STO SPECIAL CIRCLE ERNAKULAM Vs. PHIPSON AND COMPANY LIMITED ERNAKULAM
HIGH COURT OF KERALA
STO, SPECIAL CIRCLE, ERNAKULAM.
PHIPSON AND COMPANY LIMITED, ERNAKULAM
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(1.) THIS appeal arises out of a petition filed by the respondent M/s. Phipson & Co. , Ltd. , Ernakulam who is a registered dealer hereinafter referred to as the assessee under Art. 226 of the Constitution to quash Exts. P3 and P4 assessing them to sales-tax for the years 1962-63 and 1963-64. Exts. P3 and P4 were passed after overruling the claim of the assessee for exemption from tax of the turnover relating to the sales of two brands of beer namely U. B. Light Lager Beer and U. B. Sun Lager Beer manufactured by the united Breweries Ltd. , Bangalore. The assessment for 1962-63 was under the general Sales-tax Act, 1125 while the assessment for 1963-64 was under the kerala General Sales-tax Act, 1963. Wines and liquors other than toddy are included in the 1st schedule to both these Acts. It is agreed between the parties that Beer is included in the term 'liquors' in Schedule I of the Acts.
(2.) UNDER S. 5 (vii) of the General Sales Tax Act, 1125 the sale of goods specified in column (2) of Schedule I shall be liable to tax only at such single point in the series of sales by successive dealers as may be specified by the Government by notification in the Gazette; and, where the taxable point so specified is a point of sale, the seller shall be liable for the tax on the turnover for which the goods are sold by him at such point. By the notification dated 28th of September, 1957, the taxable point in respect of wines and liquors other than toddy was specified as the first sale in the State by a dealer who is not exempted from taxation under S. 3 (3) of the General salestax Act, 1125. There is no case that the assessee was exempt from taxation under S. 3 (3) of the Act. It is agreed that even under the Kerala General sales-tax Act, 1963 liquors and wine are taxable at the point of first sale in the State by a dealer who is not exempt under S. 5 of the charging section in that enactment.
The United Breweries Ltd. , Bangalore are the manufacturers of U. B. Light Lager Beer and U B. Sun Lager Beer. Mc Dowell & co. , Ltd. , Shertalli, was appointed by the United Breweries Ltd, Bangalore as the sole distributors for Kerala in respect of the two brands of beer referred to and anybody in Kerala can purchase these goods only from M/s. Mc Dowell &co. Ltd. , Shertallai. Ext. P1 is the agreement between Mc Dowell & Co. Ltd. , Shertallai and the assessee appointing the latter as the sub-distributors of the Shertallai Branch of Mc Dowell & Co. , Ltd. , for the two brands of beer, viz. , U. B. Sun Lager Beer and U. B. Light Lager Beer manufactured by the united Breweries Ltd. , Bangalore for distribution in the Kerala State on terms and conditions mentioned therein. The terms and conditions embodied in Ext. P1 are extracted below: 1. All supplies of the said two brands of Beer will be effected in Kerala to you by our Shertallai Branch and the payment for such supplies should be made by you or your Head office. 2 We will supply you with Sun Lager as well as U. B. Light Beer at a flat rate of Rs. 12/-per dozen quarts Rs. 6. 25 per dozen pints respectively delivered ex-your Godown, plus Sales Tax as applicable and deposit for empty bottles at Rs. 4. 80 per dozen quart bottles and Rs. 3. 60 per dozen pint bottles. 3 The above-mentioned rates are exclusive of Duty and hence the Duty payable by our Shertallai Branch must be remitted by you on our branch's behalf and you should take out Duty paid transport permits for consignments of beer to be supplied by our Branch. Thereafter you should forward your indents to our Shertallai Branch along with the aforesaid Duty paid transport permits, when our Sherthallai Branch will place orders with the brewery with instructions to despatch direct to Ernakulam on our Branch's account. We have suggested that you should remit the Excise Duty on our branch's behalf so as to facilitate the quick movement of the beer from bangalore to Ernakulam, failing which consignments would have to go to shertalli first and be-re-despatched from there to Ernakulam involving waste of time and money. 4 Invoices for all supplies of Beer will be made out and forwarded to you by our Shertallai Branch, immediately; they receive the relative invoices from the Brewery. If at any time there is a slight delay in the preparation of invoices by our Shertallai Branch and consignments arrive at ernakulam in the meanwhile you should take delivery of the consignments on behalf of our Shertallai Branch and hold the goods as their stock until receipt of the concerned invoices. 5 We will not sell the aforesaid brands of beer to anyone in Kerala State except through you. 6 This appointment shall be for a period of five years from the date hereof and will be renewed for a further period by mutual consent. It may, however, be terminated by you or by us by giving three months notice in writing. "
The assessee's claim for exemption is because of the plea that the sales to their customers are not first sales in the State to attract liability to tax. According to the revenue the sale of the two brands of beer to the assessee is by the United Breweries Ltd. , Bangalore and the assessee is therefore the first seller in the State.
(3.) THE question to be decided is whether the sales by the assessee of the two brands of beer are the first sales in the State. THE learned single judge held that the movements of goods from Bangalore to ernakulam had been occasioned by the sales by the United Breweries Ltd. , bangalore to Mc Dowell & Co. , Ltd. , Sherthallai and the movement took place is pursuance of such sales.
According to Clause. 3 of Ext. P1 the assessee has to pay the duty payable by the Shertallai Branch of Mc Dowell & Co, Ltd. , on their behalf and take out duty paid transport permits for consignments of beer to be supplied to the assessee by Mc Dowell and Co. , Ltd. , Shertallai. Then the assessee should forward the indents to the Shertallai branch of Mc Dowell & co. Ltd. , who will place orders with the Brewery at Bangalore with instructions to despatch the goods directly to Ernakulam on account of Mc Dowell & Co. , ltd. , Shertallai. It has been specifically stated in Ext. P1 that the remittance of excise duty by the assessee on behalf of Mc Dowell & Co. , ltd. , is to facilitate quick movement of goods from Bangalore to Ernakulam and thus prevent the del ay that may happen in sending the goods from Bangalore to shertallai and then to Ernakulam. The relative invoices are drawn by the brewery in the name of Mc Dowell & Co. , Ltd. , Shertallai and after the receipt of those invoices Mc Dowell & Co. Ltd. , will make out invoices in the name of the assessee and forward the same to the latter. According to the terms of Ext. Pi if at any time there is a delay in the preparation of invoices by the Shertallai branch of Mc Dowell & Co. Ltd. , and consignments reach ernakulam in the meanwhile assessee should take delivery of the goods on behalf of Mc Dowell & Co. Ltd. , Shertallai and hold the goods as their stock until the receipt of the said invoice.;
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