Karnataka High Court
M/S Skol Breweries Ltd vs The Deputy Commissioner Of Commercial ... on 21 November, 2012
Author: K.Sreedhar Rao
Bench: K.Sreedhar Rao
1
IN THE HIGH COURT OF KARNATAKA, BANGALORE
DATED THIS THE 21ST DAY OF NOVEMBER, 2012
PRESENT
THE HON'BLE MR. JUSTICE K.SREEDHAR RAO
AND
THE HON'BLE MR. JUSTICE B.V. PINTO
W.A.No.3311/2012
AND W.A.Nos.8028-8038/2012
C/W.
W.P.No.16109/2012 AND W.P.Nos.16431-16441/2012,
W.P.No.16949/2012 AND W.P.Nos.17171-17181/2012,
W.P.No.16950/2012 AND W.P.Nos.17198-208/2012,
W.P.No.16952/2012 AND W.P.Nos.17187-197/2012,
W.P.No.16953/2012 AND W.P.Nos.17209-219/2012
W.A.No.3311/2012
AND W.A.Nos.8028-8038/2012:-
BETWEEN:-
M/s. SKOL Breweries Ltd.,
A Company incorporated under
the Companies Act,
Having its Office at Jalahalli Camp Road,
Yeshwanthpur,
Bangalore - 560022,
Now represented by its
Assistant Manager-Taxation,
Ms. Vandana Natrajan,
D/o. Mr. Natarajan V.,
Aged about 26 years.
Appellant
(By Sri N. Venkataraman, Senior Adv. for Sri Harish & Co.,)
2
AND:-
The Deputy Commissioner of Commercial Taxes,
(Audit)-6.6, DVO-6,
Peenya,
Bangalore - 560058.
Respondents
(By Sri T.K. Vedamurthy, AGA)
These Writ Appeals are filed U/s.4 of the Karnataka
High Court Act praying to set aside the order passed in the
Writ Petition No.48848/2011 & 48855-48865/2011 (T-Res)
dated 20.04.2012.
W.P.No.16109/2012
AND W.P.Nos.16431-16441/2012:-
BETWEEN:-
M/s. SKOL Breweries Ltd.,
A Company incorporated under
the Companies Act,
Having its Office at Jalahalli Camp Road,
Yeshwanthpur,
Bangalore - 560022,
Represented by its
Vice President - Finance Control,
Mr. Suyog Karajgi,
S/o. Mr. R.G. Karajgi,
Aged about 40 years.
Petitioner
(By Sri N. Venkataraman, Senior Adv. for Sri Harish & Co.,)
AND:-
The Deputy Commissioner of Commercial Taxes,
(Audit)-6.6, DVO-6,
KIADB Building,
B-Block, 3rd Floor,
Peenya Industrial Area,
3
Peenya 2nd Stage,
Bangalore - 560058.
Respondents
(By Sri T.K. Vedamurthy, AGA)
These W.Ps. are filed under Articles 226 and 227 of the
Constitution of India with a prayer to quash the impugned
order passed by the Respondent U/s.39(1) 72(2) and 36 of
KVAT Act dated 09.05.2012 for the period from April 2010 to
March 2011 i.e., Annexure-K and the consequential notices
of demand issued by the Respondent in form Vat 180 dated
09.05.2012 for the period from April 2010 to March 2011
i.e., Annexure-L & L11 and etc.
W.P.No.16949/2012
AND W.P.Nos.17171-17181/2012:-
BETWEEN:-
M/s. SKOL Breweries Ltd.,
A Company incorporated under
the Companies Act,
Having its Office at Jalahalli Camp Road,
Yeshwanthpur,
Bangalore - 560022,
Represented by its
Brewery Vice President - Finance Controller,
Mr. Suyog,
S/o. Mr. R.G. Karajgi,
Aged about 40 years.
Petitioner
(By Sri N. Venkataraman, Senior Adv. for Sri Harish & Co.,)
AND:-
1. The Joint Commissioner of Commercial Taxes,
(Audit)-6.6, DVO-6,
Peenya,
Bangalore.
4
2. The Assistant Commissioner of Commercial Taxes,
(LVO-050), DVO-6,
Bangalore-560086.
Respondents
(By Sri T.K. Vedamurthy, AGA)
These W.Ps. are filed under Articles 226 and 227 of the
Constitution of India with a prayer to quash the impugned
order passed by the R1 U/s.63-A of the KVAT Act, dated
14.5.12 for the period from April 2005 to March 2006 i.e.,
Annexure-K and the consequential notices of demand issued
by the R2, in form Vat 180 dated 18.5.12 for the period from
April 2005 to March 2006 i.e., Annexure-L to L11, in as
much as the same has been in complete disregard to the law
laid down by the Hon'ble Supreme Court in Premier
Breweries Vs. State of Kerala, (1998)1 SCC 641 and in gross
disregard to the mandate contained in Section 4(2) of the
KVACT Act and offending Articles 14, 19(i)(g) & 265 of the
Constitution of India and etc.,
W.P.No.16950/2012
AND W.P.Nos.17198-208/2012:-
BETWEEN:-
M/s. SKOL Breweries Ltd.,
A Company incorporated under
the Companies Act,
Having its Office at Jalahalli Camp Road,
Yeshwanthpur,
Bangalore - 560022,
Represented by its
Brewery Vice President - Finance Controller,
Mr. Suyog,
S/o. Mr. R.G. Karajgi,
Aged about 40 years.
Petitioner
(By Sri N. Venkataraman, Senior Adv. for Sri Harish & Co.,)
5
AND:-
1. The Joint Commissioner of Commercial Taxes,
(Audit)-6.6, DVO-6,
Peenya,
Bangalore.
2. The Assistant Commissioner of Commercial Taxes,
(LVO-050), DVO-6,
Bangalore-560086.
Respondents
(By Sri T.K. Vedamurthy, AGA)
These W.Ps. are filed under Articles 226 and 227 of the
Constitution of India with a prayer to quash the impugned
order passed by the R1 U/s.63-A of the KVAT Act, dated
14.5.12 for the period from April 2006 to March 2007 i.e.,
Annexure-K and the consequential notices of demand issued
by the R2, in form Vat 180 dated 18.5.12 for the period from
April 2006 to March 2007 i.e., Annexure-L to L11, in gross
disregard to the date contained in Section 4(2) of the KVACT
Act and offending Articles 14, 19(i)(g) & 265 of the
Constitution of India and etc.,
W.P.No.16952/2012
AND W.P.Nos.17187-197/2012:-
BETWEEN:-
M/s. SKOL Breweries Ltd.,
A Company incorporated under
the Companies Act,
Having its Office at Jalahalli Camp Road,
Yeshwanthpur,
Bangalore - 560022,
Represented by its
Brewery Vice President - Finance Controller,
Mr. Suyog, S/o. Mr. R.G. Karajgi,
Aged about 40 years.
Petitioner
(By Sri N. Venkataraman, Senior Adv. for Sri Harish & Co.,)
6
AND:-
1. The Joint Commissioner of Commercial Taxes,
(Audit)-6.6, DVO-6,
Peenya,
Bangalore.
2. The Assistant Commissioner of Commercial Taxes,
(LVO-050), DVO-6,
Bangalore-560086.
Respondents
(By Sri T.K. Vedamurthy, AGA)
These W.Ps. are filed under Articles 226 and 227 of the
Constitution of India with a prayer to quash the impugned
order passed by the R1 U/s.63-A of the KVAT Act, dated
14.5.12 for the period from April 2007 to March 2008 i.e.,
Annexure-K and the consequential notices of demand issued
by the R2, in form Vat 180 dated 18.5.12 for the period from
April 2007 to March 2008 i.e., Annexure-L to L11, in as
much as the same has been in complete disregard to the law
laid down by the Hon'ble Supreme Court in Premier
Breweries Vs. State of Kerala, (1998)1 SCC 641 and in gross
disregard to the mandate contained in Section 4(2) of the
KVACT Act and offending Articles 14, 19(i)(g) & 265 of the
Constitution of India and etc.,
W.P.No.16953/2012
AND W.P.Nos.17209-219/2012:-
BETWEEN:-
M/s. SKOL Breweries Ltd.,
A Company incorporated under
the Companies Act,
Having its Office at Jalahalli Camp Road,
Yeshwanthpur,
Bangalore - 560022,
Represented by its
Brewery Vice President - Finance Controller,
7
Mr. Suyog,
S/o. Mr. R.G. Karajgi,
Aged about 40 years.
Petitioner
(By Sri N. Venkataraman, Senior Adv. for Sri Harish & Co.,)
AND:-
1. The Joint Commissioner of Commercial Taxes,
(Audit)-6.6, DVO-6,
Peenya,
Bangalore.
2. The Assistant Commissioner of Commercial Taxes,
(LVO-050), DVO-6,
Bangalore-560086.
Respondents
(By Sri T.K. Vedamurthy, AGA)
These W.Ps. are filed under Articles 226 and 227 of the
Constitution of India with a prayer to quash the impugned
order passed by the R1 U/s.63-A of the KVAT Act, dated
14.5.12 for the period from April 2008 to March 2009 i.e.,
Annexure-K and the consequential notices of demand issued
by the R2, in form Vat 180 dated 18.5.12 for the period from
April 2007 to March 2008 i.e., Annexure-L to L11, in as
much as the same has been in complete disregard to the law
laid down by the Hon'ble Supreme Court in Premier
Breweries Vs. State of Kerala, (1998)1 SCC 641 and in gross
disregard to the mandate contained in Section 4(2) of the
KVACT Act and offending Articles 14, 19(i)(g) & 265 of the
Constitution of India and etc.,
These Appeals and petitions are coming on for
preliminary hearing this day, SREEDHAR RAO, J., delivered
the following:
8
JUDGMENT
These Writ Appeals and writ petitions pertain to assessment orders for different years.
2. The Assessee is a manufacturer and seller of Beer. The product of Beer is an exempted commodity from tax under the Karnataka Value Added Tax Act (for short 'KVAT Act') The assessee has entered into contract with Karnataka State Beverages Corporation Ltd., (KSBC Ltd.) for sale of beer bottles. The terms and conditions of the contract stipulated that on refund of empty bottles within the stipulated time, he would pay back the value of the empty bottles. The assessee in his return claimed deduction towards price of the bottles returned from the security deposit. The terms of contract provided that if empty bottles are not returned, the value of it could be forfeited from the security deposit.
3. The Assessing Officer held that forfeiture of the value of the empty bottles not returned, amounts to sale and thus assessed the said amount to tax under the Act. The 9 assessee aggrieved by the said order filed Writ Petition before this Court. The learned Single Judge has dismissed the Writ Petition on the ground that the assessee has alternative remedy of appeals. The assessee therefore, filed these Writ Appeals.
4. The other Writ Petitions pending before the learned Single Judge have been referred to this Bench since similar questions of law and facts are involved for consideration.
5. The learned Senior Counsel Sri N.Venkataraman submits that the need to resort to alternative remedy is not necessary because the facts involved are directly covered by the decision of the Supreme Court in the case of PREMIER BREWERIES VS. STATE OF KERALA reported in (1998)1 SCC
641. The observation of the Supreme Court in para 6 and 7 are as follows:-
"6. The language of sub-section (5) and (6) of Section 5 is clear and unambiguous. These two Sub-sections deal with the method of valuation of packed goods and the rate of tax 10 payable thereon. The rules laid down are:
(1) Where goods sold are contained in a container or packed in any packing material, the rate of tax payable on the containers shall be the same as that applicable to the goods contained or packed. (2) This will be the position even if price of the containers or packing materials is charged separately, (3) The turnover of the goods will include the turnover in respect of containers or packing materials in which the goods are contained or packed. (4) The point of levy of the tax on the containers or the packing materials will be the same as applicable to the goods contained or packed. (5) If the sale or purchase of goods contained in a container or packed in a packing material is exempted from tax then no tax shall be payable on the sale or purchase of the containers or packing materials in which the goods are sold.
7. The underlying idea behind these rules is that packed goods are to be taxed as composite units. In calculating the turnover of the goods, the turnover of the containers will have to be included. The appropriate rate of tax will be the rate payable on the goods. It will not make any difference, if the containers are shown to have been sold and charged separately. The 11 logical corollary to this principle is that when the goods are exempted from tax, no tax is leviable on the containers. This will be the position even when the goods and the containers are sold and charged separately."
6. The learned Single Judge also referred to the provision of Section 4(2) of the Act which reads as follows:-
"Where goods sold or purchased are contained in containers or are packed in any packing material liable to tax under this Act, the rate of tax applicable to taxable turnover of such containers or packing materials shall, whether the price of the containers or packing materials is charged for separately or not, be the same as the rate of tax applicable to such goods so contained or packed, and where such goods sold or purchased are exempt from tax under this Act, the containers or packing materials shall also be exempt."
7. On the basis of the ratio laid down by the Supreme Court Premier Breweries case, it is submitted that the provisions of Kerala Sales Tax Act and the provisions of Section 4(2) of the KVAT Act, are exactly the same. It is held by the Supreme Court that when the sale or purchase of goods contained in a container or packed in a packing material is exempted from tax, the container and also 12 packing material also should be exempted in view of the express provisions of Sales Tax Act of State of Kerala. In the present case also, the provisions of Section 4(2) of KVAT Act are in paramateria with the provisions of Sales Tax Act of Kerala. Therefore, in this case also when the beer is exempted, the bottle which is the container of beer also should be exempted and assessment of value of bottles to tax is bad in law.
8. Sri T.K. Vedamurthy, learned counsel for the Revenue relied upon the decision of the Supreme Court in the case of KALYANI BREWERIES LTD., VS. STATE OF WEST BENGAL AND OTHERS reported in 107 STC 190. The learned counsel also referred to the observations in para 9 of the judgment which reads as follows:-
"9. Now, there is nothing on record which indicates that the terms under which the deposits would be repaid were communicated to the assessee's customers. There is no suggestion that there was an oral communication of such terms to the customers or that there was any trade usage in this behalf. It is difficult to visualise a bailment the terms whereof are not 13 made known to the bailee. The forfeiture of amounts in the assessee's "Deposit on Bottles"
account does not appear to bear out of the assessee's case that the empties were returnable at any time. This must also be taken into account that the customers were required to deposit for the beer bottles a rate which was exactly equal to the cost of the bottles; this would suggest the sale thereof more strongly than the intention to get them back upon bailment. It seems to us upon these facts and circumstances that there was really a sale of the bottles to the customers, the assessee buying back the empties from some customers. It is, therefore, that the assessee could show a refund of Rs.11,62,974/- out of the total amount of deposits, namely, Rs.30,57,143/-. Had there been a bailment which necessarily pre-supposes that the bailee was aware of the terms thereof, a large refund would have been shown."
9. On careful consideration of provisions of law and the ratio laid down by the Supreme Court, we are of the view that the decision of the Supreme Court in Kalyani Breweries case has no application to the facts of the case on hand. In 14 the said case, the contention of the assessee to exempt refund of amount paid to the purchasers towards empty bottles of beer, is held to be disputed contention and no categorical material was placed to substantiate the said contention to seek that it was a bailment and not a sale. In the present case, it is beyond pale of doubt that the transaction has been described as sale by the A.O. and also admitted by the assessee. In that view of the matter, the ratio laid down by the Supreme Court in the case of Premier Breweries case is squarely applicable to the facts of the case. In that view, the Writ Appeals and Writ Petitions are allowed.
The amount deposited by the appellant pursuant to the interim order shall be refunded to the appellant.
Sd/-
JUDGE Sd/-
JUDGE NM*