United Breweries Ltd. Vs. State of Andhra Pradesh - Court Judgment

Excerpt:
sales tax - resale - andhra pradesh general sales tax act, 1957 - assessee company was manufacturer of beer - company asserted when beer was sold bottles and crates were not sold to customers - ownership in bottles and crates remained with company - agents kept security - deposits were returned to customers when bottles and crates were returned - commercial tax officer opined that customers did not return bottles and crates - court observed that ownership of bottles did not remain with company when beer was vended - customers purchased bottles and crates with contents of receptacles - held, when bottles and crates returned to company there was resale in favour of company by customers. - maximssections 2(xv) & 3(1) & (3): [v.v.s. rao, n.v. ramana & p.s. narayana, jj] ghee as a live stock product held, [per v.v.s. rao & n.v. ramana, jj - majority] since ages, milk is preserved by souring with aid of lactic cultures. the first of such resultant products developed is curd or yogurt (dahi) obtained by fermenting milk. dahi when subjected to churning yields butter (makkhan) and buttermilk as by product. the shelf life of dahi is two days whereas that of butter is a week. by simmering unsalted butter in a pot until all water is boiled, ghee is obtained which has shelf life of more than a year in controlled conditions. ghee at least as of now is most synthesized, ghee is a natural product derived ultimately from milk. so to say, milk is converted to dahi, then butter. scientifically or common sense point of view, even though ghee is not directly obtained from milk (which is certainly a product of cow/buffalo), it is certainly a product of a product of livestock i.e., cow or buffalo. it would be rather illogical or irrational to say that ghee is not a milk/dairy product or to say that it is not a product of livestock. section 2(x) and 2(iv) of the act used the plural products of livestock. the legislative intention is very clear that not only a product of livestock like milk (when notified by government), butter etc., are products of livestock but even derivative items (derived from a product of livestock) are intended to be product of livestock for the purpose of the act. thus the term ghee is to be interpreted on the basis of expression products of livestock as defined in section 2(xv) of the act. whatever products are declared as such by the government by notification, they become products of livestock for purpose of the act. consequently it was held that ghee is the product of livestock and by reason of power conferred under section 3(1) read with section 3(3) of the act on them it is competent for the government to declare ghee as product of livestock for the purpose of regulating its purchase and sale, in any notified market area. [per p.s. narayana, j,(dissenting)]if livestock or agricultural produce and the categories thereof had been specified in the statute itself by appending in the schedule or otherwise, that would stand on a different footing from the present provisions of the act which contemplate the issuance of notifications in accordance with the procedure ordained by the provisions specified supra. in view of the clear definition of the livestock and products of livestock, the ghee being derivative of butter or cream, if the language employed in definition to be taken as they stand, the only conclusion would be is that the ghee would not fall within ambit of the definitions aforesaid. sections 4 & 3: [v.v.s. rao, n.v. ramana & p.s. narayana, jj] declaration of notified area held, it is only under section 3 that government are required to publish draft notification inviting objections and section 3(3) mandates to consider objections and suggestions before issuing declaration order. it is very conspicuous that section 4 does not contemplate any draft notification inviting objections and suggestions before either constituting market committee, establishing notified market area or declaring notified market area for the purpose of levy of market fees. thus, except ordaining government to issue preliminary/draft notification inviting objections at the time of issuing declaration order under section 3(3) of the act nowhere much less under section 4 contemplates issuing a notification inviting objections. when the legislature has chosen to exclude principles of natural justice, the court cannot introduce rule of audi alteram partem and render statutory provisions unworkable. in such a case, maxim, expressum facit cessare tacitum (when there is express mention of certain things, then anything not mentioned is excluded) would apply. section 7: [v.v.s. rao, n.v. ramana & p.s. narayana, jj] levy of market fee element of quid pro quo - held, levying fees and tax are two forms of exercise of sttaes taxing power. there is no quid pro quo between tax payer and public authority as tax is a part of common burden. it is also well settled that fee is charge for special service or a benefit given to a class of individual fee payers and fee collected need not have correlation with actual service in exactitude but if it is shown that substantial portion of the fee is expended or the purpose for which it is levied, it would be justified. expressum facit cessare tacitum sections 4 & 3: [v.v.s. rao, n.v. ramana & p.s. narayana, jj] meaning when there is express mention of certain things, then anything not mentioned is excluded. - the circulars further recite vendees to return bottles and crates and customers are assured of better supply, if the scheme is adhered by the customers; commissioner of income-tax [1959]35itr519(sc) a like contention is found considered 'buy-take' scheme.a. raghuvir, j.1. m/s. united breweries limited is a manufacturer of beer at bangalore. the company commenced supplying beer in two brands at hyderabad from october 18, 1971. the name of the two brands are : 'u.b. export lager', 'sun lager'. for the business they have done in the state of andhra pradesh (covering sale of beer), they were assessed under the andhra pradesh general sales tax act (6 of 1957). before the taxing authorities the company asserted to have sold u.b. export lager at rs. 43.18 and sun lager at rs. 43.75 per dozen of bottles and crates. the company asserted when beer was sold, bottles and crates were not sold to their customers. ownership in the bottles and crates remained with them. further the agents kept security of rs. 4.80 per dozen bottles and rs. 5 for crates. these deposits were returned to customers when bottles and crates were returned. this methodology of vending, the company represented, to be their scheme of sales and offered two circulars of the company to explain the scheme. 2. the two circulars recite for the two brands of beer are to be booked and cheques are to be issued in the name of phipson & co. ltd., himayatnagar. cheques for u.b. export lager, however, are to be issued in favour of united breweries ltd. the circulars further recite vendees to return bottles and crates and customers are assured of better supply, if the scheme is adhered by the customers; otherwise the company expressed difficulty in supplying the liquor. 3. the scheme was explained to the taxing authorities. the commercial tax officer verified the scheme and held the customers did not return bottles and crates. there was no truth in the scheme, as it was never implemented. on appeal, the commercial tax officer recorded the ledgers of the company were not produced for verification. further bottles and crates were higher in value than the amounts deposited as security. for the two reasons the scheme was not true. aggrieved the company-assessee approached and the sales tax appellate tribunal verified the records. the tribunal held there was no bailment of bottles and crates and no contractual obligation on the part of the customer to return bottles and crates. the scheme therefore, was not accepted (as) true. hence the three revision cases for the respective years. 4. before this court the scheme is sought to be supported. the same contentions argued before the taxing authorities are reiterated. it is argued on behalf of the revenue, bottles and crates could be returned, does not mean the customer was not the owner of bottles and crates, which were vended to the customers. therefore, there is no truth in the scheme propounded by the company. 5. we are in agreement with the conclusions reached by the three tax authorities having considered numerous aspects of the scheme. we hold ownership in bottles and crates did not remain with the company when beer was vended. the customer purchased bottles and crates with the contents of receptacles. when bottles and crates are returned (to the extent shown by the company) in law there was a resale of bottles and crates in favour of the company. we have no hesitation to reject the contentions raised by the company. 6. the company, however, cited large number of cases. among the cases, in punjab distilling industries ltd. v. commissioner of income-tax : [1959]35itr519(sc) a like contention is found considered 'buy-take' scheme. the issue raised there was whether the price of liquor included the cost of bottles. this aspect was juxtaposed with the security deposit (made as in the instant case) and it was considered whether deposit made was part of consideration. the supreme court held that there could be no security given for the return of bottles unless there was a right to their return and if there was no such right, there would be nothing to secure. it was further held there was no time-limit for the return of the bottles and this aspect strikes at the bottom of the contention. these two tests and answers on these aspects were held decisive. 7. in another case of the supreme court in hindustan sugar mills ltd. v. state of rajasthan : [1979]1scr276 observation was made that it is immaterial to enquire as to how the amount of consideration was made up, whether it included excise duty, sales tax and also the freight. these aspects were dealt in considering what was the consideration paid by the vendee. two english cases were cited by the company. in beecham fords ltd. v. north supplies [1959] 2 all er 336 glucose drink was sold. the facts in the case showed the receptacles were not sold. in another case in william leitch and company limited v. leydon [1931] ac 90 a passage at page 104 was read before us for appreciating the nature of transaction. in the former english case we agree with the observation made that at times the contentions raised with reference to receptacles raised difficult questions. 8. the three authorities under the act 6 of 1957 have concurrently found bottles and crates were sold when beer was sold to vendees. we have borne in mind the principles laid in deputy commissioner of sales tax v. mcdowell & co. ltd. [1980] 46 stc 79 (ker), state of tamil nadu v. mcdowell & co. ltd. [1980] 46 stc 85 (mad.) arlem breweries ltd. v. assistant commissioner of sales tax [1983] 53 stc 172 (bom) and britannia biscuits co. ltd. v. state of maharashtra [1983] 53 stc 179 (bom) in arriving at the conclusion. we find the bottles and crates when they are returned to the company indicated in our conclusion a different sale by the customer to the company. 9. in that view there are no merits in the three tax revision cases. the three tax revision cases are dismissed. no costs. 10. petitions dismissed.