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2022 (4) TMI 1545 - HC - VAT and Sales TaxLevy of Service Tax - Mandi Shulk should be included in the sale price of the goods sold by the Nigam in the Mandi or not - HELD THAT - he Hon ble Supreme Court in the case of ANAND SWARUP MAHESH KUMAR VERSUS THE COMMISSIONER OF SALES TAX 1980 (9) TMI 238 - SUPREME COURT was considering the question relating to inclusion of the market fee and the commission otherwise called dami payable to the commission agent operating within a market area established under the Adhiniyam in the turnover of purchases of the applicant for the purposes of levy of sales tax under Section 3D of the U.P. Sales Tax Act 1948 - After taking into consideration the reported cases of Paprika Ltd. Anr. v. Board of Trade; and Love v. Norman Wright (Builders) Ltd. the Hon ble Supreme Court has come to the conclusion that Mandi Shulk should not be included in the sale price. In both the judgments referred to hereinabove it has been laid down that the price payable by a purchaser under a contract of goods for the purpose of certain penal provisions was the price fixed by the contract and a seller who wished to recover the amount of the purchase tax should except where an adjustment was authorized by the Statute include that amount in the price so fixed. The Hon ble Supreme Court therefore held that the contention of the appellant in the reported case that market fees payable under the Adhiniyam cannot be included in the turnover of purchases has therefore to be upheld. Thus it is clear that any sums that are paid prior to the delivery or at the time of delivery are included in the sale price but such sums which are allowed by the seller of the goods to the purchaser or outward freight or delivery etc. are excluded including tax under the Act. Thus in view of the Hon ble Supreme Court in M/s. Anand Swarup Mahesh Kumar the sale price shall not include the Mandi Shulk that is collected by the Nigam and deposited with the funds of the Committee. This Commercial Tax Revision is allowed.
Issues Involved:
1. Whether the 'Mandi Shulk' should be included in the sale price of the goods sold by the Nigam. 2. Interpretation of Section 17(iii)(b) of the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964. 3. Applicability of the definition of 'sale price' under Sub-Section (42) of Section 2 of the Uttarakhand VAT Act, 2005. 4. Consideration of previous judgments, including those of the Hon'ble Supreme Court and the Uttarakhand High Court. Detailed Analysis: Issue 1: Inclusion of 'Mandi Shulk' in the Sale Price The primary issue revolves around whether the 'Mandi Shulk' should be included in the sale price of the goods sold by the Nigam. The revisionist-assessee argued that the 'Mandi Shulk' collected from buyers should not be part of the taxable turnover as it is collected on behalf of the Mandi Samiti and does not go to the Nigam's funds. The Assessing Authority, however, included the 'Mandi Shulk' in the taxable turnover as per Sub-Section (42) of Section 2 of the Act. Issue 2: Interpretation of Section 17(iii)(b) of the Adhiniyam Section 17(iii)(b) of the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964, as amended by U.P. Act No. 7 of 1978, was crucial in this case. This section stipulates that the market fee is to be realized from the purchaser and paid to the Mandi Committee. The Supreme Court, in the case of M/s. Anand Swarup Mahesh Kumar v. Commissioner of Sales Tax, held that the market fee should not be included in the sale price as it is collected statutorily on behalf of the Mandi Committee and not retained by the seller. Issue 3: Definition of 'Sale Price' under the Uttarakhand VAT Act, 2005 The definition of 'sale price' under Sub-Section (42) of Section 2 of the Uttarakhand VAT Act, 2005, includes any sum charged for anything done by the dealer in respect of goods at the time or before delivery, including taxes and duties but excludes certain sums like cash discounts, outward freight, and separately charged taxes. The Court concluded that the 'Mandi Shulk' does not fall under the sums included in the sale price as it is a statutory fee collected on behalf of the Mandi Committee. Issue 4: Consideration of Previous Judgments The Court considered the unreported case of M/s. Ashok Kumar v. State of Uttarakhand, where it was held that 'Mandi Shulk' should be included in the sale price. However, the Court found this view incorrect in light of the Supreme Court's judgment in M/s. Anand Swarup Mahesh Kumar, which clearly distinguished between statutory fees collected on behalf of a third party and sums forming part of the sale price. Conclusion: The Court concluded that the 'Mandi Shulk' collected by the Nigam and deposited with the Mandi Committee should not be included in the sale price for the purpose of calculating value-added tax. The orders of the Assessing Authority, the First Appellate Authority, and the Tribunal were set aside. The revisionist-assessee is liable to pay value-added tax on the sale price, excluding the 'Mandi Shulk'. Final Orders: The Commercial Tax Revision was allowed, setting aside the orders dated 26.04.2011, 17.02.2012, and 05.07.2013. There were no orders as to cost, and all pending applications were disposed of. An urgent certified copy of the order was directed to be issued to the parties as per rules.
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