1995 (2) TMI 383 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Inclusion of Rs. 1,08,320 in the turnover of sales under the Bombay Sales Tax Act, 1959.
2. Inclusion of Rs. 20,928 in the turnover of sales under the Central Sales Tax Act, 1956.

Issue-wise Detailed Analysis:

1. Inclusion of Rs. 1,08,320 in the turnover of sales under the Bombay Sales Tax Act, 1959:

The primary issue was whether the "State Federation commission" amounting to Rs. 1,08,320 collected by the assessee should be included in the turnover of sales under the Bombay Sales Tax Act, 1959. The assessee contended that this amount did not form part of the sale price within the meaning of section 2(29) of the Bombay Act. The Sales Tax Officer included this amount in the taxable turnover, a decision upheld by both the Assistant Commissioner of Sales Tax and the Maharashtra Sales Tax Tribunal.

The court examined the nature and character of the commission, noting that the assessee acted as a collecting agent for the State Federations. The commission was collected for the services rendered by the State Federations and not as part of the sale price of the goods. The court found that the commission did not form part of the consideration for the sale of goods by the assessee and hence was not includible in the taxable turnover under the Bombay Act.

The court relied on the Supreme Court's decision in Food Corporation of India v. State of Kerala [1988] 68 STC 1, where it was held that amounts collected as administrative surcharge and price equalisation charge did not form part of the sale price and could not be included in the turnover of the assessee. Similarly, the court concluded that the State Federation commission collected by the assessee did not form part of the sale price and could not be included in the turnover under the Bombay Act.

2. Inclusion of Rs. 20,928 in the turnover of sales under the Central Sales Tax Act, 1956:

The second issue was whether the "State Federation commission" amounting to Rs. 20,928 collected by the assessee should be included in the turnover of sales under the Central Sales Tax Act, 1956. The assessee argued that this amount did not form part of the sale price within the meaning of section 2(h) of the Central Act. The Sales Tax Officer included this amount in the taxable turnover, a decision upheld by both the Assistant Commissioner of Sales Tax and the Maharashtra Sales Tax Tribunal.

The court reiterated its analysis from the first issue, noting that the commission was collected by the assessee on behalf of the State Federations and did not form part of the consideration for the sale of goods. The court found that the commission did not form part of the sale price under the Central Act, similar to its conclusion under the Bombay Act.

The court again relied on the Supreme Court's decision in Food Corporation of India v. State of Kerala [1988] 68 STC 1, which established that amounts collected as administrative surcharge and price equalisation charge did not form part of the sale price and could not be included in the turnover of the assessee. The court concluded that the State Federation commission collected by the assessee did not form part of the sale price and could not be included in the turnover under the Central Act.

Conclusion:

The court answered both questions in the negative, ruling in favor of the assessee. The court held that the State Federation commission did not form part of the sale price under either the Bombay Sales Tax Act, 1959 or the Central Sales Tax Act, 1956, and therefore could not be included in the taxable turnover. No order as to costs was made.