MANASA ENTERPRISES Vs. COMMERCIAL TAX OFFICER

JUDGEMENT

(1.) As common questions arise for consideration in these writ petitions, they were heard together and are now being disposed of by this common order. While the proceedings originally under challenge, in W.P. Nos. 12684, 12696, 12702 and 12725 of 2009, were orders rejecting stay pending disposal of the appeals before the Appellate Deputy Commissioner, in the other writ petitions the challenge is to the validity of the assessment, orders levying tax on sale of empty bottles. Sri N. Venkataraman, Learned Senior Counsel appearing for the petitioners in W.P. Nos. 12684, 12696, 12702 and 12725 of 2009, would submit that the petitioners therein have already withdrawn the appeals filed before the Appellate Deputy Commissioner and have sought amendment of the prayer, in the aforesaid four writ petitions, to include a challenge to the assessment order. As the validity of the assessment orders are under challenge in the other writ petitions in this batch, the amendment petitions are, accordingly, ordered.

(2.) Learned Counsel appearing for either side would agree that the facts in W.P. No. 6022 of 2009 are illustrative of the facts in all these writ petitions. The petitioner, a registered dealer on the rolls of the Commercial Tax Officer, Saroornagar, claims that its business relates exclusively to the purchase of empty used beer and liquor bottles from hawkers and other unregistered dealers and, after cleaning, its sale to breweries and distilleries. These beer and liquor bottles are stated to have been sold, thereafter, to manufacturers who, in turn, are said to have filled them up with beer/liquor for sale to the A.P. Beverages Corporation Ltd/Canteen Stores department. The petitioner would contend that these used empty bottles cannot, in the normal course of business, be used by anyone other than breweries and distilleries. The 2nd respondent issued a notice proposing to levy tax, for the period April, 2008 to December, 2008, on such sale of used beer and liquor bottles and, thereafter, passed orders of assessment determining the turnover, relating to the sale of empty used bottles, as liable to tax under Section 4(3) read with Item 90 of the IV Schedule to the A.P. VAT Act (hereinafter referred to the Act).

(3.) Sri N. Venkataraman and Sri S. Ravi, Learned Senior Counsel and Sri S. Chakrapani, Learned Counsel appearing on behalf of the petitioners, would submit that empty beer and liquor bottles are "goods" and, under Sections 2(3) of the A.P. Excise Act, liquor can be sold only when packed in bottles. While fairly stating that bottles were packing material, and would otherwise fall within the ambit of item 90 of Schedule IV, they would submit that the destiny of these bottles was inter-twined with its contents i.e., liquor, there was an inseparable bond between them, that Section 4(5) read with Item I of Schedule VI of the Act required liquor, bottled and packed as per the provisions of the A.P. Excise Act, to be taxed at 70% at the point of first sale in the State, that, in view of Section 6, the rate of tax applicable to empty bottles was the same as the rate of tax on liquor, that bottles, containing liquor, were also liable to be taxed at 70% and not at 4% as prescribed in Section 4(3) read with Item 90 of Schedule IV, that these bottles, of sizes and shapes specified in Explanation III to Schedule VI, were peculiar only to the liquor industry, that sale of liquor to the A.P. Beverages Corporation Limited/Canteen Stores department is deemed, under Explanation I to Schedule VI, to be the first sale in the State and that sale of liquor, thereafter, is not liable to tax within the State of A.P as levy of tax on the goods specified in Schedule VI is at the point of first sale in the State. They would further submit that A.P. Beverages Corporation had already paid tax both on the liquor bottles and its contents i.e., liquor, that the petitioners had purchased empty liquor/beer bottles, from hawkers and unregistered dealers, after the beer/liquor contained therein was consumed, that, as liquor and beer bottles had already suffered tax at 70% at the point of first sale in the State, sale of empty bottles, thereafter, to breweries and distilleries constituted second and subsequent sales which, in view of Explanation II to Section 2(38), was required to be excluded from the taxable turnover of the petitioner-dealers, that such sale of empty bottles was not liable to tax under Section 4(3) read with Item 90 of the IV Schedule to the Act, that, by necessary implication, packing material, as referred to in Item 90 of Schedule IV, did not include packing material already taxed under Schedule VI and that the words "relating to", in Explanation II to Section 2(38), meant the sale price of both the contents and the containers. They would rely on Sirpur Paper Mills Limited v. Collector of Central Excise, Hyderabad, 2003 159 ELT 17, Premier Breweries v. State of Kerala, 1998 108 STC 598 and Doypack Systems (Pvt) Ltd v. Union of India, 1988 36 ELT 201. They would submit that taxable turnover, under Section 2(38), was the aggregate of the sale price of all taxable goods, that as "liquor", subsequent to its first sale in the State, ceased to be taxable goods, they could not form part of the taxable turnover and that tax, if any, levied on sale of liquor by Bars and Restaurants was illegal.