2013 (3) TMI 579 - HC - VAT and Sales Tax

Calculation of tax - gross turnover v/s net value - Held that - This court agrees with the finding of the Tax Board that the sales tax was leviable only on the value received as net consideration by the respondent after discount and not on the gross value. Section 2(39) of the Act and rule 25(1)(b) of the Rules which have been reproduced also clearly demonstrate that the tax was leviable after discount having been allowed by a trader and therefore the Tax Board was justified in coming to the conclusion. The judgments relied upon by the learned counsel for the respondent are also squarely applicable in the facts and circumstances of the case. No question of law is found to be involved in the present case and such finding being essentially a finding of fact this court does not find any manifest error or infirmity and perversity in the orders impugned passed by the learned Tax Board and the DC(A) so as to call for any interference of this court. W.P. dismissed.

Summary

Issues:
Sales tax assessment on discounted price vs. gross value

Analysis:
The case involved a sales tax revision petition where the petitioner-Department challenged an order dismissing their appeal and upholding the decision to levy tax only on the net value received after discount. The respondent-assessee, a limited company manufacturing various items, argued that sales tax should be charged on the discounted price, not the gross value, as they ultimately received only the net value. The dispute arose because the assessing officer denied the benefit of charging tax on the net value for items traded by the company, leading to a differential tax on traded goods. The DC(A) and the Tax Board both supported the respondent's claim, prompting the petitioner-Department to file a revision petition.

The petitioner-Department contended that tax should be levied on the gross turnover and not on the net value after discount. They argued that the respondent failed to justify the basis for discounts given and that different standards were applied for manufactured and traded goods. The respondent's counsel referred to previous court judgments and relevant legal provisions to support their stance that tax should be charged only on the net turnover after discount, as per the definition of 'sale price' under the Rajasthan Sales Tax Act, 1994 and Rule 25(1)(b) of the Rajasthan Sales Tax Rules, 1995.

The court examined the legal provisions, including Section 2(39) of the Act and Rule 25(1)(b) of the Rules, which clearly indicated that tax should be levied on the value received as net consideration after discount. Referring to previous judgments, the court upheld the principle that trade discounts should be considered while calculating the taxable turnover. The court concluded that no question of law was involved, and the findings of the Tax Board and DC(A) were justified. Therefore, the court dismissed the petition, stating that no manifest error or infirmity existed in the impugned orders to warrant interference.

In summary, the court upheld the decision to levy sales tax only on the net value received after discount, in line with legal provisions and precedents, dismissing the petitioner-Department's revision petition.