1973 (7) TMI 72 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Whether amounts recovered by a dealer for postage, telephone call charges, and bank charges should be included in the turnover of sales under the Bombay Sales Tax Act, 1959.

Issue-wise Detailed Analysis:

1. Definition of Turnover of Sales and Sale Price:

The court examined the definitions provided under the Bombay Sales Tax Act, 1959. Section 2(36) defines "turnover of sales" as the aggregate of the amounts of sale price received and receivable by a dealer in respect of any sale of goods made during a given period, after deducting any refunded sale price. Section 2(29) defines "sale price" as the amount of valuable consideration paid or payable to a dealer for any sale made, including any sum charged for anything done by the dealer in respect of goods at the time of or before delivery thereof, excluding the cost of insurance for transit or installation when separately charged.

2. Arguments by the Government Pleader:

The Government Pleader argued that the amounts recovered for postage, telephone call charges, and bank charges should be included in the sale price. The argument was based on the fact that these charges were added to the invoices irrespective of whether they were incurred by a particular vendee, and the amounts recovered were sometimes more than the actual expenses incurred. It was contended that these charges should be considered part of the valuable consideration for the transfer of property in goods.

3. Tribunal's Findings:

The Tribunal concluded that the amounts recovered for postage, telephone call charges, and bank charges were not to be included in the sale price as they were charges for services rendered by the dealer to his customers in general. The Tribunal found that these charges were separately stated in the bills and were not uniformly applied across all transactions. The Tribunal also noted that there was no evidence to suggest that the dealer would not have sold the goods if these charges were not agreed to be paid by the vendee.

4. Court's Analysis:

The court agreed with the Tribunal's findings and emphasized that the mere inclusion of these charges in the bills does not automatically make them part of the sale price. The court noted that these charges were for services rendered and not for the transfer of property in goods. The court referred to previous judgments, including Nemkumar Kesrimal v. Commissioner of Sales Tax, Madhya Pradesh and Srinivasa Timber Depot and Others v. Deputy Commercial Tax Officer and Others, which supported the view that service charges are not to be included in the sale price.

5. Distinguishing Other Cases:

The court distinguished the present case from Delhi Cloth and General Mills Co. Ltd. v. Commissioner of Sales Tax, Indore, where the Supreme Court held that sales tax charged separately formed part of the sale price. The court noted that the ratio of that case was limited to the recovery of taxes as part of the price and did not apply to service charges. The court also distinguished the case from N.S. Pandaria Pillai v. The State of Madras, where the amounts collected for temple renovation (mahimai) were considered part of the sale price due to the lack of evidence of sales without such charges.

Conclusion:

The court concluded that the amounts recovered for postage, telephone call charges, and bank charges should not be added to the turnover of sales. The court held that these charges were for services rendered and not part of the valuable consideration for the transfer of property in goods. The reference was answered accordingly, with the applicant ordered to pay the costs of the opponent.

Reference Answered Accordingly.