Refundable container deposits are outside turnover only when the arrangement shows a genuine deposit, not split sale consideration.

Amounts described as bottle and crate deposits are excluded from taxable turnover only where the surrounding arrangement shows a genuine refundable deposit and not part of the sale price. On the United Breweries supplies, separate billing, refund at the same rate, and retention of property in the containers supported a true deposit, so the receipts were not taxable turnover. For Ruttanjee and Co. supplies before 3 August 1972, there was no supporting agreement or evidence of a real return-and-refund arrangement, and the so-called deposits were treated as part of the liquor sale price, so they remained taxable turnover.

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Issues: (i) Whether amounts collected as bottle and crate deposits in relation to supplies of United Breweries Ltd. constituted taxable turnover under the Tamil Nadu General Sales Tax Act, 1959. (ii) Whether amounts described as bottle deposits collected in relation to Ruttanjee and Co. supplies before 3 August 1972 were taxable turnover.

Issue (i): Whether amounts collected as bottle and crate deposits in relation to supplies of United Breweries Ltd. constituted taxable turnover under the Tamil Nadu General Sales Tax Act, 1959.

Analysis: The arrangement with United Breweries Ltd. was long-standing and supported by circulars and invoices showing separate billing of liquor price and refundable deposits. The deposits were collected and refunded at the same rate, the property in the bottles and crates remained with the breweries, and the surrounding circumstances supported the view that the amounts were true deposits and not sale consideration. The possibility of forfeiture on non-return did not change the character of the original receipt. No material established a disguised sale of empties or an artificial profit-making device.

Conclusion: The amounts collected as deposits in respect of United Breweries Ltd. supplies were not taxable turnover and the assessee succeeded on this issue.

Issue (ii): Whether amounts described as bottle deposits collected in relation to Ruttanjee and Co. supplies before 3 August 1972 were taxable turnover.

Analysis: For the earlier period, the supplier had not charged any bottle deposit and there was no evidence of any agreement for return of containers or refund of deposit. The bills merely split up the consideration into price and so-called deposit without any supporting arrangement showing a real deposit or bailment. In those circumstances, the amounts collected before the new arrangement came into effect were treated as part of the sale price of liquor and not as genuine refundable deposits.

Conclusion: The amounts collected before 3 August 1972 in relation to Ruttanjee and Co. supplies were taxable turnover and the assessee failed on this issue.

Final Conclusion: The appeals succeeded in part, with relief granted for the United Breweries deposits and for Ruttanjee and Co. deposits only from 3 August 1972 onwards, while the earlier Ruttanjee and Co. collections remained taxable.

Ratio Decidendi: A receipt described as a deposit is outside turnover only when the surrounding arrangement shows a true refundable deposit and not a part of the sale price artificially split up; where no such arrangement exists, the amount forms part of taxable turnover.

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