2009 (8) TMI 1136 - HC - VAT and Sales Tax

Summary

Issues:
1. Inclusion of distribution charges in taxable turnover.
2. Tax liability on machinery sold by the company.
3. Disallowance of deduction of freight charges.
4. Tax liability on casual sales of machinery, car, and furniture.

Inclusion of Distribution Charges in Taxable Turnover:
The case involved a company engaged in various businesses, including manufacturing sugar, gas, vanaspati, and soap. The main issue was whether distribution charges should be included in the taxable turnover. The applicant argued that distribution charges were not part of the turnover, but the Assessing Authority disagreed. The Tribunal held that expenses incurred towards distribution of goods were part of the turnover if the supply was "FOR destination." The Tribunal's decision was based on the definition of turnover under Section 2(i) of the Act, which includes the aggregate amount for which goods are supplied or distributed.

Tax Liability on Machinery Sold by the Company:
Another issue was the tax liability on machinery sold by the company. The applicant contended that since the company was not dealing with machinery, cars, and furniture, these items should not be subject to tax. However, the Tribunal held that after an amendment in the definition of "Business," all casual sales fell within the definition of business, and thus, tax was rightly levied on the turnover of machinery, cars, and furniture.

Disallowance of Deduction of Freight Charges:
The Tribunal disallowed the deduction of freight charges claimed by the applicant on the grounds that the contract was "FOR destination." The Tribunal held that any expenses incurred prior to the delivery of goods in such cases are part of the turnover as per Section 2(i) of the Act. The applicant did not challenge this decision.

Tax Liability on Casual Sales of Machinery, Car, and Furniture:
Regarding the tax liability on casual sales of machinery, cars, and furniture, the Tribunal held that these items were liable to tax under the comprehensive definition of "Business" in the U.P. Trade Tax Act. The Tribunal reasoned that since all casual sales were included in the definition of business, the tax was correctly imposed on the turnover of machinery, cars, and furniture.

In conclusion, the High Court dismissed the revision, finding no substance in the arguments presented by the applicant. The Court upheld the Tribunal's decisions regarding the inclusion of distribution charges in the taxable turnover, tax liability on machinery sold by the company, disallowance of deduction of freight charges, and tax liability on casual sales of machinery, cars, and furniture.