2013 (7) TMI 512 - HC - VAT and Sales Tax

Valuation - Inclusion of excise duty in invoice amount - Assessee not collected excise amount from customers - Assessing authority added excise amount to total turnover of assessee subsequently - Held that - turnover for purposes of assessment includes the aggregate amount for which the goods are bought or sold or disposed of in any of the ways referred in the definition of sale. When the contemplation of the Act is to include the totality of the consideration alone and in the price charged in the invoice as a sale consideration did not include any sum, it being not the amount for which the goods are bought or sold, cannot be brought in within the definition of sale - assessee was not registered under the Central Excise Provisions at the time when he effected sales of the manufactured items - on the date of sale, all that the petitioner had collected as sale consideration alone would be the turnover for the purpose of assessment and when the Tribunal on the first round of litigation has clearly pointed out that the Assessing Officer was to verify the sale price till October 1986 and after October 1986 and further to find out whether the assessee had passed on the duty paid as part of the sale consideration and when no efforts were taken on this aspect, no justifiable ground to accept the plea of the Revenue to set aside the order of the Tribunal. - Decided against Revenue. Mohan Breweries and Distilleries Ltd Vs. Commercial Tax Officer, Madras and Others 1997 (9) TMI 500 - SUPREME COURT OF INDIA - Has no relevance to the facts of the present case and the issues are totally different.

Summary

Issues:
1. Whether excise duty not levied at the time of the sale transaction can be postponed subsequently?
2. Whether the excise duty component should be included in the taxable turnover for the purpose of sales tax assessment?

Issue 1: The High Court was presented with a case where the Revenue challenged the Sales Tax Appellate Tribunal's order regarding the assessment year 1986-87. The main question was whether excise duty not collected at the time of sale could be postponed and later included in the sale consideration. The assessee, a manufacturer of plastic components, argued that since excise duty was not paid at the time of sale, it should not be added to the taxable turnover. The Tribunal directed the Assessing Officer to verify whether the excise duty paid subsequently was passed on to the customers.

Issue 2: The Sales Tax Appellate Tribunal, in its order, emphasized that the liability for excise duty was incurred after the sale transaction took place. The Tribunal noted that the excise duty amount was not included in the sale consideration at the time of the sale but was paid later. The Tribunal directed the Assessing Officer to determine if the excise duty paid was passed on to the customers. The High Court rejected the Revenue's argument that the excise duty element should be included in the turnover regardless of whether it was passed on. The Court analyzed the definitions of "turnover" and "sale price" under relevant tax laws to determine that only the amount for which goods are bought or sold should be considered as turnover. As the Tribunal's order was not challenged, the Court confirmed the decision, dismissing the Tax Case Revision.

In conclusion, the High Court upheld the Sales Tax Appellate Tribunal's decision, emphasizing that excise duty not collected at the time of sale cannot be automatically included in the taxable turnover. The Court relied on legal definitions and factual findings to support its judgment, ultimately dismissing the Revenue's appeal and confirming the Tribunal's order.