1980 (4) TMI 289 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the coal mines welfare cess, stowing duty, and rescue cess recovered by the petitioner from its customers form part of the sale price of coal and are includible in the turnover for assessment of sales tax.

Detailed Analysis:

1. Nature of Coal Mines Welfare Cess, Stowing Duty, and Rescue Cess:
The court examined the statutory provisions under the Coal Mines Labour Welfare Fund Act, 1947, the Coal Mines (Conservation, Safety and Development) Act, 1952, and the Mines Act, 1952. These Acts impose excise duties known as coal mines welfare cess, stowing duty, and rescue cess respectively. The court noted that these duties are excise duties levied on coal and coke dispatched from collieries.

2. Collection Mechanism:
The court detailed the collection mechanisms for these duties. When coal is dispatched by rail, the railway administration collects the duties from the consignee or consignor and remits them to the government after deducting collection charges. For dispatches made by road, the owner of the colliery is responsible for maintaining records, filing returns, and paying the duties directly to the government without any provision for deducting collection charges.

3. Petitioner's Practice and Sales Tax Assessment:
The petitioner, a government undertaking engaged in coal mining, included the amounts of welfare cess, stowing duty, and rescue cess in the sale price when dispatching coal by road. The Regional Assistant Commissioner of Sales Tax included these amounts in the turnover for sales tax assessment. This decision was upheld by the Additional Commissioner of Sales Tax and the Deputy Commissioner of Sales Tax.

4. Legal Argument and Court's Reasoning:
The petitioner argued that it acted merely as a collecting agent and that the real incidence of the duties was on the purchaser. The court rejected this argument, emphasizing that the owner is primarily liable for paying these duties and there is no statutory provision allowing the owner to collect the duties from the purchaser. The court concluded that the duties recovered by the petitioner from the purchasers form part of the sale price.

5. Excise Duty and Sale Price:
The court referred to established legal principles, noting that excise duty is a tax on the production or manufacture of goods and is typically passed on to the consumer as part of the sale price. The court cited the Supreme Court's rulings in George Oakes (Private) Ltd. v. State of Madras and Delhi Cloth & General Mills Co. Ltd. v. Commissioner of Sales Tax, which held that taxes collected by the seller from the buyer form part of the sale price and are includible in the turnover for sales tax assessment.

6. Distinguishing Cases:
The court distinguished the present case from Joint Commercial Tax Officer v. Spencer & Co. and McDowell & Co. Ltd. v. Commercial Tax Officer, where the tax burden was statutorily placed on the purchaser. The court also disagreed with the Patna High Court's decision in New Gobindpur Coal Co. (P.) Ltd. v. State of Bihar, which held that the mine owner was merely a collecting agent.

Conclusion:
The court concluded that the sales tax authorities were correct in treating the excise duties recovered by the petitioner from the purchasers as part of the sale price for the goods sold. The petition was dismissed without any order as to costs, and the security amount was ordered to be refunded to the petitioner.

Petition dismissed.