- (1.) A common question arises in the appeal and the special leave petitions. Leave granted in the special leave petitions.
(2.) The assessee is common in all the appeals. For the sake of convenience we shall refer to the facts in the Civil No. 4734 of 1984 which pertains to the assessment year 1967-68 (1/4/1967 to 31/3/1968. The matter arises under the Bombay Sales Tax Act, 1959.
(3.) The assessee is a manufacturer of biscuits. It is a registered dealer both under the Bombay Sales Tax Act, 1959 and the central Sales Tax Act, 1956. The biscuits manufactured by the respondent are sold in tins. In respect of the biscuits sold outside the city of Bombay and its suburbs, the price charged by the respondent includes the cost of tins in which the biscuits are sold but insofar as the city of Bombay and its suburbs are concerned with which sales alone we are concerned herein the respondent followed a different practice. While selling the biscuits in tins, it collected the price of biscuits alone and so far as the tins in which biscuits were sold, it took a refundable deposit with the stipulation that if the tin is returned within three months in good condition, the deposit shall be returned. These deposits were credited to "deposit account: returnable tins". The tins so supplied to purchasers were shown as the stock of the respondent-assessee in its account books, but debited in the customer's account. When the tins were returned, a reversal entry was made in both the accounts. Sales tax was charged only on the sale price of the biscuits but not on the deposit received in respect of the tins. Indeed in respect of the city of Bombay and its suburbs, a separate price list was issued by the respondent. The price list carried an endorsement: " (A) Deposit of Rs. 5.50 for LB tins and Rs. 3.50 for LS tins will be charged at the time of supply, which will be refunded on return of tins in good condition within 3 months from date of supply. " In the invoices issued by the respondent, there was a separate column showing the number of tins supplied to the purchaser and the amount of deposit received from him in that behalf. At the top of the invoice the following endorsement occurred: "[d]ealers are informed that the Company's liability to refund the value of returnable tins extends only up to three months from the date of the invoice. " It has however been found by the High court that notwithstanding the endorsement on the price list as well as on the invoice, the respondent was in fact receiving the tins returned even after the expiry of three months and refunding the deposit amount.;