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

2. Appellant is asociety registered under the U.P.Societies Act. It carries on business of manufacture and sale of India Made Foreign Liquor (for short, IMFL) and country liquor.3. In respect of the assessment yearthe books of accounts maintained by it were rejected by the Assessing Authority, inter alia, on the premise that tax would be payable in respect of bottles being containers of the country liquor. An appeal was preferred there against by Appellant before the Deputy Commissioner (Appeal) and by reason of an order dated 11.01.1994, the said appeal was allowed in part holding that no sales tax could be imposed on the bottling charges for country made liquor. A Second Appeal there against was preferred before the Trade Tax Tribunal by the Revenue, which was dismissed. A Revision was preferred before the High Court against the said judgment of the Tribunal and by reason of the impugned judgment, the High Court opined that bottling charges are part of the turnover and are liable to tax.

Court's reasoning:
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.