2001 (5) TMI 926 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the amount of surcharge collected by the appellant exceeds 40 percent of the purchase price, thereby making the second sale the first sale under section 8(1)(a) of the Assam General Sales Tax Act, 1993, read with rule 12 of the Assam General Sales Tax Rules, 1993.
2. Whether the surcharge is included within the meaning of "sale price" as defined under sub-section (34)(d) of section 2 of the Assam General Sales Tax Act, 1993.
3. Whether the imposition of tax on the surcharge amounts to double taxation.

Detailed Analysis:

Issue 1: Surcharge and First Point of Sale
The appellant company argued that the surcharge collected on behalf of the Central Government should not be included in the sale price for determining whether the resale price exceeds 40 percent of the purchase price. The court, however, noted that the resale price of the appellant company clearly exceeded 40 percent of the original purchase price. Section 8(1)(a) of the Assam General Sales Tax Act and rule 12 of the Assam General Sales Tax Rules stipulate that if the resale price exceeds 40 percent of the purchase price, the resale is deemed to be the first point of sale within the state. The court concluded that the surcharge collected by the appellant on behalf of the Central Government could not be excluded from the sale price calculation, as this would render the statutory provisions otiose. Therefore, the appellant company was liable to pay tax on the resale treating it as the first point of sale.

Issue 2: Definition of "Sale Price"
The appellant contended that the surcharge should not be included in the "sale price" as defined under sub-section (34)(d) of section 2 of the Act. The court disagreed, stating that the definition of "sale price" in the Act is broad enough to encompass the surcharge. The phrase "including any sum charged" within the definition is sufficiently elastic to include the surcharge. Furthermore, Explanation 1 to sub-section (34)(d) of section 2 explicitly includes "any tax, cess or duty" within the sale price, leaving no doubt that the surcharge is part of the sale price.

Issue 3: Double Taxation
The appellant argued that taxing the surcharge without adjusting the tax paid during the first sale would result in double taxation. The court rejected this argument, noting that value-added taxation does not constitute double taxation. The learned single judge had previously addressed this issue, concluding that value-added taxation is not double taxation. Additionally, the court pointed out that the tax on the surcharge is collected from the actual consumers and not paid by the dealer, thus eliminating the concern of double taxation.

Conclusion:
The appeal was dismissed, with the court affirming that the surcharge collected by the appellant forms part of the sale price and that the appellant is liable to pay tax on the resale as the first point of sale. The court also clarified that the imposition of tax on the surcharge does not amount to double taxation. The parties were directed to bear their own costs.