2009 (8) TMI 105 - SC - VAT and Sales Tax

Whether in the facts and circumstances of the case the incidental charges could be treated as a part of taxable turnover and if that is so as to what should be the correct rate at which the said incidental charges should be calculated? Held that - As it was brought to our notice that the appellant-Corporation had paid the required tax for the Assessment Year 1975-76 as demanded within the time specified in the demand notice. In the same manner when on 28-3-2001 the Excise and Taxation Officer had asked the appellant-Corporation to deposit an amount of Rs. 29, 52, 874.15 before 30-3-2001 the Corporation had deposited the said amount on 28-3-2001. As by this order we propose to request the High Court to decide the first question afresh there is no need to elaborate upon the same except holding that adequate materials as well as factual details are available for determination of the first question of law referred to the High Court.

Summary

Issues:
1. Interpretation of legal provisions under the Punjab General Sales Tax Act, 1948.
2. Assessment of taxable turnover including incidental charges.
3. Authority of the High Court to answer questions referred by the Sales Tax Tribunal.

Analysis:
1. The appeal by Food Corporation of India (FCI) challenged the High Court's judgment on questions referred by the Sales Tax Tribunal under the Punjab General Sales Tax Act, 1948. The High Court disposed of the reference by returning the first question unanswered and favoring the assessee on the second question. The appellant contended that the High Court erred in not answering the first question, which was specifically referred by the Tribunal based on earlier directions. The High Court's decision was challenged by FCI before the Supreme Court.

2. The case revolved around whether incidental expenses incurred by the State or Agencies of FCI could form part of the gross turnover and be subjected to tax. The Assessing Authority and the Appellate Authority had considered the inclusion of market fees and other charges in the taxable turnover. The Tribunal referred the question to the High Court, which returned it unanswered citing lack of factual basis. However, the Supreme Court found that there were sufficient factual details available in the orders of the Assessing Authority and the Sales Tax Tribunal to determine the question.

3. The High Court's authority to answer questions referred by the Sales Tax Tribunal was a crucial issue. The Division Bench of the High Court had directed the Tribunal to refer specific questions for its opinion, which the Tribunal complied with. The Supreme Court held that the High Court should have considered the material available in the orders of the lower authorities and answered the questions referred by the Tribunal. Consequently, the Supreme Court set aside the High Court's order on the first question and remitted it back for fresh consideration, emphasizing the need for a detailed response based on the factual details provided in the case.

In conclusion, the Supreme Court partially allowed the appeal by FCI, directing the High Court to reconsider and answer the first question referred by the Sales Tax Tribunal after affording an opportunity to both parties. The judgment highlighted the importance of factual basis in legal determinations and the obligation of the High Court to address questions referred by lower authorities in compliance with specific directions.