1978 (5) TMI 115 - HC - VAT and Sales Tax

Summary

Issues:
1. Taxability of amount received on account of devaluation of currency as part of turnover for sales tax assessment.

The judgment of the Court analyzed the case where the assessee, engaged in manufacturing and selling shoes, received an additional amount from the State Trading Corporation due to currency devaluation. The assessing authority included this amount in the turnover of the assessee for sales tax assessment, considering it as part of the sale consideration. The appellate authority upheld this view, but the revising authority found that there was no agreement between the parties regarding the additional amount due to devaluation. The revising authority held that the disputed amount did not form part of the sale consideration and invalidated its inclusion in the turnover.

The revising authority referred the question of law to the High Court, seeking clarification on whether the amount received on account of devaluation should be considered part of the turnover for sales tax assessment. The High Court examined the contract between the assessee and the State Trading Corporation, emphasizing that there was no agreement regarding the treatment of excess amount due to devaluation. The Court concluded that the additional amount received was a casual receipt not forming part of the sale consideration, as it was not agreed upon in the sale transaction.

The Court referred to the definition of turnover under the U.P. Sales Tax Act, which requires the amount to be the consideration for the sale or supply of goods. Since the additional amount was not received as part of the sale consideration but due to a fortuitous circumstance, and the corporation decided to distribute it among its suppliers, the Court held that it was not liable to sales tax. The Court ruled in favor of the assessee, answering the question in the negative and holding that the amount received on account of devaluation did not form part of the turnover for sales tax assessment.