JUDGMENT Rajes Kumar, J.
1. Present revision under Section 11 of UP. Trade Tax Act (hereinafter referred to as "Act") is directed against the order of Tribunal dated 16.08.1995 for the assessment year 1989-90 under U.P. Trade Tax Act.
2. Dealer/opposite party (hereinafter referred to as "Act") was carrying on the business of manufacture and sale of Indian Made Foreign Liquor 'hereinafter referred to as "IMFL"). During the year under consideration, dealer had realized per bottle at Rs. 2.60, 2.30 and 1.57 from its customers under heading of P.P. Caps, Seal Level and Filling etc. Total amount realized in this regard was Rs. 91,19,705,20p., which was called as bottling charges. Dealer had admitted the liability of tax on the said bottling charges in the return but during the course of assessment proceedings, denied the liability on such amount. Assessing authority included the such bottling charges in the turn over and levied the tax thereon. First appeal filed by the dealer was allowed. First appellate authority relied upon the decision in the cases of Hyderabad Deccan Cigarette Factory v. The State of Anndhra Pradesh, reported in 17 STC, 624, Lalchandra Shyam Sunder v. CST, Madhya Pradesh, reported in 68 STC, 225, CST v. The Bhopal Sugar Industries Ltd. 48 STC, 45, CST v. Swadeshi Cotton And Flour Mills Ltd., reported in 46 STC, 138, Binod Mills Co. Ltd., Ujjain v. CST, reported in 29 SIC, 413, CST v. Gopal Rai Sai Ram, Ghaziabad, reported in 1983 LPTC, 91, Shamsuddin Akbar Khan & co. v. State of Orissa, reported in 26 SIC, 280, and held that the bottling charges was not charged as a result of sale and the value of packing material was very less in comparison to the value of the main goods and the dealer had no option except to sell the liquor in packing material. Commissioner of Trade Tax filed appeal before the Tribunal. Tribunal by the impugned order rejected the appeal and confirmed the order of the first appellate authority.
3. Heard learned Counsel for the parties.
4. Learned Standing Counsel submitted that the bottling charges had been charged towards the filling of the liquor in bottles, which included the price of the packing material. He submitted that the bottling charges is part of the turn over as defined under Section 2(i) of the Act "any sum charged in respect of the goods before the delivery of the goods". He submitted that without packing, liquor can not come in a marketable form and thus the bottling charges is part of the turn over and is liable to tax. Learned counsel for the dealer submitted that the bottling was only for the convenient delivery of the liquor and, therefore, being a delivery charges, it is not the part of the turn over.
5. Having heard learned Counsel for the parties and perused the order of the Tribunal.
6. Section 2(i) which defines the "turn over" as it exits at the relevant time, reads as follows:
Turnover" means the aggregate amount for which goods are supplied or distributed by way of sale or are sold, by a dealer, either directly or through anther, on his account or on account of others, whether for cash or deferred payment or other valuable consideration:
Explanation I: omitted.
Explanation II:-
Subject to such conditions and restrictions, if any, as may be prescribed in this behalf:-
(i) the amount for which goods are sold shall include any sums charged for anything done by the dealer in respect of the goods sold, at the time of or before the delivery thereof, other than cost of freight or delivery or cost of installation or the amount realised as sales tax or purchase tax, when such cost or amount is separately charged.
(ii) Any cash or other discount on the price allowed in respect of any sale and any amount refunded in respect of articles returned by customers shall not be included in the turnover; and
(iii) Where for accommodating a particular customer, a dealer obtains goods from another dealer and immediately disposes of the same without profit to the customer, the sale in respect of such goods shall be included in the turnover of the latter dealer alone:
7. In the present case admittedly the liquor was sold in packed form. Liquor could not be sold without packing. The contract for sale of the liquor was for sale in bottle. Therefore, there was an implied contract for the sale of packing material. Merely because the bottling charges was charged separately it can not be said that there was no contract for the sale of packing material. Section 2(i) defines turn over which contemplates the inclusion of "any sums charged for anything done by the dealer in respect of the goods sold, at the time of or before the delivery thereof. The bottling was done before the delivery of the goods thus, the bottling charges are liable to be included in the turn over being "any sums charges for anything Hone by the dealer in respect of the goods at the time of or before the delivery thereof."
8. In the case of CST v. Rai Bharat Das and Bros., reported in AIR 1989, 315, dealer was carrying on the business of silica sand. Silica sand could be sold in loose form and in packed form as per the contract. In case where silica sand was sold in packed form in gunny bags, price of the packing material was realized from the customers. Apex Court held as follows:
We are of the opinion, in view of the facts found by the Tribunal which must be taken to be conclusive, and in the light of Section 2(h) of the Act, the High court was in error. In the facts of this case such packing charges could be included. There was an agreement to sell the gunny bags, as found by the Tribunal. The price of silica was shown separately and the cost of packing was also shown separately. In view of the definition of Section 2(h) of the Act, anything which was an integral part included any sum charged for anything done by the dealer in respect of the goods, may form part but anything supplied separately pursuant to a separate order, direction or specification to the purchaser, could not form part of the sale price of the gunny bags. This was done in order to putting them in deliverable state and incidental to the same.
9. In the case of TVL Ramco Cement Distribution Co. Pvt. Lt., v. State of Tamilnadu, reported in AIR, 1993, 123. Dealer was carrying on the business of cement. Dealer had charged the cost of packing materials used by the dealer in packing cement for being delivered to its customers. The question was whether packing charges could form the part of turn over. Apex Court held as follows:
The position in regard to packing charges as well as the excise duty on packing charges is also no different. As pointed out by this Court in the Hindustan Sugar Mills case and in Commr. of Sales Tax v. Rae Bharat Das and Bros. , packing charges form part of "sale price" because the expression "any sum charged for anything done by the. dealer in respect of the goods" used in the definition in Section 2(h) of the Central Sales Tax Act, 1956, squarely covers such charges as packing is an integral element of the transaction of sale and packing charges are an integral part of the sale price. Once this is so, it follows that these charges and the excise duty thereon cannot be excluded from the turnover for purposes of the Central Sales Tax Act. Nor will, for the reasons earlier discussed in relation to freight charges, the assessee be in a position to claim a deduction in respect of these charges by virtue of Rule 6(cc) of the Sales Tax Rules. In our view, this position has been correctly set out, applying the decision in the case of Rai Bharat Das and Bros. in State of Tamil Nadu v. Vanniaperumal and Co., (1990) 76 STC 203 (Mad) (FB) Dalmia Cement (Bharat) Ltd v. State of Tamil Nadu, (1991) 81 STC 327 (Mad) and Dalmia Cement (Bharat) Ltd v. State of Tamil Nadu, (1991) 83 STC 442 (Mad). We are, therefore, of the opinion that the packing charges and excise duty thereon cannot also be deducted in computing the taxable turnover for the purposes of the Tamil Nadu Acts.
We, therefore, hold-
(i) that the freight charges should be included in arriving at the taxable turnover for purposes of C.S.T. and T.N.S.T.; and
(ii) that packing charges and excise duty thereon should also be included in arriving at the taxable turnover for purposes of both C.S.T. and T.N.S.T.
10. In the case of Dyer Meakin Breweries Ltd. v. State of Kerala, reported in 26 STC, 248. Appellant company was manufacturing the liquor at various places in UP. and Haryaria and transported the goods from its breweries and distilleries to its place of business in Ernakulam and sold them there. While selling liquor to the customers the appellant made out separate bills for ex-factory price and for "freight and handling charges". The appellant claimed that the amount charged for "freight and handling charges" incurred by it in transporting the goods from the breweries and distilleries to the warehouse in Kerala were eligible for deduction under Rule 9 (f) of the Kerala General Sales Tax Rules, 1963. This claim was negatived by this Court. The Court observed:
It is common ground that the sale of the liquor took place in Ernakulam The company arranges to transport liquor for sale from the factories to its warehouse at Ernakulam. It was not brought for any individual customer. All the expenditure incurred is prior to the sale and was evidently a component or the price for which the goods were sold. It is true that separate bills were made out for the price of the goods ex-factory and for 'freight and handling charges". But, in our judgment, the Tribunal was right in holding that the exemption under Clause (f) of Rule 9 applies when the freight and charges for packing and delivery are found to be incidental to the sale and when they are specified and charged for by the dealer separately and expenditure incurred for freight and packing and delivery charges prior to the sale and for transporting the goods from the factories to the warehouse of the company is not admissible under Rule 9(f). Rule 9(f) seeks to exclude only those charges which are incurred by the dealer either expressly by necessary implication for and on behalf of the purchaser after the sale when the dealer undertakes to transport the goods and to deliver the same or where the expenditure is incurred as an incident of sale. It is not intended to exclude from the taxable turnover any component of the price, expenditure incurred by the dealer which he had to incur before sale and to make the goods available to the intending customer at the place of sale.
11. The aforesaid two decisions of the Apex Court clearly held that the in case where the goods are sold in packed form, there is implied contract for sale of material even if the price are separately charged for. It has been further held that the packing charges charged for the packing material and for labour charges etc. falls within the purview of "any sums charges for anything done by the dealer in respect of the goods at the time of or before the delivery thereof and thus, it is the part of turn over. Bottling of liquor is an integral part of the process of manufacturing. Liquor becomes marketable only after bottling. Liquor can not be sold without packing. Thus, the packing charges are liable to be included in the turn over and liable to tax. I do not agree that bottling charges is a delivery charges.
12. For the reasons stated above, order of the Tribunal is liable to be set aside so far as it relates to deleting the tax on the bottling charges is concerned.
13. In the result, revision is allowed. Order of the Tribunal is set aside in part so far it relates to deleting the tax on bottling charges is concerned. Appeal filed by the Commissioner of Trade Tax before the Tribunal is allowed and it is held that the bottling charges is part of the turn over and is liable to tax accordingly.