1976 (1) TMI 38 - AT - VAT and Sales Tax

Summary

Issues:
- Whether interest charges and Hundi charges should be included in the turnover of sales as part of the sale price.

Analysis:
The appellant, a private Limited Company dealing in machinery and spare parts, appealed against an order of assessment by the Assistant Commissioner of sales tax regarding the inclusion of interest charges and Hundi charges in the turnover of sales. The bills issued by the appellant included these charges, leading to a dispute with the sales tax authorities. The crux of the matter revolved around whether these charges should be considered part of the sale price. The definition of "sale price" under the Bombay sales tax Act was crucial in determining this issue. The Tribunal analyzed the agreement and contract of sale between the parties to ascertain the nature of these charges in relation to the sale price. It was established that the interest charges and Hundi charges were related to the mode of payment agreed upon by the parties and were not part of the sale price itself.

The Tribunal referred to previous judgments to support its decision. In one case, it was held that charges like interest charges, contingent on the mode of payment, should not be considered part of the sale price. The Tribunal distinguished another case where charges were considered part of the sale price based on specific facts and admissions by the assessee. In the present case, there was no admission that the interest charges and Hundi charges formed part of the sale price. The Tribunal emphasized that these charges were related to the facility of payment by instalments and were not intrinsic to the sale price. Therefore, the Tribunal concluded that the impugned orders of the lower authorities, including the interest charges and Hundi charges in the sale price, could not be sustained. The appeal was allowed, and the case was remanded for recomputation based on the observations made.