2018 (2) TMI 1548 - SC - VAT and Sales Tax

Refund of tax paid on excess amount - price variation clause - rejection on the ground that there is no provision under the Act for reducing or refunding the amount of tax once the amount of tax has been paid - Section 2(39) of the Rajasthan Sales Tax Act, 1994 - Held that - In IFB Industries Limited v. State of Kerala 2012 (3) TMI 66 - Supreme Court of India , the issue was with regard to the definition of turnover . This court held that to take the benefit of trade discount and to make it eligible for exemption, all that the assessee is required to prove was that the purchaser had paid only the sum originally charged less the discount and that this should be a regular practice in the trade. A bare reading of Section 2(39) of the Rajasthan Sales Tax Act, which defines sale price clearly indicates that it is the price which is either paid or payable to a dealer as consideration for the sale. The definition itself makes it clear that any sum by way of any discount or rebate according to the practice normally prevailing in the trade shall be deducted and shall not be included in the sale price. The definition of turnover means the aggregate amount received or receivable by a dealer. In the instant case, when the orders were placed with the assessee, the price was not finalized by the MoP & NG. There was a clear cut stipulation in the purchase order that the price of ₹ 682/is only a provisional price subject to review and it was clearly understood by the parties that the final price applicable after 01.07.1999 will be the price as approved by the MoP & NG. Therefore, though the assessee may have received ₹ 682/per cylinder, it was under a legal obligation only to receive that price which was fixed by the MoP & NG - since the price of the cylinder has been reduced, the assessee cannot charge more than the price fixed, is bound to refund the excess amount collected and is therefore legally entitled to get refund of the tax paid on the excess amount. The assessee shall be refunded the amount of sales tax paid on the excess amount - assessee also entitled to interest - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Interpretation of sale price and turnover under the Rajasthan Sales Tax Act, 1994; Entitlement of the assessee to refund of sales tax paid on excess amount charged for LPG cylinders; Legal implications of provisional pricing in supply orders; Applicability of trade discounts in determining turnover; Judicial precedents on sale price and turnover definitions.

Analysis:
The Supreme Court addressed the issue of the sale price and turnover under the Rajasthan Sales Tax Act, 1994 in a case involving an assessee manufacturing LPG cylinders for government-owned companies. The appellant charged a provisional price for the cylinders based on a supply order, subject to review by the Ministry of Petroleum and Natural Gas (MoP & NG). The MoP & NG later revised the price downwards, leading to the deduction of excess payments by the oil companies. The assessee sought a refund of sales tax paid on the excess amount, contending that the revised price should be considered the actual sale price for tax purposes.

The court examined the definitions of sale price and turnover under the Act. Section 2(39) defined sale price as the amount paid or payable to a dealer as consideration for the sale, deducting any discount or rebate prevailing in the trade. Section 2(44) defined turnover as the aggregate amount received or receivable by a dealer for sales, excluding tax shown separately. The court emphasized that any discount or rebate should be deducted from the sale price, as per trade practices.

Citing judicial precedents, the court highlighted the importance of considering the actual price received by the assessee. Referring to the IFB Industries case, the court noted that to qualify for exemption, the purchaser must pay the reduced amount after discount. It also referenced a Gujarat High Court judgment, emphasizing that discounts do not form part of the sale price. The court distinguished a previous Supreme Court judgment under the Excise Act, stating its inapplicability to the present case.

Ultimately, the court held that the assessee was legally entitled to a refund of the sales tax paid on the excess amount charged for the LPG cylinders. Since the price was subject to review by the MoP & NG, the revised price should be considered the actual sale price. The court directed the refund of the sales tax paid on the excess amount, restoring the Deputy Commissioner's order in favor of the assessee and awarding interest on the refunded amount.

In conclusion, the judgment clarified the interpretation of sale price and turnover under the Rajasthan Sales Tax Act, 1994, emphasizing the importance of actual amounts received by the dealer. It upheld the assessee's entitlement to a refund of sales tax paid on excess amounts charged, based on the revised pricing determined by the MoP & NG. The decision provided clarity on the treatment of provisional pricing in supply orders and the applicability of trade discounts in determining turnover for tax purposes.