It then obtained an order referring a certain question arising out of the assessments for decision by the High Court of Punjab.
The scheme in substance was that a distiller on a sale of liquor became entitled to charge a wholesaler a price for the bottles in which the liquor was supplied at rates fixed by the Government which he was bound to repay to the wholesaler on the latter returning the bottles.
No time limit had been fixed within which the bottles had to be returned in order to entitle a wholesaler to the refund, number does it appear that a refund had ever been refused.
The object of demanding and taking these additional sums was obviously to provide additional inducement for the return of the bottles to the distiller so that its trade in selling the produce of its distillery might number be hampered for want of bottles.
It is number disputed that for the accounting periods with which this case is companycerned, the additional amounts had been taken without Governments sanction and entirely as a companydition imposed by the appellant itself for the sale of its liquor.
of the bottles companyered by it had been returned, though the remaining 10 per cent.
Sometime in 1944, the Amritsar Distillery Co. Ltd. which then was in existence, insisted on the wholesalers paying to it in addition to the price of the bottles fixed under the buy back scheme, certain amounts described as security deposits and calculated at varying rates per bottle according to sizes for the bottles in which the liquor was supplied to them promising to pay back for each bottle returned at the rate applicable to it and further promising to pay back the entire amount paid on a transaction when 90 per cent.
The price of the bottles received by the appellant under the buy back scheme was entered by it in its general trading account while the additional sum received for them was entered in the general ledger under the heading Empty Bottles Return Security Deposit Account .
The companypany while it was in existence realised these additional sums and so did the appellant after it took over the business.
The moneys taken as price of the bottles were returned as and when the bottles were returned.
Appeal from the judgment and order dated June 16, 1953, of the Punjab High Court in Civil Reference No.
119 of 1955.
had number been returned.
The moneys described as security deposit were also returned as and when the bottles were returned with only this difference that in this case the entire sum taken in one transaction was refunded when 90 per cent.
The Judgment of the Court was delivered by SARKAR, J. The appellant is a companypany carrying on business as a distiller of companyntry liquor.
After the war started the demand for companyntry liquor increased but difficulty was felt in finding bottles in which the liquor was to be sold.
The appellant was assessed to income tax on the balance of the amounts of these additional sums left after the refunds made there out.
The price refundable was later increased perhaps because the previous price did number fully achieve the desired result of the bottles finding their way back to the distillers.
1 of 1953.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
November 24.
N. Sanyal, Additional Solicitor General of India, Gopalakrishnan, R. H. Dhebar and D. Gupta, for the respondent.
of the bottles companyered by it had been returned.
In order to relieve the scarcity of bottles the Government devised in 1940 a scheme called the buy back scheme.
The entire trade was largely companytrolled by Government regulations.
Apparently it was companyceived that the price fixed under the scheme would be found to be higher than the price which the bottles would fetch in the open market and the arrangement for the refund of the price would therefore encourage the return of the bottles from the companysumers through the intermediaries ultimately to the distiller.
The appellant carried on the same business as its predecessor, namely, sale of the produce of its distillery to licensed wholesalers.
The sale was made on these terms In each transaction of sale the appellant took from the wholesaler the price of the liquor, a certain sum fixed by the government, as price of the bottles in which the liquor was supplied and a further sum described as security deposit for the return of the bottles.
V. Viswanatha Sastri and Naunit Lal, for the appellant.
The wholesalers in their turn sold the liquor to licensed retailers from whom the actual companysumers made their purchases.
It was incorporated in May 1945 and was in fact a previously existing companypany called the Amritsar Distillery Co. Ltd. reconstructed under the provisions of the Companys Act.
The present appeal is against that decision which related to all the three varieties of taxes for which the appellant had been made liable.
The same arrangement, but with prices calculated at different rates was made for the liquor sold in bottles by a wholesaler to a retailer and by a retailer to the companysumers.
It had also been assessed to business profits tax and excess profits tax on the same balance.
Its appeals against the orders of assessment to these taxes to the Appellate Assistant Commissioner and thereafter to the Tribunal failed.
