1985 (1) TMI 305 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether "other charges" collected by the assessee for rendering unspecified services can be treated as commission.
2. Whether such commission forms part of the sale price as defined in section 2(p) of the Rajasthan Sales Tax Act, 1954.

Issue-wise Detailed Analysis:

1. Whether "other charges" collected by the assessee for rendering unspecified services can be treated as commission:

The assessee, M/s. Uttumal Gagumal, was assessed to tax under section 10 of the Rajasthan Sales Tax Act, 1954, for the period March 24, 1966, to April 11, 1967. The Commercial Taxes Officer included an amount of Rs. 24,302.50 shown as "other charges" in the taxable amount, asserting that the definition of "sale price" was broad and the assessee could not claim ignorance.

The Deputy Commissioner (Appeals) upheld this assessment, noting that the assessee failed to specify the services for which these "other charges" were collected, suggesting an attempt to evade tax. The Board of Revenue, however, accepted the assessee's revision, holding that the commission does not fall under the definition of "sale price" based on a precedent from the U.P. Sales Tax Act.

Upon further appeal by the department, the High Court was called upon to decide whether these "other charges" could be considered as commission. The Court noted that the assessee failed to demonstrate what specific services were rendered for these charges, and thus, they could only be treated as commission.

2. Whether such commission forms part of the sale price as defined in section 2(p) of the Rajasthan Sales Tax Act, 1954:

The Court examined the definition of "sale price" under section 2(p) of the Act, which includes "any sum charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof." The Court concluded that the definition is broad enough to encompass "other charges" received by the assessee, whether as commission or adhat, related to the goods sold on behalf of the principal.

The Court emphasized that the Board of Revenue did not provide a clear finding on the nature of the transaction and relied on the facts established by the Deputy Commissioner (Appeals) and the Commercial Taxes Officer. The Court held that the "other charges" collected by the assessee for rendering unspecified services can only be treated as commission, which forms part of the "sale price" under section 2(p) of the Act.

Conclusion:

The High Court answered the reference by concluding that the "other charges" collected by the assessee for unspecified services are to be treated as commission and such commission forms part of the "sale price" as defined in section 2(p) of the Rajasthan Sales Tax Act, 1954. The parties were directed to bear their own costs.