1973 (12) TMI 82 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the amount of Rs. 54,305 realized as excise, welfare, and rescue cesses on dispatches of coal by road has been correctly taxed by the sales tax authorities.

Issue-Wise Detailed Analysis:

1. Nature of Cesses and Their Collection:
The judgment addresses the nature of the excise, welfare, and rescue cesses collected on coal dispatches. These cesses are levied under three statutes:
- Mines Act, 1952: The Coal Mines Rescue Rules, 1959, provide for the imposition and recovery of excise duty on coal and coke despatched by any means.
- Coal Mines Labour Welfare Fund Act, 1947: Section 3 imposes a duty of excise on all coal and coke despatched from collieries.
- Coal Mines (Conservation and Safety) Act, 1952: Section 8 provides for the imposition of excise duty on all coal raised and despatched.

In all cases, the cesses are levied on the dispatch of coal, not on the sale of coal. The collection agencies differ based on the mode of dispatch: railway administration for rail dispatches and mine-owner for road dispatches.

2. Definition of "Sale Price":
The Bihar Sales Tax Act, 1959, defines "sale price" under Section 2(q) as the amount payable to a dealer as valuable consideration for the sale of goods. Explanation (2) excludes the cost for transport if separately charged. The core issue is whether the cesses form part of the sale price.

3. Arguments and Findings:
- The assessee argued that the cesses do not form part of the sale price as they are levied on dispatches, not sales.
- The appellate authority and the Tribunal included the cesses in the gross turnover, treating them as part of the sale price.
- The court noted that the cesses are collected for specific purposes (e.g., rescue stations, labour welfare) and are not directly tied to the sale transaction.

4. Distinction Between Rail and Road Dispatches:
- For rail dispatches, the railway administration collects the cesses, which are then remitted to the government. If the consignee (purchaser) pays the cess, it does not form part of the sale price.
- For road dispatches, the mine-owner collects and deposits the cesses. The court reasoned that the mode of collection should not affect whether the cesses are part of the sale price.

5. Relevant Precedents:
- The court referenced the case of Commissioner of Commercial Taxes, Bihar, Patna v. Ashoka Marketing Limited, where it was held that railway freight paid by the customer formed part of the sale price.
- The court distinguished this case from Dayabhai Gokulbhai Patel v. The State of Bihar, where excise duty under the Central Excises and Salt Act, 1944, was included in the sale price because it was levied before the goods were in a fit state for sale.

6. Conclusion:
The court concluded that the cesses levied on the dispatch of coal by road do not form part of the sale price. The amount of Rs. 54,305 realized by the assessee as excise, welfare, and rescue cesses was not correctly taxed by the sales tax authorities. The Tribunal's decision was incorrect, and the question was answered in the negative, in favor of the assessee.

Final Judgment:
The amount of Rs. 54,305 realized as excise, welfare, and rescue cesses on dispatches of coal by road has not been correctly taxed by the sales tax authorities. The Tribunal's decision is not correct in law. No order as to costs.