2009 (8) TMI 1099 - HC - VAT and Sales Tax

Whether, in the facts and circumstances of the case, the Tribunal is legally correct in treating the turnover representing loading charges, transport charges, unloading charges as not includible in the purchase turnover for the purpose of levy of tax under section 7A of the Tamil Nadu General Sales Tax Act, 1959? Held that - We are in full agreement with the decisions rendered in Gwalior Rayon Silk Manufacturing and Weaving Co. Ltd 1980 (9) TMI 262 - MADRAS HIGH COURT and P.R. Tata & Co. 1970 (4) TMI 149 - ORISSA HIGH COURT deciding the question of law in favour of the assessee. Thus tax case revision fails and the same is dismissed.

Summary

Issues:
1. Whether loading, transport, and unloading charges are includible in the purchase turnover for levy of tax under section 7A of the Tamil Nadu General Sales Tax Act, 1959.

Analysis:
The judgment pertains to a tax revision filed by the State against the Sales Tax Appellate Tribunal's order regarding the treatment of loading, transport, and unloading charges in the purchase turnover for tax levy. The dispute arose from the assessment year 1997-98, where the assessee was taxed not only on the value of goods but also on associated transportation charges for fly ash purchased from a thermal power station. The Assistant Commissioner assessed the taxable turnover, leading to an appeal by the assessee. The Appellate Deputy Commissioner allowed the levy of purchase tax but excluded additional expenses like loading and transport charges. The Tribunal, citing precedents, upheld the exclusion of post-sale expenses from the purchase turnover, leading to the State's challenge in the High Court.

The High Court deliberated on whether expenses incurred by the dealer in transporting fly ash post-sale constitute pre-sale or post-sale expenses. Both the Appellate Deputy Commissioner and the Tribunal found that the sale concluded upon delivery at the thermal power station, and subsequent expenses were post-sale in nature. The Court referenced the Gwalior Rayon case, emphasizing that only post-purchase expenditures could be included in the turnover for tax assessment. The Tribunal's reliance on this principle led to the rejection of the State's appeal.

Additionally, the Court drew from the Orissa High Court's decision, which clarified that purchase turnover comprises amounts paid or payable for the purchase, excluding charges for activities post-delivery. The judgment highlighted that the seller's role ends upon delivery, and any expenses incurred thereafter are the buyer's responsibility. The Court found no grounds to interfere with the factual findings of the lower authorities, aligning with previous decisions from the Madras and Orissa High Courts.

In conclusion, the High Court dismissed the tax case revision in favor of the assessee, emphasizing the distinction between pre-sale and post-sale expenses in determining the purchase turnover for tax assessment. The judgment reinforced the exclusion of post-sale charges from the taxable turnover, in line with established legal principles and precedents.