TaxTMI 
TaxTMI 
2020 (7) TMI 469
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....of Rs. 29,67,236.25 against the petitioner and the respondents undertook not to take any action towards recovery of the outstanding demand emerging from the said order. The petitioner had also filed supplementary affidavit contesting the order dated December 21, 2018 passed by the respondents in suo motu revisional proceeding. The petitioner had, accordingly, prayed for setting aside the order dated December 21, 2018. 2. The main issue relates to demand raised against the petitioner on account of levy of purchase tax against return of empty bottles from unregistered dealers under section 12(1) of the WB VAT Act, 2003. 3. Pursuant to the application filed by the petitioner as well as supplementary affidavit filed by the petitioner, the petitioner has prayed for setting aside the adverse report dated March 24, 2018 drawn up Bureau of Investigation, notice in form 70 dated April 2, 2018 for suo motu review proceeding and orders passed in suo motu revisional proceedings on December 21, 2018. Notice dated April 2, 2018 issued in form 70 was already set aside in course of hearing and, hence, the said prayer stands disposed of. 4. The learned advocate for the petitioner made subm....
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....of the value of goods, depending upon the concerned period of purchases during various financial years. Copy of the said report was placed at annexure A of the petition. Learned advocate for the petitioner submitted that the said liability of purchase tax under the VAT Act does not arise because the said transaction is neither a sale nor a purchase of the bottles and payment towards the empty bottles returned from the customers is only release of the caution money. It was emphatically submitted that the said transaction cannot be treated as "sales simpliciter". 7. It was also submitted that provisions of section 12 of the VAT Act, 2003 get attracted only when the unregistered purchase of goods are not meant for purpose specified in clauses (a) to (i) of section 22(4) of the VAT Act and the petitioner is not covered by the said provisions. Learned advocate also submitted that provisions of section 22 are to be read with in conjunction with section 17 of the VAT Act. It was also submitted that as per provisions of section 17 the dealer will pay tax at the rate specified under section 16(2) of the VAT Act. It was also submitted that provisions of section l6(2A) of the Act override ....
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....the supplementary affidavit and it was submitted in the supplementary affidavit that the said transactions were composite sale of goods and return of empty bottles constituted sales return. It was also submitted that there was no scope to treat such sales returns as "purchase simpliciter" as also stated in para 5 of supplementary affidavit. 13. The learned advocate for the petitioner also drew attention to para 5(vii) of the supplementary affidavit and explained difference between sales simpliciter and sales return in support of his contention that the said transactions were sales returns. 14. The learned advocate for the petitioner also submitted that para 15 of the judgment rendered by the WB Taxation Tribunal in the matter of Kalyani Breweries Limited v. State of West Bengal [1990] 78 STC 441 (WBTT), had been misquoted by including parts of other paras in the judgment and reflecting the judgment in a different manner altogether as also submitted in the written note by learned advocate for the petitioner. Learned State Representative submitted that this was an error on the part of the concerned officials of Bureau of Investigation who prepared the report and expressed his r....
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....90 (SC), in support of his contention that return of bottle did not constitute purchase of bottles from the retail vendors but constituted sales return and/or rebate or discount. 17. We have also gone through the orders passed in suo motu revisional proceeding. After narrating various facts of the case, revisional authority has passed a reasoned order. Reliance was also placed on the judgment of Kalyani Breweries Limited v. State of West Bengal rendered by this Tribunal [1990] 78 STC 441 (WBTT) as well as the provisions of the WB VAT Act, 2003 including definition of purchase. 17.1. It is also recorded that it was evident that the dealer being registered under section 24 of the WB VAT Act, 2003 had to purchase goods from another registered dealer by payment of tax on the sale price and under prescribed tax invoice, i. e., in case of anything not done other wise the dealer had to pay tax on his purchase. 18. The learned State Representative also submitted a written note in support of his contention in course of hearing. The last comprehensive note was submitted on March 15, 2019. 18.1. The learned State Representative also relied upon the judgment of Richards....
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.... contained or packed and the sale price of the containers or packing materials, whether shown separately or not shall be included in the sale price of the goods. We have also referred to section 16(2B), which states that sale of any goods which are exempted from tax, when sold in packed conditions with containers or any packing material such containers or packing materials shall also be exempted from tax. 19.1 In our considered opinion the provisions of section 16(2A) apply when there is a composite sale of goods under the VAT Act. Similarly, pro visions of section 16(2B) apply only when goods exempted under the VAT Act are sold along with packing material, i. e., composite sale of the goods exempted under the VAT Act. We are of the considered view that provisions of section 16(2A) and section 16(2B) override that of section 16(2) of the Act and the rate of tax will be determined with reference to provisions of section 16(2) of the Act only when provisions of section 16(2A) and section 16(2B) are not applicable. In this case, where rate is to be ascertained only for packing materials, i.e., empty bottles, provisions of section 16(2A) and section 16(2B) do not apply. Hence,....
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....hased the goods, it was a case of resale by the buyer to the seller the sale price being the very same amount which the buyer had paid to the seller and, therefore, the claim of return of goods made by the applicants before the Sales Tax Officer was not sustainable ?' .... 3.... The Assistant Commissioner, however held that by taking back the goods sold by it the assessee had violated the terms of the declaration on the strength of which it had purchased the goods without payment of tax for use in manufacture of the goods in question for sale and hence it was liable to purchase tax under section 14 of the Act. Against the above order of the Assistant Commissioner, both the assessee and the Revenue went in appeal to the Maharashtra Sales Tax Tribunal ('the Tribunal'). The assessee was aggrieved by the order of the Assistant Commissioner in so far as it had held that the assessee was liable to purchase tax under section 14 of the Act. The Revenue was aggrieved by the above order in so far as the entitlement of the assessee for deduction of the value of the goods returned by the distributors from its turnover is concerned. The Tribunal rejected the appeal....
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....ion of the Commissioner that the purchaser could not return the goods within the said period on account of circumstances beyond his control.... The nomenclature given by the parties to such transaction of return of goods, viz., 'return of goods' or 'repurchase of goods', would be of no relevance because return of goods falling under section 2(36) of the Act envisages purchase of the goods earlier sold by the asses see-dealer to the purchaser. On return of goods, the purchaser would naturally be entitled to the refund of the price of the goods, if already paid, or to credit for the same, if it had been debited for the price thereof at the time of sale. The return of goods envisaged by clause (36) of section 2 of the Act, therefore, in all cases will be preceded by a sale of goods and in effect, would be repurchase of the goods by the dealer. The Tribunal was therefore not justified in rejecting the claim of the assessee on the ground that the return of the goods amounted to repurchase of the goods by the assessee-dealer. In that view of the matter, we are of the clear opinion that the assessee is entitled to deduction of the sale price of the goods refunded by him to....
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....cable subject to certain conditions which did not exist in the case, as is clear from reading of the judgment. 20.1.2 It may also be relevant to note that deduction from turnover of sale only upon satisfying the conditions as laid under the relevant provisions of law. Thus, goods which were returned but were not allowed to deducted from turnover of sales, were again subjected to tax under the relevant provisions of law at the time of sale. 20.2 The relevant parts of Kalyani Breweries Ltd. v. State of West Bengal the Supreme Court of India, dated September 15, 1977 [1997] 107 STC 190 (SC) read as below (pages 191-195 in 107 STC) : "The assessment year with which we are concerned is the assessment year 1974-75. The assessee, the appellant, brewed and sold beer in beer bottles. For the beer it gave to its purchasers one invoice and another for 'the deposit on bottles'. On record are two such corresponding invoices. On the invoice which relates to 'deposit on bottles' there is another item, of 'truck charge'. It was the case of the assessee that the rate per bottle of the deposit was adjusted so as to cover the cost of the bottles that....
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.... was only a bailment of the beer bottles to the customers. The United Breweries Ltd. [1997] 105 STC 177 (SC) ; [1997] 3 SCC 530, decided by a Bench of three learned judges, involved a brewer making and selling, beer in bottles. In respect of the beer bottles the brewer had issued, circulars to its buyers..... ..... .... Upon this basis this court came to the conclusion that the intention of the brewer did not appear to have been to sell the beer bottles ; on the contrary, the brewer was trying to ensure that the bottles in which the beer was supplied to customers through its customers were brought back to it so that they could be used again. It was in this context that it was said, 'It does not appear that any time limit was fixed for return of bottles in this case. But, even if such limit was fixed, it is well-settled that time is not of the essence of the contract unless the parties specifically make it so'. In Raj Sheel v. State of Andhra Pradesh [1989] 74 STC 379 (SC) ; [1989] 3 SCC 262, this court was again concerned with brewers who sold beer in bottles and the question was whether the bottles were exigible to sales tax. Learned cou....
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....en sold or merely transferred without consideration was dependent upon the contract between the parties. It found that there was a lack of adequate and clear factual material and, therefore, remanded the matter to the assessing authority for fuller investigation. ..... Decision : Now, there is nothing on record which indicates that the terms under which the deposits would be repaid were communicated to the assessee's customers. There is no suggestion that there was an oral communication of such terms to the customers or that there was any trade usage in this behalf, it is difficult to visualise a bailment the terms whereof are not made known to the bailee. The forfeiture of amounts in the assessee's 'deposit on bottles' account does not appear to bear out of the assessee's case that the empties were returnable at any time. This must also be taken into account that the customers were required to deposit for the beer bottles a rate which was exactly equal to the cost of the bottles ; this would suggest the sale thereof more strongly than the intention to get them back upon bailment. It seems to us upon these facts and circumstances that ....
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.... with a stipulation for return of such containers or bottles to the applicant within a period of four months from the date of supply. In the event of purchasers failing to return the empty bottles, the deposit with the petitioner stands forfeited..... ..... 15. It seems to us that the nature of the transaction was such that return of bottles could hardly be expected.... If, in some cases, bottles were returned and corresponding value returned therefor, the transaction remained a transaction of sale. The refund in such cases must have to be treated as a rebate or discount. Consequently, the amount refunded will be excluded from sale price ; but the amount forfeited must have to be treated as part of sale price, and, therefore, liable to levy of sales tax." 20.3.1 We would most respectfully like to interpret para 15 of the judgment as "the amount refunded will continue to be excluded from sale price", in the facts and circumstances of the case. 21. The main prayers for adjudication before this Tribunal in this application is as to whether return of empty bottles would constitute purchase of empty bottles by the petitioner, with incidental prayers regardi....
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....ally return of caution money. It may be noted that the amount realised against bottles was kept as caution money in the case of Kalyani Breweries, which is not the position in this case. 22.3 In our considered opinion, this is a case of composite sales of goods, i. e., product sold in a packaged condition. The price of country liquor sold is a composite price, i.e., inclusive of bottles in which it is packed, and there is no separate treatment for the bottles in any manner whatsoever, by the petitioner in the returns filed in this regard. Since it is a composite sale price, which is in this case is included in the invoice value as well as Maximum Retail Price (i. e., MRP ), sales tax is also paid at the rate applicable for the main product, i. e., country spirit. We do not find any agreement to the effect that buyer of the goods is under an obligation to return empty bottles. We are also of the considered view that sales return would normally denote return of the entire goods sold with reference to the terms of sale, i. e., invoice in this case or a separate agreement in this regard. If the country spirit bottle, i. e., bottle filled up with country liquor, is returned for....
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....ture of accounting. Sales tax liability was upheld only on the empty bottles not returned and security money for feited, which is not applicable in this case since sales tax was already paid on the bottles as part of composite price. 22.6 We also do not agree that purchase of bottles is not liable to levy of value added tax under the W. B. VAT Act, 2003. In fact, it appears that the petitioner has been regularly paying VAT at the time of purchase of empty bottles from regular dealers, i. e., purchase of new bottles. 22.7 We are also of the considered view that issue of credit notes having cross reference to the original invoice and predetermined value would not change the nature of the transaction amounting to sale, particularly because only empty bottles are being returned for a price and there is no compulsion on the part of purchasers nor is there any agreement to that effect. In our considered view, transaction of sale having been completed with composite sale, return of empty bottles after consumption of main product cannot be treated as sales return, when the amount was not realised separately as "deposits or caution money" and also not accounted for accordi....