2009 (12) TMI 855 - AT - VAT and Sales Tax

Summary

Issues:
1. Inclusion of commission received by the seller in the "sale price" under the West Bengal Sales Tax Act.
2. Exclusion of goods returned in the assessment years 2000-01 and 2001-02 for computation of gross turnover under rule 159 of the West Bengal Sales Tax Rules.

Analysis:

Issue 1: Inclusion of Commission in Sale Price
- The assessing officer added back the commission received by the dealer to the gross turnover, considering it as part of the sale price due to incentives given by the manufacturer. The appellate authority upheld this decision, stating that special discounts should be included in the sale price for taxation purposes.
- The petitioner contended that the commission was not treated in the profit and loss account and hence should not be considered part of the sale price. Citing various legal precedents, it was argued that compensatory discounts should not be included in the sale price.
- The Tribunal agreed with the petitioner, stating that commission on the purchase cannot be added to the sale price for determining taxable turnover. The sale price should only include the amount directly or indirectly payable to the dealer, as per the provisions of the West Bengal Sales Tax Act.

Issue 2: Exclusion of Returned Goods
- The assessing authority disallowed the deduction for goods returned by way of credit notes, stating they were not relevant to the stock-in-trade for the assessment year 2002-03 as they had been imported and sold in earlier years.
- The petitioner argued that under rule 159 of the West Bengal Sales Tax Rules, deduction should be allowed for goods returned during subsequent return periods, provided due tax was paid earlier. The assessing authority erred in not allowing the entire deduction as per the rule.
- The Tribunal agreed with the petitioner, stating that the assessing authority should reconsider the issue of goods returned in accordance with rule 159. The correctness of the computation of taxable turnover was also to be examined by the revisional authority.

Conclusion:
- The Tribunal partially allowed the application, reversing the decision to add back commission to the gross turnover and setting aside the disallowance of credit notes for returned goods. The revisional proceeding was remanded for further consideration following the provisions of rule 159 of the West Bengal Sales Tax Rules and ensuring the correctness of the taxable turnover computation.