bottles, the bottles cease to be goods covered by the Sixth Schedule. Section 6 does not prevent the bottles from being taxed at the rate applicable to packing material when sold separately. The amendment to section 4(9), by deleting the words "other than liquor", shows that liquor separately sold after separation from the bottles is also taxable under that provision, while the bottles themselves remain taxable as packing material. Input tax credit restrictions for Sixth Schedule goods do not alter the taxability of empty bottles sold independently.

Conclusion: Sale of empty bottles, after separation from liquor, is liable to tax at four per cent under section 4(3) read with item 90 of the Fourth Schedule, and the challenge fails.

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