2017 (7) TMI 582 - HC - VAT and Sales Tax

Valuation - includibility - whether freight, cylinder charges and handling charges were required to be included in the taxable turnover of the Respondent/Assessee? - The Tribunal, examined the sale bills, which were shown to it, during the course of the hearing and thereafter, recorded a finding of fact that freight and other charges were shown separately in the sale bills - Held that - the finding returned by the Tribunal, that the freight and other charges were shown separately, was not correct. In so far as the cylinder holding charges were concerned, the Tribunal relied upon the judgment in the case of West coast Industrial Gases V. State of Kerala, 2002 (10) TMI 743 - KERALA HIGH COURT , where it was held, that unless, it could be demonstrated that the Assessee had transferred the effective control of the cylinders to its customers, the charges collected for temporary possession of the cylinders could not be included in the taxable turnover. Appeal allowed - decided partly in favor of Revenue.

Summary

Issues:
1. Appeal against the judgment of Tamilnadu Sales Tax Appellate Tribunal for A.Ys 2000-01 and 2001-02.
2. Inclusion of freight, cylinder charges, and handling charges in taxable turnover.

Analysis:
The two appeals were directed against the common judgment of the Tamilnadu Sales Tax Appellate Tribunal for the Assessment Years 2000-01 and 2001-02. The core issue revolved around whether freight, cylinder charges, and handling charges should be included in the taxable turnover of the Respondent/Assessee. The Revenue argued that these charges were pre-sale expenses. However, the Tribunal examined the sale bills presented during the hearing and found that freight and other charges were separately shown in the bills. Regarding cylinder holding charges, the Tribunal referred to a judgment of the Kerala High Court, stating that unless it was proven that the Assessee had transferred effective control of the cylinders to customers, charges collected for temporary possession could not be included in the taxable turnover.

The Tribunal analyzed the case law and facts presented, noting that the customers only had temporary possession of the cylinders without effective control. It concluded that incidental charges collected by the dealer-appellants could not be considered pre-sale expenses and should not be included in the taxable turnover. Consequently, the Tribunal set aside the order levying tax on the turnovers for the respective assessment years in favor of the dealer-appellants.

The Revenue contended that the Tribunal's finding on the separate display of charges in sale bills was incorrect. However, as no ground challenging the Tribunal's finding as perverse was raised in the appeal, the High Court dismissed the appeals. Despite opportunities, the Revenue could not provide the final order passed by the Appellate Assistant Commissioner, which was noted by the Court. Ultimately, the appeals were dismissed with no order as to costs.