1987 (4) TMI 451 - HC - VAT and Sales Tax

Summary

Issues:
Whether market area cess collected by the assessee can be included in the sale price for computing taxable turnover.

Analysis:
The High Court of Rajasthan heard a revision against the order of the Board of Revenue regarding the inclusion of market area cess in the sale price for tax calculation. The central issue was whether the cess collected by the assessee from purchasers should be considered part of the sale price. The department argued that since the liability for the cess payment lies with the seller, it should be included in the sale price. However, the court referred to a Supreme Court decision that highlighted the distinction between cases where a dealer can pass on the tax to the purchaser legally and cases where such provision doesn't exist. The court emphasized that if the liability for the cess payment is on the purchaser under the statute, it should not be included in the sale price.

The court examined the relevant statutory provisions under the Rajasthan Agricultural Produce Markets Act, 1961 and 1963 Rules. Section 17 of the Act mandates market committees to collect fees from licensees in a prescribed manner. Rules 58 and 59 of the 1963 Rules specify the collection of cess by the market committee on agricultural produce. Importantly, sub-rule (2) of rule 59 explicitly states that the cess should be paid by the purchaser, with a provision for the seller to pay if the purchaser is unidentified. These provisions establish that the liability for the cess payment rests with the purchaser, not the seller.

Based on the statutory framework and the Supreme Court's test, the court concluded that the cess collected by the assessee from purchasers and remitted to the market committee should not be considered part of the sale price for tax calculation. The court upheld the Board of Revenue's decision in favor of the assessee, dismissing the revision petition without any order as to costs.