1951 (11) TMI 11 - HC - VAT and Sales Tax

Summary

Issues:
Application for revision against the order of the Collector of Sales Tax; Assessment of sales tax on conveyance charges; Exclusion of conveyance charges from sale price calculation; Double charging of sales tax on conveyance charges; Refund of excess sales tax paid.

Analysis:
The applicants, dealers in bricks, were assessed for sales tax by the Sales Tax Authorities based on suspicion that conveyance charges included extra price for bricks. The applicants challenged this assessment through various levels of appeal. The High Court examined Section 2(h)(i) which allows the exclusion of "cost of freight or delivery when separately charged" from the sale price. The Court noted that the conveyance charges were separately mentioned in the bills, satisfying the legal requirement for deduction. Therefore, the Court directed the exclusion of proper conveyance charges in fixing the applicants' turnover.

However, the Court observed discrepancies in the conveyance charges where they exceeded the price of bricks in some cases or appeared too large in others. The Court held that applicants cannot benefit from including extra brick prices in conveyance charges to avoid sales tax. To address this issue, the Court remanded the matter to the Sales Tax Officer for inquiry and determination of the correct conveyance charges in each case. The Sales Tax Officer was instructed to report the amount of conveyance charges and the corresponding tax to be deducted.

Additionally, the Court noted instances where the applicants had already recovered sales tax on conveyance charges. The applicants agreed to forego this claim, leading the Court to direct the Sales Tax Officer to investigate only the instances mentioned in the agreed statement. The Sales Tax Officer submitted a report, which both parties accepted. Consequently, the Court modified the order under revision and directed a refund of Rs. 184-6-0 to the applicants from the excess sales tax paid.

In conclusion, the High Court's judgment clarified the treatment of conveyance charges in sales tax assessment, emphasizing the importance of separate billing and accurate calculation. The Court's decision to refund excess tax paid demonstrates a fair and thorough review of the matter, ensuring compliance with legal provisions and principles of taxation.