Sen, J. - (1.) This appeal arises from a judgment of the High Court at Madras on a sales tax revision case. Mc. Dowell and Company Ltd, is primarily a distributor of liquor for United Breweries Limited (hereinafter referred to as "U. B."). It was customary for the bills issued to the assessee by U. B., the principal, to show the price, the tax payable thereon and the deposits for bottles in which the liquor was sold separately. The assessee in its turn, similarly charged its customers. The rate of deposit at which the assessee was charged by U. B. and the rate at which the assessee charged its customers were the same. The same procedure was followed year after year. From time to time, the rate of deposit it was enhanced due to shortage of empty bottles. In the sale notes, it was specifically stated "Empty bottle deposit is refundable against the return of the bottles at the Brewery. The freight on return of empties and breakages will be on your (Purchasers) account". In the copies of the bills issued as against the assessee, the price of liquor was separately shown and the sales tax was added to it. Thereafter, with reference to the number of bottles supplied, a separate charge was made as deposits at the rate of 40 paise per bottle or Rs. 4.80 per dozen of bottles. The question that came up for consideration was whether these deposits were liable to be treated as part of the assessees sales turnover for the purpose of levy of sales tax. The assessing authority was of the view that there was a sale of the bottles by U. B. to the purchaser and the deposit amount had to be included in the turnover and taxed. The Tribunal, however, took the view that the receipts were only deposits and not price realised on sale of the bottles. The deposit amount could not be taxed in any way as price of bottles.
(2.) Before the High Court, contention of the State was that the transactions were liable to be treated as sales. The deposits were merely shown in the accounts separately. That did not mean that these deposits were not sale proceeds. The way they were shown in the accounts could not be determinative of the nature of the amount received. The rights of the parties crystallised at the time when the sale of liquor took place. The purchaser not only paid for the liquor but also for the bottles. The amounts received on account of sale of the bottles though described in the account as deposits, were nothing but sale price of the bottles.
(3.) Another point which was highlighted on behalf of the State was that the assessee has debited the amounts paid for the bottles in its purchase account. It was, therefore, contended that there was no doubt in the mind of the assessee that it was purchasing the bottles.;