2015 (9) TMI 95 - HC - VAT and Sales Tax

Valuation - inclusion of freight into Sale price Assessing authority found that coal was purchased by society and after transportation, it has been distributed amongst members of society dividing cost and freight equally on basis of no profit-no loss but sale price would include freight Tribunal upheld finding of assessing authority Held that - present case in case of Commissioner, Trade Tax, U. P., Lucknow v. Agrawal Mandi Janta Ent Nirmata Association 2006 (8) TMI 560 - ALLAHABAD HIGH COURT observed, assuming that freight was paid by customer since railway receipt was in name of dealer and liability to pay freight was of dealer, it is deemed to have been paid on behalf of dealer by purchaser Freight incurred for transporting goods from outside to inside of State was inward freight made prior to sale and, thus, it would be part of turnover In view of above, question answered against assesse Revision dismissed.

Summary

Issues:
Whether freight of coal could have been included in the turnover of the assessee for taxability.

Analysis:
The primary issue in this case revolved around the inclusion of freight of coal in the turnover of the assessee for tax purposes. The assessing authority initially included the freight in the turnover, which was later reversed by the first appellate authority but then reinstated by the Tribunal. The petitioner's counsel argued that the railway receipts were issued in the name of the assessee, and the freight was paid in advance by the society. However, the court found no evidence to suggest that the society did not pay the freight, leading to the conclusion that the freight should indeed be included in the turnover of the assessee.

The judgment relied on a previous ruling by the court in the case of Commissioner, Trade Tax, U. P., Lucknow v. Agrawal Mandi Janta Ent Nirmata Association, Baghpat, where a similar situation was addressed. The court emphasized that even if the freight was paid by the customer, since the liability to pay the freight was on the dealer, it is deemed to have been paid on behalf of the dealer by the purchaser. Therefore, the freight incurred for transporting the goods was considered inward freight made prior to the sale and deemed to be a part of the turnover. This legal precedent further supported the decision to include the freight in the turnover of the assessee.

Conclusively, the court answered the question against the assessee and dismissed the revision. The judgment highlighted the importance of considering the liability for freight payment and the legal implications of such payments in determining the turnover for tax purposes. The decision was based on established legal principles and precedents set by previous rulings of the court, ensuring consistency and clarity in tax assessments related to freight inclusion in turnover calculations.