Kalyani Breweries Limited v. State Of West Bengal and Ors.
1997( 7 ) SCC 738
The assessee brewed and sold beer in beer bottles and when empty beer bottles were returned by the customers, refunds were made at same rate for deposit on bottles. There was nothing on record which indicated that the terms under which the deposit would be repaid were communicated to the assessee’s customers. There was no time limit for the return. The assessor treated the amount written off (Bottle Deposit Forfeited Account) as a part of the assessee’s sales realization and taxed it.
ISSUE: Whether transaction was sale or bailment?
Lower Courts (favoured Tax Authority)
The Assistant commissioner confirmed the order as did the W.B. commercial Tax tribunal on the ground that the transaction was one of sale and not bailment. They laid emphasis on there being no time limit to return the bottles. The assessee filed an appeal in the SC.
The intention of the assessee was not to sell the beer bottles. The fact that the relevant invoices spoke of a deposit and the fact that a sum as Rs. 11 lakh had been refunded from out of the bottle deposit account showed that there was only a bailment.
Held (S.B. Bharucha)
- The circumstances that the price of the product and the price of the container are shown separately alone can’t be conclusive of the true nature of the transaction.
- The fact that the customers were required to deposit for the beer bottle a rate which was exactly equal to the cost of the bottles suggests the sale thereof more strongly than the intention to get them back upon bailment.
- He found that there was a lack of adequate factual material to decide the question and remanded the matter to assessing auth. for fuller investigation.