1990 (9) TMI 329 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of the term "turnover" under the Kerala General Sales Tax Act, 1963 in relation to commission and inspection charges received by assessees from non-resident principals.

Analysis:

The High Court of Kerala addressed the issue of whether commission and inspection charges received by assessees from non-resident principals should be included in the purchase turnover of rubber liable for taxation. The assessees were engaged in the business of purchasing rubber on their own account and on behalf of non-resident principals. The assessing authority included these charges in the purchase turnover, but the Deputy Commissioner (Appeals) and the Sales Tax Appellate Tribunal disagreed.

The Appellate Tribunal found that the purchase price of goods bought for non-resident principals was the same as in the bought notes. The commission and inspection charges were separately mentioned in the statement sent to the principal. The Tribunal observed that the commission was based on the quantum of purchases but was never shown in the trading account, indicating a distinct treatment by both parties. The Tribunal interpreted the definition of "turnover" under the Kerala General Sales Tax Act to exclude post-purchase commission and inspection charges from the purchase price.

The High Court referred to an earlier unreported Bench decision which held that once the goods were purchased and sent to non-resident principals, the purchase was complete, and any commission received thereafter did not form part of the purchase turnover. The Court agreed with the Tribunal's interpretation, stating that the commission and inspection charges should not be included in the purchase turnover liable for taxation.

In conclusion, the High Court found the tax revision cases to be without merit and dismissed them, upholding the decision that commission and quality inspection charges received by assessees from non-resident principals should not be considered part of the purchase turnover for taxation purposes. The judgment provides clarity on the interpretation of turnover under the Kerala General Sales Tax Act in the context of commission and inspection charges in transactions involving non-resident principals.