2003 (9) TMI 781 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether sales tax under the Bihar Finance Act should be levied on the cost price of liquor or on the wholesale price including excise duty and sacheting cost.

Issue-wise Detailed Analysis:

1. Levy of Sales Tax on Cost Price vs. Wholesale Price Including Excise Duty and Sacheting Cost:

The petitioners, retail vendors of country liquor, challenged the notification dated 10-2-1999 issued by the Excise Commissioner, which fixed the price of liquor including 25% sales tax on the wholesale price. They argued that sales tax should be realized only on the cost price of liquor, excluding excise duty and sacheting costs.

The court examined the definitions under the Bihar Finance Act, including "gross turnover," "sale," and "sale price." It was noted that the aggregate of sale prices received or receivable by a dealer constitutes the gross turnover, and the sale price includes the amount payable as valuable consideration for the sale or supply of goods.

The court referred to the Bihar Excise Act, which allows the State Government to fix the cost price of country liquor, inclusive of various charges like excise duty and sacheting costs. The retail vendors are required to pay this fixed price to obtain liquor from the warehouse.

The court cited precedents from the Supreme Court, including Mc Dowell & Company Limited v. Commercial Tax Officer and Mohan Breweries & Distilleries Ltd. v. Commercial Tax Officer, which established that excise duty forms part of the consideration for the sale and is included in the turnover for tax purposes. The court emphasized that even if excise duty is paid by a person other than the manufacturer, it is considered a payment on behalf of the manufacturer, thus forming part of the sale price.

The court concluded that excise duty and sacheting costs are components of the sale price and must be included in the gross turnover for levying sales tax under the Bihar Finance Act. The impugned notification, which included these components in the wholesale price for calculating sales tax, was found to be legally valid.

Conclusion:

The court dismissed the petition, upholding the notification that sales tax should be levied on the wholesale price of liquor, including excise duty and sacheting costs. The judgment affirmed that these components are part of the consideration for sale and must be included in the gross turnover for tax purposes.