S.P. BHARUCHA, J. - (1.) THE Judgment of the court was delivered by -
(2.) UNDER challenge in this appeal by special leave is a judgment and order of the West Bengal Taxation tribunal. The assessment year with which we are concerned is Assessment Year 1974-75. The assessee, the appellant, brewed and sold beer in beer bottles. For the beer it gave to its purchasers one invoice and another for "the deposit on bottles". On record are two such corresponding invoices. On the invoice which relates to "deposit on bottles" there is another item, of "truck charge". It was the case of the assessee that the rate per bottle of the deposit was adjusted so as to cover the cost of the bottles that were purchased by it. Up to 1/3/1974, the rate was Rs. 4.80.00 per dozen bottles but, due to the increase in their cost, the rate was raised to Rs. 9 .00 per dozen bottles with effect from 2/3/197474. The amounts received as such deposit were credited to an account entitled "Deposit on Bottles" in the assessee's ledger. When the empty bottles were returned by customers, refunds were made at the same rate. There was no time-limit for the return and bottles taken from the assessee in one year might be returned in the next year. The following accounting procedure was adopted: Deposits for three months were kept in the aforementioned account as a liability and the balance in that account was transferred to an account called the "Bottle Deposit Forfeited Account". The amount of bottle deposit receipts, returns and forfeiture were shown by the assessee thus: JUDGEMENT_738_7_1997Html1.htm 741 The Commercial Tax Officer treated the amount of Rs. 16,55,355 being the forfeited deposit amount aforestated, as a part of the assessee's sales realisations and taxed it. The Assistant Commissioner confirmed the order, as did the West Bengal Commercial Taxes tribunal. The matter was carried to the West Bengal Taxation tribunal, whose order is under appeal Both tribunals placed emphasis upon the fact that it had been admitted by the assessee that there was no time-limit for the return of the empty bottles. They found that the transaction in respect of the beer bottles was not one of a bailment as contended by the assessee but one of sale.
(3.) LEARNED counsel for the appellant relied upon Benjamin's Sale of Goods (3rd Edn.) where it is stated: "It is a question of construction whether sacks, barrels, bottles and similar containers in which goods are sold are themselves the subject of a sale or are merely bailed to the buyer, remaining at all times the property of the seller or the original manufacturer. It is not decisive of the issue that a charge is made for the non-return of the container, nor will the payment of such a charge necessarily transfer the ownership of the container to the person who pays it." LEARNED counsel also referred to the Curzon's Dictionary of Law (4th Edn.) which defines a deposit to mean "a sum of money paid on terms under which it will be repaid ". Great emphasis was laid by learned counsel on the judgment of this court in United Breweries Ltd. v. State of A.P. and Raj Sheel v. State of A.P In learned counsel's submission what had to be seen was whether the transaction in respect of the beer bottles was a sale. The intention of the assessee's transaction was not to sell the beer bottles. The fact that the relevant invoice spoke of a deposit and the fact that so substantial a sum as Rs. 11 lakhs had been refunded from out of the Bottle Deposit Account to customers who returned the empties showed that there was only a bailment of the beer bottles to the customers. The United Breweries Ltd. case decided by a bench of three learned Judges involved a brewer making and selling beer in bottles. In respect of the beer bottles the brewer had issued circulars to its buyers. Four things were found by this court to emerge therefrom, namely: "(1 The refundable deposits were being collected on the bottles and the crates. (2 The appellant advised its customers to collect forty paise per bottle from the consumers as deposit. (3 The customers were advised to collect the empty bottles from the consumers and return them to the appellant. (4 The empty bottles and crates were to be taken back by the trucks of the appellant, the drivers of which were authorised to issue a receipt for the empties against which the appellant would issue credit notes. At the time of the booking of the next consignment, the customers would get advantage of the credit notes." 742 This arrangement suggested to this court "a continuous process by which the appellant will sell beer to its customers in bottles and crates and collect the sale price of beer and also deposits for the crates and the bottles. The customers, in their turn, will sell beer to the consumers and apart from the price of beer, will recover forty paise per bottle as deposit to ensure return of the bottles. The bottles will ultimately be taken back by the appellant for which the trucks will be sent and the credit notes will be given to the customers for return of the empties. This scheme of recycling the bottles and crates will keep down the costs and ultimately will have the effect of reducing the price of beer and encouraging the customers to buy beer in larger quantities". It was also found, as a matter of fact, that the rate at which the customer was required to make the deposit for the beer bottles was less than the cost of the beer bottles. Upon this basis this court came to the conclusion that the intention of the brewer did not appear to have been to sell the beer bottles, on the contrary, the brewer was trying to ensure that the bottles in which the beer was supplied to consumers through its customers were brought back to it so that they could be used again. It was in this context that it was said: It does not appear that any time-limit was fixed for return of bottles in this case. But, even if such limit was fixed, it is well settled that time is not of the essence of the contract unless the parties specially make it so." ;