1995 (2) TMI 428 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether freight and insurance charges separately billed by the assessee should be included in the taxable turnover.

Analysis:
The High Court of Allahabad heard revisions under the U.P. Sales Tax Act, 1948, filed by the Commissioner, Trade Tax, U.P., against an order by the Sales Tax Tribunal, Ghaziabad, regarding the assessment years under the U.P. Sales Tax Act, 1948, and Central Sales Tax Act, 1956. The assessee, a limited company engaged in the manufacture and sale of A.C.S.R. conductors, wire, etc., had not included amounts received for freight and insurance charges in its taxable turnover. The assessing authority disagreed and included these charges in the turnover. The Deputy Commissioner (Appeals) and the Sales Tax Tribunal partially allowed the appeals, holding that while excise duty was part of the turnover, separately charged freight and insurance charges were not. The department challenged this decision, arguing that the charges should be included based on the contract terms. The counsel for the assessee contended that as per the Acts and precedent cases, separately charged charges should not be included in the turnover.

The counsel for the department argued that the Tribunal's decision was erroneous and contrary to the Acts. They cited the case law of Hindustan Sugar Mills Ltd. v. State of Rajasthan to support their position. On the other hand, the counsel for the assessee relied on various judgments, including Vinod Coal Syndicate v. Commissioner of Sales Tax U.P., to assert that charges separately billed should not be part of the turnover. They also differentiated the Hindustan Sugar Mills case based on the Cement Control Order. The court examined the definitions of "turnover" under the U.P. Sales Tax Act and Central Sales Tax Act, which exclude separately charged charges from the turnover. The court referenced previous cases like M.P. Traders and J.P. Cement, Bareilly, where this principle was upheld. The court also mentioned the Supreme Court's decision in Vinod Coal Syndicate, affirming the exclusion of separately charged charges from the turnover. The court clarified the interpretation of turnover in the Hindustan Sugar Mills case based on the later decision in Ramco Cement Distribution Co. Pvt. Ltd.

Ultimately, the court upheld the Tribunal's decision, stating that separately charged freight and insurance charges should not be included in the taxable turnover. The court found no error in the Tribunal's conclusion and dismissed the revisions, emphasizing that the charges were billed separately and, therefore, should not form part of the turnover.