1982 (12) TMI 184 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the entire amount received by the assessee from the railways is liable to sales tax.
2. Whether the price of ballast and the cost of transport and other charges should be taxed separately.
3. Interpretation of contract clauses and letters from the Railway Administration.
4. Application of the definition of "turnover" under the U.P. Sales Tax Act and relevant rules.

Issue-Wise Detailed Analysis:

1. Liability of the Entire Amount to Sales Tax:
The Sales Tax Officer assessed the entire amount received by the assessee from the railways to sales tax. The Assistant Commissioner (Judicial) partly allowed the assessee's appeal for some years, holding that only the price of ballast supplied was liable to tax, not the transport and other charges. However, for the years 1972-73 and 1974-75, the appeal was dismissed, upholding the Sales Tax Officer's order. The Tribunal allowed the department's appeals and dismissed the assessee's appeals, leading to the present revisions.

2. Separate Taxation of Ballast Price and Transport Charges:
The Tribunal concluded that the rate quoted and accepted was an all-inclusive rate for the material delivered at the site. It held that the property in the ballast remained with the assessee until it was inspected and passed at the site, making the entire amount part of the turnover. However, the assessee argued that the price of ballast and transport charges were separately agreed upon, supported by letters from the Railway Administration showing separate rates for ballast and carriage.

3. Interpretation of Contract Clauses and Railway Letters:
The Tribunal referred to clauses 28, 29, and 30 of the contract, which indicated an all-inclusive rate. It found that the price could not be broken up into separate components. The assessee presented letters from the Railway Administration, which were not contested before the Assistant Commissioner (Judicial), indicating that the cost of ballast and other charges were separately agreed upon. The Tribunal ignored these letters, but the court found that they should have been accepted as authentic, especially since there was no objection to them before the Assistant Commissioner (Judicial).

4. Definition of "Turnover" and Relevant Rules:
The Tribunal referred to the definition of "turnover" under the U.P. Sales Tax Act, which includes any sums charged for anything done by the dealer in respect of the goods sold at the time of or before delivery, excluding separately charged freight or delivery costs. It held that the entire composite price had to be included in the turnover. However, the court noted that rule 44 of the U.P. Sales Tax Rules, which prescribes deductions to arrive at taxable turnover, did not permit the deduction of cartage, loading, and unloading charges.

Conclusion:
The court concluded that the contract and the letters from the Railway Administration indicated separate agreements for the price of ballast and transport charges. Therefore, only the cost of ballast should be included in the assessee's turnover, excluding transport and other charges. The revisions were partly allowed, modifying the Tribunal's orders to include only the cost of ballast in the turnover. The papers were sent back to the Tribunal for appropriate orders, and the assessee was awarded costs of Rs. 200.

Judgment:
The revisions are partly allowed, and the orders of the Tribunal are modified to include only the cost of ballast in the assessee's turnover, excluding transport and other charges. The matter is remitted to the Tribunal for appropriate orders, and the assessee is awarded costs.