2009 (8) TMI 1089 - HC - VAT and Sales Tax

Whether, on the facts and in the circumstances of the case, the transportation charges, which were separately charged, are liable to be taxed under the Act? Held that - We answer the question framed, in favour of the assessee and against the Revenue and hold that the transportation charges charged separately are liable to be deducted from the gross turnover of the assessee as provided under section 5(2)(A)(a)(iii) of the OST Act.

Summary

Issues:
1. Taxability of separately charged transportation charges under the Orissa Sales Tax Act.

Analysis:
The case involved a dispute regarding the taxability of transportation charges separately charged by the petitioner. The petitioner was initially assessed under section 12(8) of the Orissa Sales Tax Act for the years 1984-85. The assessing authority found that the petitioner had adopted measures to avoid tax liability on transportation charges, resulting in an enhanced turnover and the levy of penalties. The petitioner appealed this assessment, citing a precedent where it was held that transportation charges separately charged and paid by the purchaser were deductible from the gross turnover. The first appellate authority allowed the appeal based on this precedent. However, the Revenue filed a second appeal before the Tribunal, which upheld the assessing authority's order.

In response to the arguments, the petitioner relied on precedents emphasizing the duty of assessing authorities to provide deductions or exemptions due to taxpayers based on true facts, regardless of the taxpayer's claims. The petitioner also cited a Supreme Court judgment emphasizing the duty of the assessing officer to apply relevant provisions for determining taxable income. The first appellate authority found that the transportation charges were part of the delivery cost to the purchaser and should be covered under section 5(2)(A)(a)(iii) of the OST Act. The authority also highlighted that the assessing authority must give deductions as per the law, even if the taxpayer did not disclose certain turnovers.

Ultimately, the High Court ruled in favor of the petitioner, holding that the transportation charges separately charged were liable to be deducted from the gross turnover as per section 5(2)(A)(a)(iii) of the OST Act. The Court quashed the Sales Tax Tribunal's order and confirmed the first appellate authority's decision. The revision was allowed accordingly.

This judgment clarifies the treatment of transportation charges separately charged under the Orissa Sales Tax Act, emphasizing the statutory obligation of assessing authorities to determine taxable income accurately and provide deductions as per the law, even if certain turnovers were not disclosed by the taxpayer.