MIS. KALYANI BREWERIES LTD. versus ST ATE OF WEST BENGAL AND ORS.

Citation: [1997] SUPP. 4 S.C.R. 114 · Decided: 15-09-1997 · Supreme Court of India · Bench: S.P. BHARUCHA · Disposal: Dismissed

Judgment (excerpt)

A 
MIS. KALYANI BREWERIES LTD. 
v. 
ST ATE OF WEST BENGAL AND ORS. 
SEPTEMBER 15, 1997 
B 
[S.P. BHARUCHA AND M. JAGANNADHA RAO, JJ.] 
Sales Tax: 
Sales Tax on sale of containers-Sale of Beer-Deposit collected on 
C bottles-Refundable on return-No time limit for return of bottles-Balance 
deposit amount left with assessee-Subjected to sales tax-Tribunal held that 
transaction was sale and not a Bailment-Held, bailee not aware of bailment 
terms-Deposit rate equal to cost of bottles-No strong intention to get back 
bailment-Imposition of sales tax justified. 
D 
The appellant-assessee, a manufacturer and seller of beer, collected 
deposit for bottles from customers. These were credited to "Deposit on 
Bottles" account. On return of empty bottles refund was made. There was no 
time limit fixed for return of bottles. The deposits were kept for three months 
in the account as a liability and the balance in that account was transferred 
E to an account called the "Bottle Deposit Forfeited Account". The Commercial 
Tax Officer levied sales tax on the forfeited deposit amount. The order was 
confirmed by both the Assistant Commissioner and Commercial Taxes 
Tribunal. On appeal, the Taxation Tribunal held that the transaction of the 
beer bottles was not a bailment but was a sale. Hence the present appeal. 
F 
G 
The contention of the appellant-assessee was that substantial sum had 
been refunded from the bottle deposit account to the customers who returned 
the empty bottles. Thus there was only a bailment of bottles to the customers 
and no intention to sale. 
Dismissing the appeal, this Court 
HELD : 1.1 On the facts and circumstances it seems that there was 
really a sale of the bottles to the customers, the assessee buying back the 
empties from some customers. The amount shown as forfeited was rightly 
made liable to Sales-tax. Had there been a bailment which necessarily pre-
H supposes that the bailee was aware of the term thereof, a larger refund would 
lf4 
--
KAL YAN! BREWERIES LTD. v. STATE 
115 
have been shown. [120-G) 
1.2. The facts and circumstances must be ascertained to determine 
whether or not the assessee had sold the beer bottles to its customers so as 
to beconie liable to pay sales tax on the price of deposit realised thereof. The 
A 
two factors that would militate against the sale of beer bottles are, first, the B 
invoices that speak of the "deposit on bottles" and, secondly, the refund out of 
the aggregate amount of the deposit. [120-C-D] 
2. There is nothing on record to indicate that the terms under which 
the deposits be repaid were communicated to the assessee's customers. There 
is no suggestion that there was an oral communication of such terms to the C 
customers or that there was any trade usage in this behalf. It is difficult to 
visualise a bailment the terms whereof are not made known to the bailee. 
[120-E] 
3. The forfeiture of amounts in the assessee's °'deposit on bottles" 
account does not appear to bear out the assessee's case that the empties were D 
refundable at any time. It must also be taken into account that the customers 
were required to deposit for the beer bottles at rate which was exactly equal 
to the cost of the bottles; this suggests the sale thereof more strongly than 
the intention to get the back on bailment. (120-F] 
E 
United Breweries Ltd. v. State of A.P., [1997] 3 SCC 530 and Raj Steel 
and Ors. v. State of A.P. and Ors., (1989] 3 SCC 262, distinguished. 
Raj Steel and Others v. State of A.P. and Ors., [1989) 3 SCC 262, 
referred to. 
Benjamin's Sale of Goods (Third Edition) and Curzon's Dictionary of 
Law (Fourth Edition), referred to. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4524of1989. 
From the Judgment and Order dated 21.7.89 of the West Bengal Taxation 
Tribunal Calcutta in Case No. R. N.-92of1989. 
Sunil Gupta and Mrs. A.K. Verma for Mis JBD and Co. for the Appellant. 
B. Sen, Dilip Sinha and J.R. Das for the Respondents. 
F 
G 
H 
,, 
116 
SUPREME COURT REPORTS [1997] SUPP. 4 S.C.R. 
A 
The Judgment of the Court was delivered by 
S.P. BHARUCHA, J. 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 the Assessment 
B 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

Excerpt shown. Read the full judgment & AI analysis in Lexace.