Case: M/S. Co-Operative Company Ltd Vs. Commnr. Trade Tax, U.P

tax would be on the total turnover, assuming that the prices of the bottles were to be included in the price of the country liquor, provided one is leviable. If an exemption has been granted, it would be on sale of the articles in a deliverable form. There exists a serious dispute as to whether for the purpose of levying sales tax, a part of the commodity which is sold as a composite whole would come within the purview of the Act when sale of two different commodities can be bifurcated for levy of tax. 24. Containers of the principal commodity which is the subject matter of the contract of sale may have to be taken into consideration for the purpose of arriving at the total turnover, but even for that purpose there has to be an element of ad idem of mind between the purchaser and seller. If by reason of express contract or implied contract, the containers are also sold, indisputably the same would be exigible to tax, as has been held in Commissioner of Taxes Assam v. Prabhat Marketing Co. Ltd., Gauhati [AIR 1967 SC 602 ], but it is difficult to accept the contention of Mr. Dwivedi that even in absence of such a contract, sales tax would be leviable. Reliance has been placed by Mr. Dwivedi on Jamana Four and Oil Mills (P) Ltd. v. State of Bihar [(1987) 3 SCC 404] , wherein this Court was not dealing with a situation of the present nature. It was held: "3. The dealer filed a revision before the Tribunal and contended that the demand of Sales Tax payable at different rates on the calculated turnover of gunny bags was not at all warranted as no price had been charged for the containers. The Tribunal found:(1) The dealer transferred the property in the gunny bags, the packing material, to the purchasers for price.(2) The price of the gunny bags was included in the consolidated rates of price charged by the dealer.(3) There was an implied agreement for the sale of gunny bags between the dealer and the different purchasers to whom the wheat products were supplied.(4) The transfer of gunny bags was impliedly covered by the contract of sale with regard to the wheat products.On these findings the Tribunal held:We hold that the learned lower courts were justified in levying tax at a different rate on the turnover on account of sale of gunny bags in which the wheat products were sold.It further found:The learned Deputy Commissioner has given a direction for determination of the turnover on account of sale of gunny bags. On being asked the applicant accepted that the accounts maintained by him would reveal the exact number of gunny bags used in the transaction of sale under consideration as also the price of the same. Hence we direct in modification of the orders passed by the learned Deputy Commissioner in this behalf that the learned Assessing Officer should ascertain from the accounts, the turnover on account of sale of gunny bags as container of wheat products during the period under consideration and assess tax thereon at the prescribed rate of 4=per cent The balance turnover shall be assessed at 2 per cent." 25. Reliance has also been placed by Mr. Dwivedi on M/s Chhatta Sugar Company Ltd., Mathura v. Commissioner of Sales Tax [1991 UPTC 341], wherein a learned Single Judge of the Allahabad High Court, without any discussion, opined that the containers would also be taxed. 26. Inclusion of bottles as a separate item in the notification dated 07.09.1981, in our opinion, is not relevant. Appellant is not a dealer of bottles. Had it been a dealer of the bottles, he might have been exigible to sales tax in terms of the said provision. 27. Thus, without adverting to the question as to whether there had been an implied sale, Entry 20 will have no role to play.28. We may also consider the matter from another angle. A tax may be leviable at different rates. Definition of turnover having undergone an amendment and being expansive in nature, would it be permissible to segregate it to make different commodities for the purpose of imposition of tax at a higher rate, would, in our opinion, merit consideration. We are not oblivious of the fact that if the sale is in relation to two different commodities, it may be permissible to levy tax at different rates, but not when the definition of turnover includes a wide range of subjects including the package. Only for the purpose, the concept of implied contract of sale would assume significance.29. We, however, are not impressed with the arguments of Mr. Radhakrishnan that Section 3AB of the Act introduced in the statute by reason of the U.P. Trade Tax (Amendment) Act, 1991 is clarificatory in nature. The said amendment came into force with effect from 25.04.1990. The assessment year, as noticed hereinbefore, is 01.04.1989 to 31.03.1990. The Act having been brought into force from a particular date, no retrospective operation thereof can be contemplated prior thereto. The said provision furthermore contains a substantive provision which is itself a pointer to the fact that for the earlier period packing materials would not be exempted merely because main commodity is exempted from tax, but albeit subject to the condition that there was an agreement to sell in respect thereof. The amendment sought to deal with a matter which created some problem in implementation of the Act.30. We, therefore, are of the opinion that the matter requires reconsideration by the High Court. The High Court must on the basis of the materials available on records arrive at a finding as to whether there existed any implied contract for sale and/or whether in effect and substance keeping in view the fixation of price of different materials by the excise authorities in terms of the U.P. Excise Act and/or rules framed thereunder any separate charges have been levied for prices of the bottles separately or not.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 1

Reasoning from the judgment:
1[ds]14. There is no finding by the High Court that there was an implied condition of sale in regard to sale of bottles. The High Court while arriving at the said finding did not deal with the question as to whether the charges levied by Appellant from its customers, which admittedly stand approved by the Excise Authority, represent bottling charges or sale of bottles.The High Court, in our opinion, failed to take into consideration the fact that the question as to whether there had been an implied contract for sale of bottles and any amount has separately been charged therefor was required to be determined. Each case is required to be determined on consideration of the relevant materials placed on record by the parties.18. The Assessing Officer proceeded on the basis that the assessee admitted to have levied charged for the bottles. It, however, failed to make a distinction between bottling charges and the price of bottles. When the excise articles are sold in a bottle, it must have a label containing the requisiteas envisaged under the Excise Act and the Rules framed thereunder or the terms and conditions of licence authorising the dealer to deal with in the commodity in question. The Assessing Officer did not proceed on the basis that the price of bottles form a part of the turnover as contended by Mr. Dwivedi.Thus, without adverting to the question as to whether there had been an implied sale, Entry 20 will have no role to play.28. We may also consider the matter from another angle. A tax may be leviable at different rates. Definition of turnover having undergone an amendment and being expansive in nature, would it be permissible to segregate it to make different commodities for the purpose of imposition of tax at a higher rate, would, in our opinion, merit consideration. We are not oblivious of the fact that if the sale is in relation to two different commodities, it may be permissible to levy tax at different rates, but not when the definition of turnover includes a wide range of subjects including the package. Only for the purpose, the concept of implied contract of sale would assume significance.29. We, however, are not impressed with the arguments of Mr. Radhakrishnan that Section 3AB of the Act introduced in the statute by reason of the U.P. Trade Tax (Amendment) Act, 1991 is clarificatory in nature. The said amendment came into force with effect from 25.04.1990. The assessment year, as noticed hereinbefore, is 01.04.1989 to 31.03.1990. The Act having been brought into force from a particular date, no retrospective operation thereof can be contemplated prior thereto. The said provision furthermore contains a substantive provision which is itself a pointer to the fact that for the earlier period packing materials would not be exempted merely because main commodity is exempted from tax, but albeit subject to the condition that there was an agreement to sell in respect thereof. The amendment sought to deal with a matter which created some problem in implementation of the Act.30. We, therefore, are of the opinion that the matter requires reconsideration by the High Court. The High Court must on the basis of the materials available on records arrive at a finding as to whether there existed any implied contract for sale and/or whether in effect and substance keeping in view the fixation of price of different materials by the excise authorities in terms of the U.P. Excise Act and/or rules framed thereunder any separate charges have been levied for prices of the bottles separately or not.