1988 (4) TMI 394 - SC - VAT and Sales Tax

Whether charges locally called tulai is a part of purchase price liable to tax? Held that - Appeal allowed. The position that tulai shall be a part of delivery charges and in case it has been separately charged in respect of each of the sale transactions entered into between the customers and the assessee the same would be entitled to exemption from tax. Otherwise it would come within the definitions of purchase price and taxable turnover . This being the legal position the matter has to be examined keeping this in view. We vacate the judgment of the High Court and remit the matter to it for a fresh disposal.

Summary

Issues:
1. Interpretation of "purchase price" under Section 2(gg) of the U.P. Sales Tax Act.
2. Whether charges locally called "tulai" are part of the "purchase price" liable to tax.
3. Assessment of interest under Section 8(1) of the U.P. Sales Tax Act on the failure to deposit tax on tulai.
4. Legal obligation of the assessee to pay interest on tulai charges.

Analysis:
1. The judgment involves a dispute over the interpretation of "purchase price" under Section 2(gg) of the U.P. Sales Tax Act. The High Court considered the definition of "purchase price" and its components, including charges like tulai, in determining the taxable turnover of the assessee.

2. The main issue in the appeals was whether charges known as "tulai" constituted a part of the "purchase price" subject to tax. The assessee argued that tulai was separately charged and should not be included in the taxable turnover, while the Revenue contended that tulai was akin to dhami and should be taxable as part of the purchase price.

3. The judgment also addressed the assessment of interest under Section 8(1) of the U.P. Sales Tax Act due to the non-deposit of tax on tulai by the assessee. The Tribunal held that interest on tulai was legally chargeable, leading to the appeal to the High Court.

4. The High Court clarified that tulai would be considered part of delivery charges and could be exempt from tax if separately charged in each sale transaction. However, if not separately charged, tulai would fall under the definitions of "purchase price" and "taxable turnover," making it subject to tax. The High Court remitted the matter for fresh disposal, emphasizing the need to determine whether tulai formed part of the purchase price.

5. The judgment highlighted the legal obligation of the assessee to pay interest on tulai charges, emphasizing that the mere assertion of bona fide belief was insufficient to avoid interest payment. The High Court directed a quick disposal of the case within three months, without awarding costs to either party.

6. In conclusion, the Supreme Court dismissed the revisions, upholding the Tribunal's decision on the levy of interest on tulai charges. The judgment provided clarity on the treatment of tulai in taxable turnover and emphasized the legal requirement for the assessee to fulfill tax obligations, including interest payments.