Rajasekhara Murthy, J.
1. Petitioner in this case is a wholesale dealer in liquor. Petitioner purchases bottled beer from its manufacturers at Bangalore and other places for purposes of distribution to retailers. At the time of sale to the retailers a deposit known as 'empty bottle deposit' at 70 p. per bottle is taken by the petitioner. This deposit, according to the petitioner is only meant for repaying the said sums to the retailers on the return of the bottles. For the assessment year 1976-77 a sum of Rs. 5,17,713-75 p. representing such deposits was Claimed as a deduction from the total turnover. The Assistant Commissioner of Commercial Taxes (Assessment -1) Bangalore, allowed the said claim and consequently, deducted it from the total turnover.
2. The Deputy Commissioner of Commercial Taxes, Bangalore, in exercise of power conferred under Section 21(2) of the Karnataka Sales Tax Act, issued a notice, as per Annexure-B, to the petitioner to show cause why the exemption allowed by the Assessing Officer in respect of the deposits in question, should riot be withdrawn and the deposits treated as part of the total turnover of the assessee. In reply to this notice, the petitioner filed objections in detail and contended that the deposit should not be treated as part of its turnover since there was no sale of empty bottles by the petitioner, He also relied upon a Division Bench decision of the Kerala High Court in Macdowell & Co., Ltd.'s case, 46 STC 79 and another decision of Madras High Court, 46 STC 85 in which the petitioners were sister concerns of the petitioner herein.
3. The Deputy Commissioner, thereafter fixed the case for hearing on 11-2-1980 and called upon the petitioner to produce the relevant documents, etc., in support of the petitioner's contention. The petitioner has challenged the show cause notice in this Writ Petition.
4. Sri Hanumantha Rao, learned Counsel for the petitioner has, at the outset, challenged the very jurisdiction of the Deputy Commissioner, to issue notice under Section 21(2) of the Act proposing to. revise the assessment. According to him, the matter does not require any investigation since the claim was scrutinised by the Assessing Officer and on being satisfied, the exemption claimed was allowed. The learned Counsel has reiterated the very same contentions which he urged before the Deputy Commissioner in his reply and in addition has relied upon a decision of this Court by Sri K.S. Puttaswamy, J. in Mysore Breweries Ltd. -v.- Deputy Commissioner of Commercial Taxes, Bangalore, W.P. No. 18690 & 23105 of 1980 D.D. 8-3-1983.
5. The following decisions are also relied upon on behalf of the petitioner in support of its contention :
1) United Excise v. Commr. of Sales Tax, 28 STC 16 (M.P.)2) 46 STC 79 (Ker)3) 46 STC 85 (Mad), and4) Arlem Breweries v. Asst. Commr. of S.T. 53 STC 172 (Bom).
6. In the Madhya Pradesh High Court decision the question that arose was different and related to sale of packing materials and it has no bearing on the present case.
7. In the Kerala and Madras decisions Macdowell & Co., Ltd. sister concerns of the petitioner were the respondents. They had made a similar claim before the Assessing Officers in respect of similar deposits which they had received from their retailers. The question before the High Courts was : whether the 'bottle deposits' was an integral part of the sale and its turnover was assessable to tax. No doubt, the High Courts held that the deposits in respect of bottles which was separately invoiced and separately treated in the accounts, cannot be treated as an integral part of the sale price, and while arriving at this conclusion they also distinguished the Supreme Court decision in Punjab Distilling Industries' case, : 35ITR519(SC) . But both the Courts accepted the finding of the Tribunal and its conclusions recorded after an elaborate examination of the nature of transaction between the parties.
8. It may be noted that all the cases referred by the petitioner, arose out of the references filed under the Act. Therefore, it is urged by the learned Government Pleader by way of preliminary objection that the petitioner should agitate the matter before appellate authorities under the Act, since it involves investigation into facts and calls for consideration of relevant materials. It is also urged by Sri Dattu, High Court Government Pleader that the Writ Petition deserves to be dismissed in view of the general principle laid down by the Supreme Court in Punjab Distilling Industries' case regarding 'empty bottle deposits'.
9. As regards the decision in Mysore Breweries Ltd., case8 it is stated on behalf of the Government that the matter is under appeal before a Division Beach in W.A. No. 275 and 276/84.
10. The Deputy Commissioner is empowered to exercise revisional jurisdiction under Section 21 of the Act and may call for and examine the record of any order passed under the provisions of the Act, and pass such order as he thinks fit, if he is not satisfied as to the legality or propriety of such order. The Deputy Commissioner, in the present case issued a notice proposing to revise the assessment order and subject the turnover of Rs. 5,17,713.75 P. to tax. The exemption granted by the assessing authority was, in the opinion of the Deputy Commissioner, erroneous. The petitioner filed elaborate objections to the said notice raising several contentions and urged that the proceedings initiated may be dropped. Thereafter the Deputy Commissioner posted the case to 11-2-1980 and called upon the petitioner to produce all relevant books of accounts relating to the assessment period 1976-77 in support of his contention, It is, thereafter that the petitioner filed Writ Petition and obtained an order of stay of further proceedings before the Deputy Commissioner.
11. The question therefore that arises for consideration in this Writ Petition is : whether this Court should interfere with the notice issued by the Deputy Commissioner proposing to revise the order of assessment
12. To accept the contention of learned Counsel for the petitioner, at this stage, would prevent the Deputy Commissioner from proceeding with the proposed enquiry and foreclose the Deputy Commissioner from making an order in accordance with law. According to the petitioner's contention, the Deputy Commissioner has no jurisdiction to proceed with the proposed revision since, according to him there was no sale of the empty bottles and that therefore the order of the assessing officer allowing this claim need to be interfered with.
13. According to the learned High Court Government Pleader, the Deputy Commissioner had jurisdiction to initiate proceedings under Section 21(2) of the Act since the order granting exemption to the disputed turnover was erroneous and prejudicial to the interests of revenue. In support of his contention he has placed reliance on the ratio of the decision in Punjab Distilling Industries' case, in which the Supreme Court had an occasion to deal with the similar contention. It is therefore necessary to examine a few facts of that case and the principle laid down by the Supreme Court in order to consider the preliminary objection.
14. The Distiller Company in that case used to collect certain amounts described as 'security deposits' which were returnable to the wholesalers on their returning the empty bottles. These amounts were taken to account under the heading ''empty bottles return security deposit account'. The question that arose before the High Court and later before the Supreme Court was :
'Whether these amounts called 'security deposits' were the trading receipts of the assessee ?
15. The High Court had taken the view that while realising these amounts the Company was really charging extra price for the bottles.
16. The Supreme Court held that the amount which was called security deposits was actually part of the consideration for the sale and therefore part of the price of what was sold. The Supreme Court also observed that the Company was really charging extra price for the bottles in insisting on the deposits to be made at the time of sale. The Supreme Court relied upon the observations made in earlier decision in KMS Lakshmanier & Sons -v- Commissioner of I. P. & Excess Profits Tax, Madras : 23ITR202(SC) while applying the ratio of that decision to the facts in Punjab Distilling Industries' case.
17. A Division Bench of this Court (of which 1 was a member) had occasion to deal with, a similar claim for deduction made by United Breweries Ltd., Bangalore8.
18. The Commissioner of Commercial Taxes had revised the order of assessment and brought to tax, deposits on crates and bottles made by the wholesalers with United Breweries, as part of the turnover of the assessee.
19. While allowing the appeal filed by the assessee, this Court remanded the matter to the Commissioner to decide on facts whether the advance deposit taken by the assessee formed part of the price of beer and therefore should be treated as part of its turnover and further observed that two different Commissioners had taken divergent views in this aspect.
20. It cannot therefore be contended, at this stage, that a claim of this nature should be accepted without any further enquiry by the revising authority in excrete of its powers of revision. Since the Deputy Commissioner has pointed out the error in the assessment order and he is of the view that the deduction allowed by the Assessing Officer was not in accordance with law, any order to be made pursuant to the said notice should be after hearing the petitioner and considering his objections to the proposed revision. Therefore, the contention of the petitioner that its claim before the Deputy Commissioner is covered by the decision of this Court in Mysore Breweries case3 cannot be accepted.
21. It is therefore too premature for the petitioner to contend that he is entitled to claim deduction of the deposits without any further investigation. It may be noted herein that the exemption was allowed by the Assistant Commissioner (Assessment), solely on the ground that the said deposits 8. STA No. 10/1980 DD 2nd February 1984 had been credited to a separate account and shown in the bill separately. On the facts of the present case, it is therefore necessary for the Deputy Commissioner functioning under the Act to ascertain the facts and. scrutinise the documents which may be produced by the petitioner in support of its claim and to decide whether the disputed turn over is exigible to tax and also consider the application of the principles laid down by the Supreme Court in Punjab Distilling Industries' case6 and in the case of K. M. S. Lakshmanier & Sons -v.- Commr. of Income Tax & Excess Profits Tax, Madras7. I am therefore of the opinion that this is not a case for interference by this Court in exercise of its jurisdiction under Article 226 of the Constitution at the stage of notice.
22. Writ petition is accordingly disposed of and the petitioner is directed to appear before the Deputy Commissioner of Commercial Taxes, Bangalore and show cause and produce all the relevant materials on which he seeks to rely in support of his contention.