TaxTMI 
TaxTMI 
1997 (3) TMI 601
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....omers. This deposit cannot be treated as sale proceeds in any way. It has been emphasised that the assessee had issued circulars to its customers making it clear that empty bottles and crates were not being sold. The bottles were to be returned so that the process of bottling beer could continue smoothly and steady supply could be maintained. The system followed by the assessee was that upon the return of the empty bottles, fresh supplies would be made to the dealer. The assessee had submitted figures to show that a substantial part of the bottles was returned by the consumers. The attention of the sales tax authority was also drawn to the circulars issued by the assessee to its customers to the following effect: "UNITED BREWERIES LIMITED, HYDERABAD. 24, Grant Road, P.B. 5104, Bangalore-1. Dear Sir, We are glad to inform you that our brewery at Hyderabad commenced operating on October 18, 1971 and we are not in a position to render the same service to you as we render to our valued customers in Bangalore, viz., delivery of our beer at your door fresh from the brewery every day. The brands can offer and their prices are as follows: U.B. Export Lager: Rs. Rate p....
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.... Revenue was that the mere fact that bottles and crates in which beer was sold could be returned did not mean that the customers had not purchased the bottles and the crates and had not become owners thereof. The bottles and crates were also vended to the customers along with the beer. The High Court held that the ownership in the bottles and crates did not remain with the UB when beer was sold. The customers purchased the bottles and the crates with the contents of receptacles. When bottles and crates were returned to the extent shown by the assessee, in law, there was a resale of bottles and crates to the assessee. The High Court referred to the decision of this Court in the case of Punjab Distilling Industries Ltd. v. Commissioner of Income-tax [1959] 35 ITR 519, and pointed out that UB did not have any right to the return of the bottles and crates nor was there any time-limit set for return of the bottles and crates. Therefore, it was a clear case where bottles and crates were sold along with beer and had to be included in the sale price. 7. The assessee has come up in appeal against this decision. The case of the appellant is that the company carries on business of manufact....
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....s with customers will be taken back by our truck, the driver of which will issue a receipt, against which our brewery will issue a credit note on production of which credit will be allowed for the deposit at the time of booking of the next order. Please take back empty bottles from your customers and pay them 40 paise per bottle. This will reduce the cost of the beer and encourage them to buy larger quantities from you. As open delivery will be given, there will be no question of leakages. Further, as already stated above, the beer will be delivered to you fresh every day. Not only will this simplify your business but you will build up a very good turnover in beer just like every one of our customers in Bangalore. This arrangement will be particularly of great advantage to you during the hot weather when there is a large demand for beer. We hope you will easily visualize the tremendous benefit to you of our having started our brewery in Hyderabad and extend you kind patronage to your mutual benefit." 8.. Four things emerge from this circular set out herein- (1) The refundable deposits were being collected on the bottles and the crates. (2) The appellant advised its customers to....
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.... lays down that where there is a contract for sale of specific or ascertained goods, the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred. For the purpose of ascertaining the intention of the parties, regard shall be had to the terms of the contract, conduct of the parties and the circumstances of the case. Sections 20 to 24 contain rules for ascertaining the intention of the parties as to the time at which the property in the goods is passed to the buyer. But these rules will apply only if a different intention does not appear from the contract itself. 13.. From the memorandum issued by UB, it appears that UB was very anxious not to lose the bottles and crates in which the beer was supplied. 40 paise was charged as deposit and the customers were also advised to do likewise when they sold the beer to the consumers. The whole intention was to get back the bottles from the consumers through the customers. The scheme was that UB would regularly send trucks with beer to the customers to supply beer and get back the empties. These empties will be filled up again for further supplies. This recycling of bottles will keep....
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....d a right to return the tins in good condition within three months. The supplier was under an obligation to refund the deposit amount only if the tins were returned within three months in good condition. 15.. It is not clear how the court came to the conclusion in the facts of that case that the tins were sent to the buyers on sale or "on sale or return" basis or any analogous condition. We are of the view that the principle of section 24 or any analogous principle cannot be applied to a case like this. Neither the beer nor the bottles nor the crates were sent to the customers by UB for approval or "on sale or return" basis or any other similar term. Section 24 of the Sale of Goods Act, 1930 is subject to the provisions of section 19 which provides that the property in specific or ascertained goods is passed to the buyer only at such time as the parties to the contract intend it to be passed. The facts of this case reveal that UB did not intend to sell the bottles or the crates to the customers. There was no intention of an out and out sale to the customers. On the contrary, the customers were advised to sell the beer in bottles to the consumers and collect a deposit of 40 paise p....
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....view, the deposit amount which was liable to be forfeited on failure of the return of bottles was in the nature of liquidated damages recoverable by the supplier under section 74 of the Contract Act. An overall view has to be taken of the dealings and transactions between the manufacturer of the beer, its customers and the consumers. The intention of UB, does not appear to have been to sell the beer bottles. Nor was there any intention of the retailers to sell the bottles to the consumers. On the contrary, by the terms and conditions of the agreement UB was trying to ensure that the bottles in which the beer was supplied to the consumers through their customers were brought back to it so that they could be used again for fresh supply of beer at a cheap rate. 19.. Strong reliance was placed by Mr. Ganguli on the decision of this Court in the case of Punjab Distilling Industries Ltd. v. Commissioner of Income-tax, Simla [1959] 35 ITR 519; [1959] Supp 1 SCR 683. That case was decided under the Income-tax Act, 1922. There the appellant-distiller of country liquor carried on the business of selling liquor to licensed wholesalers. Due to shortage of bottles during the war time, a buy-ba....
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....iner is also sold along with liquor. 22.. Commissioner of Income-tax, Madurai v. T.V. Sundaram Iyengar Sons Ltd. [1996] 222 ITR 344 (SC); (1996) 6 Scale 757, is a case under Incometax Act. The question in that case was whether unclaimed sundry credit balances lying with the assessee could be treated as trading receipt. The amounts were left lying with the assessee and the claims of the customers had become barred by limitation. The assessee transferred the unclaimed balances to the profit and loss account. It was held that the moneys had been received by the assessee in course of trading transaction. Although originally the amounts received were not of income nature, by lapse of time the claim of the depositors became timebarred and the amount by operation of law acquired a totally different character. This principle was enunciated in the case of Jay's-The Jewellers Ltd. v. Commissioners of Inland Revenue [1947] 29 TC 274 (KB). This was a case under the Income-tax Act. We fail to see how this principle has any relevance to the case now before us. In that case, the dictum of Lord Greene in the case of Morley (Inspector of Taxes) v. Tattersall [1939] 7 ITR 316 (CA), that the tax....
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....re also referred to an English decision in the case of Beecham Foods Ltd. v. North Supplies (Edmonton) Ltd. [1959] 2 All ER 336, where the plaintiffs were the manufacturers and suppliers of a glucose drink sold under the trade mark "Lucozade". Every bottle of "Lucozade" was supplied subject to a condition as to the price at which it might be resold, the condition being the observance of the fixed retail price as published in the current price list issued by the plaintiffs' distributors. In the retail price list for 1957, the price was shown as "2s. 6d. plus 3d." for a twenty-six ounce unit, and under the heading "Bottle and container charges", it was stated that "Lucozade" bottles were "charged at 3s. per dozen, refundable". The defendants, who carried on business as grocers, sold "Lucozade" at 2s. 7d. per bottle. Moulded in the glass of the bottle was the word "Lucozade", and there was a label on the bottle with "2s. 6d." in large type, followed by the words "plus 3d. deposit returnable on bottle with stopper", in smaller type. The plaintiffs, who were the manufacturers, brought an action for an injunction to restrain the defendants from selling "Lucozade" at a price less than....