2016 (2) TMI 1016 - HC - VAT and Sales Tax

Valuation - transport subsidy to be included in the turnover, for assessment to tax or not? - Held that - reliance was placed in the case of E.I.D. Parry (I) Ltd vs- Assistant Commissioner of Commercial Taxes, 1999 (12) TMI 708 - SUPREME COURT OF INDIA , where the Supreme Court opined that transport subsidy was part of the consideration and it can be regarded as the component of the purchase price - the refund of transport subsidy to the petitioner is only by way of an incentive and such refund in our considered opinion will not warrant exclusion of the freight charge paid by the petitioner, to determine the purchase price for the purpose of assessment to tax. Petition dismissed - decided against petitioner.

Summary

Issues:
1. Challenge to the order dismissing the appeal against the decision of the Commissioner of Taxes, Assam by the Assam Board of Revenue.
2. Whether the transport subsidy component should be excluded while determining the import value of coal for the assessment of Entry Tax.
3. Interpretation of relevant legal precedents regarding the inclusion of transport subsidy in the turnover for the purpose of tax assessment.
4. Application of the law on the calculation of purchase price for the levy of Entry Tax.
5. Whether the refund of transport subsidy should impact the determination of the purchase price for tax assessment.

Analysis:

1. The revision application challenged the order dismissing the dealer's appeal against the decision of the Commissioner of Taxes, Assam by the Assam Board of Revenue. The issue at hand was the inclusion of the transportation charge on coal in the turnover for the assessment of Entry Tax.

2. The dealer argued that the transport subsidy component should be excluded from the import value of coal for the purpose of Entry Tax assessment. However, the revenue authorities included the freight charge in the total price to determine the turnover for tax assessment, rejecting the dealer's contention.

3. The legal counsel for the dealer relied on legal precedents such as Neyveli Lignite Corporation Ltd. and E.I.D. Parry (I) Ltd to support the exclusion of transport subsidy from the turnover. The Supreme Court's interpretation in these cases emphasized that amounts paid as consideration under the contract of sale could be regarded as part of the purchase price for tax calculation.

4. Referring to legal precedents like E.I.D. Parry (I) Ltd and Ponni Sugars (Erode) Ltd, the High Court concluded that the transport subsidy formed part of the consideration for the purchase and could be included in the turnover for tax assessment. The law was clear that when freight charges are paid or payable, they should be included in the total price for determining the turnover for levying Entry Tax.

5. The court further emphasized that the refund of transport subsidy to the dealer was merely an incentive and should not warrant the exclusion of the freight charge paid by the dealer in determining the purchase price for tax assessment. Ultimately, the court found no merit in the revision petition and dismissed it, citing the settled law on the calculation of purchase price for the levy of Entry Tax.