1 to 8. [These paras are not reproduced here as they involve minor issues.] 9. Another major item of dispute common to both the assessment years is about the deduction of central sales tax liability as an admissible expenditure. The claim is Rs. 84,21,284 for the assessment year 1979-80 and Rs. 28,37,124 for the assessment year 1980-81. The assessee-firm exports coffee on a large scale. The export of coffee outside India is controlled by the Coffee Board, Bangalore. The Coffee Board also authorises private exporters to export coffee. There was a dispute whether central sales tax was leviable in respsct of export sales. The Supreme Court had originally held that exemption from central sales tax was available only in respect of the actual exporter and not the intermediate seller. The Central Sales Tax Act, 1956 was then amended to exempt from tax even the last sale on purchase of goods preceding the sale or purchase occasioning the export of goods outside the territories of India subject to certain conditions. Applying this Section, it appears that while the export coffee sales were exempt from central sales tax, the Coffee Board, which is the immediate previous seller of coffee to the exporter, was also not liable to pay central sales tax provided certain conditions were satisfied. But apprehending that sales tax may be levied on the Coffee Board, the Board asked the exporters to deposit the probable sales tax payable by the Coffee Board or in the alternative to furnish bank guarantee to that effect. The action of the Board in demanding the guarantee was challenged by the assessee and two others in a writ petition before the Supreme Court.
The order passed by the Supreme Court and its effect will be considered later in our order. Suffice it to say, that on the basis of the circular issued by the Coffee Board the assessee claimed that there was an accrued liability on their part to pay the aforesaid sums of Rs. 84,21,284 and Rs. 28,37,124 to the Coffee Board which has to be allowed as an admissible deduction in the computation of its income for the respective years. The IAC discussed the various case laws and held that a mere provision will not amount to an accrued liability and, accordingly, disallowed the assessee's claim for deduction of the said sums.
10. The Commissioner (Appeals) dealt with this issue in his order for the assessment year 1978-79. For that year a sum of Rs. 26,89,000 had been demanded from the assessee. It actually paid that amount but subsequently as other exporters offered only bank guarantee, it got the amount refunded on furnishing a bank guarantee. The Commissioner (Appeals) observed that the assessee's claim had been disallowed by the IAC on the ground that it was only a contingent liability and was also not debited to the profit and loss account. He held as follows : 6.4. I have carefully considered the facts of the case and I am of the opinion that the appellant's claim for deduction of central sales tax has to be allowed. This is not a payment made to a private party. This is a payment demanded by a statutory body and made by the appellant to the Government of India. In the case of the appellant-company, there was a specific performance of the contract as a result of which sales tax liability arose. The liability to the refund of a part of the purchase price held as deposit in lieu of sales tax was contingent on the assessment being completed by the sales tax authority on the guidelines issued by the Supreme Court.
But that does not mean that a liability did not exist when the demand was raised by the Coffee Board and the payment was made by the appellant. Besides, this is not merely a liability which was not met by the appellant-company. The sales tax as demanded had been originally paid in full but subsequently, as agreed to by the Coffee Board, only a bank guarantee was filed. As regards the Income-tax Officer's observation that the amount had not been claimed in the profit and loss account, the appellant points out that in the mercantile system of accounting, actual entries are immaterial. What is relevant is the method of accounting and not the actual entries [CIT v. Chunilal Mehta (SC), C.A. No. 153568 (Taxes & Planning, Oct.
1971)]. The appellant also relies on the decision of the Supreme Court in Kedarnath Jute Mfg. Co. Ltd. v. CIT  82 ITR 363 where it has been observed that whether the assessee is entitled to a particular deduction or not will depend on the provision of law relating thereto and not on the view which the assessee might take of his rights nor can the existence or absence of entries in his books of account be decisive or conclusive in the matter. Finally, the appellant contends that the assessee-company on purchasing coffee for 'valuable consideration' did not incur a liability in the year of account. An assessee maintaining the books on the mercantile system of accounting is entitled to claim a deduction in the year in which the liability arises notwithstanding the fact that he has taken steps to dispute his liability and he fails or omits to make entries in his books of account- CIT v. Central Provinces Manganese Ore Co. Ltd.  112 ITR 734 (Bom.).
6.5. Taking into account all the facts of the case and on the basis of the explanation offered and the evidence produced, I am convinced that the payment made by the appellant-company towards the central tax liability has to be allowed as a deduction from the total income determined by the Income-tax Officer.
11. For the years under appeal, he observed that on the reasons given by him in his order for 1978-79, the assessee's claim has to be allowed. He then stated that a provision had been made for central sales tax liability while the IAC had wrongly stated that no provision had been made. Next he states that the IAC was not correct in holding that the circular of the Coffee Board dated 7-2-1977 was quashed by the Supreme Court. He then referred to a portion of the Supreme Court judgment where it was stated that the impugned circular was quashed to the extent to which it insisted on production of an agreement with or an order from a foreign buyer from the registered exporters before participating in export auctions. From that he drew the inference that the observations made by the Supreme Court was with regard to future transactions and did not affect the liability regarding past dealings.
As only the sales tax authorities could apply the law as laid down by the Supreme Court and until they took a decision, the sales tax liability subsisted and had to be allowed. He, accordingly, ordered deletion of the sums of Rs. 84,21,284 and Rs. 28,37,124. The revenue is in appeal.
12. The learned standing counsel referred to the writ petition filed by the assessee and others and read out portions of the Supreme Court judgment. According to him, the Supreme Court more or less clearly stated that the Coffee Board was not liable to pay any sales tax. It was an apprehension by the Coffee Board that a demand may be raised against it by the sales tax authorities and so it wanted to protect itself by collecting as advance from the exporters the sales tax which it might have to pay in future. The liability was purely contingent.
There was no demand on the Coffee Board. There was no payment by the assessee. There was, thus, no acceptance of any liability. There was neither any legal liability nor a contractual liability. The same issue came up in another case and the Tribunal in its order in IT Appeal No.1057 (Bang.) of 1982 dated 15-3-1983 in the case of Ramesh Enterprises (P.) Ltd. v. ITO  5 ITD 395 (Bang.) upheld the contention of the revenue. He submitted that there was no grounds to depart from the decision in Ramesh Enterprises (P.) Ltd.'s case (supra).
13. The learned counsel for the assessee relied on the following decisions : Shrikant Textiles v. CIT  81 ITR 222 (Bom.), Kedarnath Jute Mfg. Co. Ltd. v. CIT  82 ITR 363 (SC), CIT v. Sugar Dealers  100 ITR 424 (All.) and CIT v. Punjab Distilling Industries Ltd.  53 ITR 75 (SC).
He submitted that the assessee was bound to pay to the Coffee Board, the said sums by virtue of the circular dated 7-2-1977. Whether paid or not the liability subsisted. Even if on a subsequent date the liability was extinguished, that did not mean that there was no accrued liability. In Shrikant Textiles' case (supra), it was held that although by a second notice of demand excise duty was reduced, that cannot be made the basis for a finding that even on the earlier date the assessee could be said to have been definitely informed that the excise duty was being recalculated on a fresh basis.
Whatever duty was levied on the earlier occasion was allowed as a liability in the relevant year although subsequently it was reduced.
Similarly, in the case of Punjab Distilling Industries Ltd. (supra), the empty bottle return security deposit was considered as part of the receipts although the assessee was bound to refund the security deposits when 90 per cent of the bottles were returned. It was submitted that the converse also holds good and in the light of the decisions of the Supreme Court in Punjab Distilling Industries Ltd.'s case (supra) and Kedarath Jute Mfg. Co. Ltd.'s case (supra) and of the Bombay High Court in Shrikant Taxtiles' case (supra), there was a definite and accrued liability on the assessee to pay certain sums to the Coffee Board which was an admissible deduction.
It was urged that the Commissioner (Appeals)'s order did not require any modification. It was also sought to be pointed out that the invoices themselves contained a note regarding the sales tax recoverable from the assessee by the Coffee Board. These details had not been examined in the case of Ramesh Enterprises (P.) Ltd. (supra). This introduced a vital distinction between the assessee's case and that in Ramesh Enterprises (P.) Ltd.'s case (supra). It was also submitted that even if the liability were allowed in this year, the revenue was well protected by Section 41(1) of the Income-tax Act, 1961, to collect the tax in the year of remission of liability.
In fact, there was also a demand by the sales tax authorities, Mangalore. It was, thus, submitted that the order of the Commissioner (Appeals) did not require any interference.
14. In reply, the learned standing counsel submitted that there was no distinction between the two cases, viz., the assessee's and Ramesh Enterprises (P.) Ltd.'s case (supra). Mention of an ad hoc figure of sales tax in the invoice did not give rise to an accrued liability. The relevant case laws had already been discussed by the Tribunal in Ramesh Enterprises (P.) Ltd.'s case (supra). The revenue's claim to tax the remission of liability under Section 41(1) had been rejected by the Commissioner (Appeals) in later years on technical ground that the assessee which received remission was constitutionally different from the assessee which incurred liability. Since there was no accrual of liability nor even a payment towards such liability, he submitted that the assessee's case to obtain deduction of a liability which never existed should not be accepted.
15. At the outset, we have to mention that the facts as stated by the Commissioner (Appeals) in his order for the assessment year 1978-79 do not seem to be quite correct. The relevant portions of his order in paragraph 6.2 are reproduced below : ... According to the appellant, in order to remove hardship caused by these decisions of the Supreme Court, Parliament enacted the new Sub-section (3) of Section 5 and added the proviso to Section 6(1).
The appellant claimed that no sales tax was payable as per the provisions of Section 5(3). This contention of the appellant was not accepted by the Coffee Board which held the view that the appellant was liable to pay sales tax under the Central Sales Tax Act. The Coffee Board issued a circular dated 7-2-1977 laying down certain conditions for availing of exemption under Section 5(3). Further, as the Board was not certain as to the final view of the central sales tax authorities, it insisted on payment of sales tax by the registered exporters ....
Firstly, the assessee was not liable to pay Central sales tax as it was the ultimate exporter. The doubt was only about the liability of the intermediate seller, viz., the Coffee Board. Therefore, the statement that the assessee was liable to pay sales tax under the Central Sales Tax Act is not correct. It was the Coffee Board which apprehended that it might be liable to pay central sales tax on the supposition that the taxing authorities might reject its claim for exemption under Section 5(3) of that Act. Since, as the dealer, it thought that it might be asked to pay sales tax, it tried to obtain reimbursement of sales tax from its clients. Therefore, there was no liability imposed by the statute itself on the assessee for payment of sales tax. The question was about the assessee's liability to reimburse to the Coffee Board sales tax, if any, payable by the Board. With this background, we will now proceed to narrate the facts of the case and examine the question of accrual of liability in the light of reported decisions.
16. Central sales tax is a tax on sale or purchase of goods taking place in the course of inter-state trade or commerce. Section 6 of the Central Sales Tax Act reads as follows : 6. Liability to tax on Inter-State sales.-(1) Subject to the other provisions contained in this Act, every dealer shall, with effect from such date as the Central Government may, by notification in the Official Gazette, appoint, not being earlier than thirty days from the date of such notification, be liable to pay tax under this Act on all sales of goods other than electrical energy effected by him in the course of inter-State trade or commerce during any year on and from the date so notified : Provided that a dealer shall not be liable to pay tax under this Act on any sale of goods which, in accordance with the provisions of Sub-section (3) of Section 5, is a sale in the course of export of those goods out of the territory of India.
5. When is a sale or purchase of goods said to take place in the course of import or export.-(1) A sale or purchase of goods shall be deemed to take place in the course of the export of goods out of the territory of India only if the sale or purchase either occasions such export or is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India.
(3) Notwithstanding anything contained in Sub-section (1), the last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of the territory of India shall also be deemed to be in the course of such export, if such last sale or purchase took place after and was for the purpose of complying with, the agreement or order for, or in relation to such export.
It is, thus, clear that export sales are not liable to central sales tax. This concession was also extended to penultimate purchaser or seller by virtue of Section 5(3). In this case, the assessee is the final exporter. Therefore, it is not liable to pay any central sales tax on export sales. By virtue of the Coffee Board Act, the entire stock of coffee produced in the country is to be handed over to the Coffee Board. The Coffee Board then auctions the coffee and customers are permitted to bid in those auctions. The bidders can also be exporters. Therefore, the Coffee Board become the penultimate seller to the exporter. According to Section 5(3) read with Section 6, the Coffee Board will not be liable to pay central sales tax, provided the conditions stated therein are satisfied.
17. After the introduction of Section 5(3) in the Central Sales Tax Act by the Central Sales Tax (Amendment) Act, 1976, the Coffee Board issued the following circular : As all exporters are aware, a new Sub-section (3) has been added to Section 5 of the Central Sales Tax Act, 1956 (hereinafter referred to as 'the Act') by the amending Act, 108 of 1976. The provisions of this new Sub-section has been given retrospective effect from 1-4-1976. The new Sub-section reads as follows : Notwithstanding anything contained in Sub-section (1), the last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of the territory of India shall also be deemed to be in the course of such export, if such last sale or purchase took place after and as for the purpose of complying with, the agreement or order for, or in relation to such export.
2. According to this newly inserted Sub-section (3) of the Act, the last sale or purchase of any goods, immediately prior to the sale or purchase occasioning the export of the goods out of the territory of India, shall also be deemed to be in the course of such export, subject to certain conditions laid down therein.
3. The Coffee Board is advised that the benefit of new Section 5(3) of the Central Sales Tax Act of 1956 will be available in respect of coffee purchased by the exporters in the export auctions conducted by the Coffee Board, if such purchases by the exporters take place after and was for the purpose of compliance with an agreement or order for supply of coffee secured from foreign buyers. In order to avail of the benefit, it would be necessary that the exporters should have proof to establish the following : (a) The registered exporter should have an export contract on hand at the time of his participating in the export auction.
(b) The purchase of coffee effected by the registered exporter in the auction should be for fulfilment of the export contract.
4. Such of the coffee exporters participating in export auctions and who would like to avail of the benefit contemplated in the Sub-section should deposit with Chief Coffee Marketing Officer before the commencement of each export auction, copies of the export orders or agreements from their foreign buyers, on the basis of which they wish to avail of the benefit, along with originals of the orders or agreements, as evidence of the compliance of condition (a) referred to in para 3 ante. In respect of coffee purchased by exporters in the open auctions against prior orders or agreements lodged with the Chief Coffee Marketing Officer in the manner stated above, sales tax will not be collected from the exporter at the time of payment of value of the coffee and its delivery, subject to the exporters furnishing a contingency deposit or a bank guarantee as detailed below.
5. Since the final authority to exempt any sale from payment of sales tax under Section 5(3) of the Act is the assessing authority a firm order lodged before the commencement of auction will not be free from doubt in regard to its acceptability to the assessing authority as evidence of order or agreement secured prior to the purchase of coffee in the open auction, until the assessment is completed. As the assessment of the transactions relating to this is generally taken up a couple of years after the close of the financial year, it has been decided to collect a contingency deposit in lieu of the sales tax liability on such exports and equivalent to the amount of such liability from the exporters.
6. If, however, the exporters do not choose to make a contingency deposit, they could adopt either of the following two alternatives to cover their liability towards sales tax : (a) The exporters may furnish a bank guarantee to the Board as per the specimen enclosed, for the amount of sales tax involved in respect of their purchases in such auction and for which they propose to seek the benefit of exemption from liability. While furnishing the bank guarantee, the exporters should also furnish details of the sales tax involved separately in respect of each pool agent/depot concerned as an enclosure to the bank guarantee.
(b) The exporters may furnish security deposit for the amount involved in the form of separate fixed deposit receipts for the coffee purchased in the different states in each of the export auction. The fixed deposit receipts should be in the name of Coffee Board, on account of the exporter concerned for a period of 4 years.
7. The Coffee Board as the assessee will have to establish to the satisfaction of the assessing authority that the benefit of Section 5(3) of the Act is available on all transactions in respect of which the benefit of Section 5(3) of the Act is proposed to be availed of.
The contingency deposit/ security deposit/bank guarantee is being called for from the exporters in order only to provide for a cover against any levy of the sales tax by the assessing authority in future. In the event of the assessing authority not accepting the Board's contention for the benefit under Section 5(3) of the Central Sales Tax Act and making assessment on the Board, the contingency deposit/security deposit will be appropriated towards the payment of sales tax by the Board. In the case of bank guarantee, the Board will demand the amount involved from the banks who have given guarantees and appropriate the amount towards the Board's liability of sales tax. It may also be mentioned that if the assessing authority does not accept the Board's contention and levy sales tax on such transactions, the Board may prefer an appeal before the appellate authority and in such event the expenses incurred in connection with such appeal will have to be borne by the exporters.
8. Since the amendment to Central Sales Tax Act has been brought into force with retrospective effect, any benefit arising thereof in respect of past purchases will have to be dealt with on the merits of each case. Such of the exporters who have a clear case for seeking exemption in respect of their past purchases may prefer their claims with contemporaneous evidence of an acceptable nature when the question will be examined at this end.
The conditions sought to be imposed by the Coffee Board for making contingent deposits or furnishing bank guarantees were opposed by some of the exporters including the assessee. Writ petitions bearing Nos.
4238 and 4239 of 1978 were filed by the assessee. These writ petitions along with those filed by Consolidated Coffee Ltd. and T.G.M. Assadi & Sons were disposed of by the Supreme Court. The decision is reported in Consolidated Coffee Ltd. v. Coffee Board AIR 1980 SC 1468. Regarding interpretation of Section 5(3), the Court held as follows : 14. In the first place the concerned phrase speaks of two things in disjunctive : 'agreement' or 'order'. The word 'order' which appears in a statute dealing with sales tax must be understood in a commercial sense, that is, in the sense in which traders and commercial men will understand it. In commercial sense an order means a firm request for supply of definite goods emanating from a buyer, an indent placed by a purchaser and, therefore, an order for or in relation to export would mean an indent from a foreign buyer.
It is not possible to accept the contention urged by counsel for the petitioners that the word 'order' in this phrase can mean or refer to an order, direction, mandate, command or authorisation to export that may be issued by a statutory body like the Coffee Board for two reasons : first, occurring in a sales tax statute the word must be given its commercial meaning and, secondly, while enacting the provision Parliament could not be said to have only statutory bodies like Coffee Board or STC in mind. If, therefore, an order for export in the concerned phrase means an indent from a foreign buyer, the preceding word 'agreement' in the phrase would take colour from the word 'order' and would on the principle of noscitur a sociis mean an agreement with a foreign buyer. In Maxwell on the Interpretation of Statutes (at p. 289, 12th edn.) the rule of noscitur a sociis is explained thus : 'Where two or more words, which are susceptible of analogous meaning, are coupled together they are understood to be used in their cognate sense. They take as it were, their colour from each other, the meaning of the more general being restricted to a sense analogous to that of the less general'. Applying this rule of construction it becomes clear that 'the agreement' occurring in the phrase must mean the agreement with a foreign buyer and not the agreement with a local party containing a covenant to export.
Secondly and more importantly, the user of the definite article 'the' before the word 'agreement' is, in our view, very significant.
Parliament has not said 'an agreement' or 'any agreement' for or in relation to such export and in the context the expression 'the agreement' would refer to that agreement which is implicit in the sale occasioning the export. Between the two sales (the penultimate and the final) spoken of in the earlier part of the Sub-section ordinarily it is the final sale that would be connected with the export, and, therefore, the expression 'the agreement' for export must refer to that agreement which is implicit in the sale that occasions the export. The user of the definite article 'the' therefore, clearly suggests that the agreement spoken of must be the agreement with a foreign buyer. As a matter of pure construction it appears to us clear, therefore, that by necessary implication the expression 'the agreement' occurring in the relevant phrase means or refers to the agreement with a foreign buyer and not an agreement or any agreement with a local party containing the covenant to export.(p. 1482) ... therefore, the question will again be what type of obligation and arising from what circumstances has been prescribed by the Parliament by enacting Section 5(3) and that would depend upon the proper construction of the phrase 'the agreement or order for or in relation to such export' occurring therein and, as we have said above, since on proper construction the expression 'the agreement or order' means the agreement with or an order from a foreign buyer it must be held that the Parliament intended to prescribe that the obligation to export arising only from such agreement or order that would afford the inextricable link so as to constitute the penultimate sale a sale in the course of export.(p. 1486) Next it considered the question as to when the penultimate sale of coffee to the exporters at auctions conducted by the Coffee Board could be said to have taken place. In paragraph 30 the Court held as follows : Having regard to the above discussion it is clear to us that in the penultimate sales (sales of coffee effected to Registered Exporters at export auctions conducted by the Coffee Board) the property in the coffee sold thereat passes to the buyer immediately upon payment of full price, weighment and setting apart of coffee for delivery to the buyer under Clauses 19 and 20 of the Auction Conditions and it would be at this stage, i.e., just before this stage is reached that the agreement with or order from a foreign buyer must be available or produced in order to attract Section 5(3) of the Central Sales Tax Act, 1956.(p. 1496) 31. In the result the writ petitions are partly allowed. The impugned Circular dated 7th February, 1977, to the extent to which it insists on production of an agreement with or an order from a foreign buyer from the Registered Exporters before participating in export auctions is quashed ; it is also quashed hereafter to the extent to which it requires Registered Exporters to make contingency deposits or furnish bank guarantees out of abundant caution inasmuch as such requirement would be unnecessary in view of our authoritative pronouncement. The Coffee Board may, if so advised, modify its Circular or issue an appropriate Circular requiring the production of an agreement with or an order from a foreign buyer from the Registered Exporters just before the property in the coffee sold at such auctions passes under Clauses 19 and 20 of the Auction Conditions.
32. As regards past dealings and transactions, final assessment, if any, made by the Taxing Authorities as well as recoveries id made thereunder contrary to the view expressed by us above deserve to be set aside and reassessments made and the concerned State Governments will direct their Taxing Authorities to do the needful and further direct the refund of recoveries made to the Coffee Board which in its turn will refund the same to the concerned Registered Exporters.
Assessment or recoveries if made in conformity with our judgment need not be disturbed. Similarly contingency deposits or bank guarantees already obtained by the Coffee Board from the Registered Exporters, if they are contrary to our judgment, these will be refunded or released forthwith, as the case may be, by the Coffee Board.(p. 1496) From the above, it would appear that the Coffee Board would be the penultimate seller and not liable to Central sales tax in all cases where there is an agreement between the exporter and the foreign buyer.
The Coffee Board was prohibited from insisting on the production of agreement to export before participating in the auction or making contingency deposits or furnishing bank guarantees by the exporters. It is also to be noted that the assessee got refund of deposits already made and the bank guarantees became unenforceable by virtue of the Supreme Court judgment. It, thus, appears that the circular of the Coffee Board ipso facto did not impose a liability on the exporters to make payments to the Coffee Board towards apprehended sales tax liability of the latter. The Tribunal in its order dated 15-3-1983 in Ramesh Enterprises (P.) Ltd.'s case (supra) held as follows : The circular of the Coffee Board has been extracted in the Commissioner (Appeals)'s order. It is clear from the said circular that the Coffee Board was not collecting any sales tax but only required the exporters to make contingent deposit or bank guarantee in order only to provide for a cover against any levy of sales tax by the assessing authority in future. That will clearly show that what was demanded by the Board was not in respect of any sales tax liability ascertained but only by way of contingency. It required the exporters to make security deposit or bank guarantee. Thus, there was no actual sales tax liability on the assessee when the bank guarantee was given. There was no such sales tax liability, even on Coffee Board when the bank guarantee was furnished by the assessee. Thus, the question of deducting the contingent liability does not arise as in fact there was no sales tax liability at all at that time. (p. 401) Following the above decision, we hold that there was no accrued liability on the part of the assessee to pay the aforesaid sums to the Coffee Board.
18. We have now to examine whether the mention of sales tax liability in the invoices issued by the Coffee Board can be taken as an evidence of accrual of liability. We are now considering the case of accrual of liability according to law. Accrual of a legal liability does not depend on the action of the parties. Hence, if the Coffee Board has merely mentioned that sales tax at 6 per cent on sales is to be paid by the assessee that does not amount to accrual of liability. The Board itself has accepted that it is only a contingency and in fact wanted a contingency deposit to be made or a bank guarantee to be furnished. The Supreme Court has now held that the Board was not empowered to demand such deposits or furnishing of bank guarantees. When that is the case, how could it be said that the liability to pay sales tax arose Nor do we agree with the assessee's counsel that the invoices were not examined in the case of Ramesh Enterprises (P.) Ltd. (supra) and that fact introduced a vital distinction between that case and the assessee requiring review of our earlier order. The facts are the same in both cases and production or non-production of the invoices hardly matters since the entire issue has to be considered from the legal angle. The cases cited on behalf of the assessee have also been discussed in the Tribunal's decision in Ramesh Enterprises (P.) Ltd.'s case (supra). In the case of Punjab Distilling Industries Ltd. (supra) there was a binding contract between the assessee and its customers to make security deposits. The Punjab Excise Rules did not create a right in the distiller to return the bottles and as such the amount deposited by the wholesalers having been taken under a trading contract, the Supreme Court held that they formed part of trading results. The converse proposition that such deposits are to be taken as a liability of the trader will nut arise. As and when the deposits are returned, the distiller was entitled to claim a deduction. The facts in the present case are clearly distinguishable. The decision of the Bombay High Court in Shrikant Textiles' case (supra) is also not applicable to the present case as noticed by the Tribunal in its decision in Ramesh Enterprises (P.) Ltd.'s case (supra). We accordingly, allow the department's ground. The IAC's order disallowing the claim of the assessee for deduction of central sales tax for the two years in question is restored and the order of the Commissioner (Appeals) in this behalf is reversed.