2006 (8) TMI 560 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of freight charges as part of turnover under U.P. Trade Tax Act, 1948.
2. Liability of dealer for freight charges paid by customers.
3. Relevance of railway receipts in determining liability for freight charges.
4. Application of case law in determining turnover components.

Analysis:
The judgment pertains to two revisions under section 11 of the U.P. Trade Tax Act, 1948, challenging the Tribunal's order for the assessment years 1987-88 and 1988-89. The dealer, an association of brick kiln owners engaged in coal trading, imported coal against declaration form XXXI and issued Forms C for purchases. Dispute arose regarding the treatment of freight charges in turnover calculation. The assessing authority included freight in turnover, leading to appeals by the dealer, which were allowed, resulting in deletion of tax on freight. The Commissioner of Trade Tax appealed to the Tribunal, which rejected the appeals.

The key contention was whether freight, paid directly by brick kiln owners to the railway, should be considered part of the dealer's turnover. The Standing Counsel argued that even if paid by customers, since railway receipts were in the dealer's name, the liability for freight rested with the dealer. Citing precedents, the Counsel asserted that inward freight, incurred before coal sale, constituted turnover. In contrast, the dealer's counsel maintained that direct payment absolved the dealer from including freight in turnover.

Upon review, the Court noted the dealer's registration under relevant tax Acts, importation of coal through railway, and ownership of railway receipts. Emphasizing that receipts were not endorsed to purchasers, the Court reasoned that liability for freight, borne by the dealer, rendered it part of turnover. Relying on prior judgments, the Court upheld inclusion of inward freight in turnover, thereby allowing the revisions. Consequently, the Tribunal's order was set aside, and the Commissioner's appeals were allowed for appropriate orders under section 11(8) of the Act.