1993 (11) TMI 212 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether deduction of packing charges from the total turnover, for the purpose of determining the taxable turnover was erroneous.
2. If so, whether it can be said to be a mistake apparent from the record, inviting rectification u/s 25-A.

Judgment Summary:

Preliminary Objection:
The respondent raised a preliminary objection that the petitioner had filed appeals regarding some rectification orders and hence the writ petitions should not be entertained due to the availability of an alternative remedy. However, the court noted that where an authority acts without jurisdiction or in excess of jurisdiction, it is proper to exercise writ jurisdiction.

Re: Point (i):
The petitioner contended that the deduction of packing charges from the total turnover was justified u/r 6(4)(ff) of the Karnataka Sales Tax Rules, 1957, and that the question of whether packing charges should be included in the taxable turnover is a factual issue requiring investigation. The petitioner argued that the assessing authority had initially allowed the deduction of packing charges, and this decision could not be rectified merely on the basis of a subsequent Supreme Court decision.

The court referred to the Supreme Court decision in *Ramco Cement Distribution Co. Pvt. Ltd. v. State of Tamil Nadu* [1993] 88 STC 151, which held that packing charges form part of the "sale price" and thus should be included in the taxable turnover. The court also cited the Division Bench ruling in *Visvesvaraya Iron & Steel Ltd. v. Deputy Commissioner of Commercial Taxes* [1991] 83 STC 305, which held that the cost of packing material should be included in the taxable turnover for cement sales covered by the Cement Control Order, 1967.

Re: Point (ii):
The court examined whether the deduction of packing charges constituted a "mistake apparent from the record" u/s 25-A. The court noted that the assessment orders did not provide any reasons for deducting packing charges and were non-speaking orders in this regard. The court held that overlooking the binding decision in *Visvesvaraya's case* [1991] 83 STC 305 constituted a mistake apparent from the record. Furthermore, the court stated that a subsequent decision of the Supreme Court, such as in *Ramco's case* [1993] 88 STC 151, which clarified the law, rendered the previous assessment orders erroneous and amenable to rectification.

Conclusion:
The court held that the orders of rectification, which included packing charges in the taxable turnover, were valid and justified. The court dismissed the writ petitions but allowed the petitioner to address any other grievances related to the rectification orders in the appeals filed or to be filed. The court also directed that if appeals for the assessment years 1983-84 and 1984-85 were filed, the appellate authority should condone the delay due to the pendency of these writ petitions.

Disposition:
Writ petitions dismissed.