1970 (4) TMI 149 - HC - VAT and Sales Tax

Summary

Issues: Interpretation of "purchase price" for sales tax assessment.

The judgment by the Orissa High Court involved a partnership firm engaged in the business of myrobalan under a lease from the Forest Department. The firm's turnover for sales tax assessment was disputed by the Sales Tax Officer, who sought to include additional expenses like labor and transport charges in the purchase turnover. The firm's appeal to the Assistant Commissioner of Sales Tax was unsuccessful, leading to a writ application under articles 226 and 227 of the Constitution.

The key issue revolved around the interpretation of "purchase price" as defined in the Orissa Sales Tax Act, 1947. The court analyzed the definitions of "purchase price" and "turnover of purchases" provided in the Act. It was established that the purchase price includes the amount payable for goods and any sum charged for seller's services at the time of or before delivery. In this case, the myrobalan was to be collected, transported, and crushed by the purchaser, not the seller. Therefore, the court held that expenses incurred by the petitioner for these activities should not be included in the purchase turnover for sales tax assessment.

Consequently, the court found that the taxing authorities had erred in including collection, transport, and crushing charges in the purchase turnover. The writ application was allowed, and a writ of certiorari was issued to quash the assessment orders and the first appellate authority's decision. The Sales Tax Officer was directed to re-compute the tax excluding the disputed charges. The petitioner was entitled to a refund of any excess amount already paid, with no order as to costs. Justice Acharya agreed with the decision, and the application was allowed.