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2014 (6) TMI 860 - HC - VAT and Sales TaxDetermination of selling price - pricing system of LPG and kerosene assigned to Petroleum Planning and Analysis Cell (PPAC) - petitioner revised its liability of tax reducing the turn over as per the final price. After fixing the price in accordance with credit or debit note, the petitioner used to fix its tax liability calculating the operative price in respect of VAT Tax as well as Central Sales Tax. - what is the sale price in accordance with the provisions of Central Sales Tax Act and M.P.VAT Act, 2002. Held that - provisional invoice price and final price both are controlled by PPAC. The petitioner has no liberty to fix price. The change in sell price is due to the directions and fixation of price by PPAC because the domestic LPG is being sold to a consumer on a subsidized price and shortfall has been made good by the manufacturing companies and Oil Marketing Companies on sharing basis as directed by MOP and NG and also partly from the contribution of Central Government through issue of Oil Bonds. Hence in our opinion, the sale price of LPG in the case of the petitioner would be the price fixed by the petitioner after deduction in primary invoice on the basis of credit notes issued subsequently because that was the price, which was released by the petitioner effectively and fixed under the price fixation mechanism. The authority committed an error of law in disallowing the deductions from total turnover on the basis of credit notes issued to Oil Marketing Companies which had resulted reduction in the turn over and liability of tax of the petitioner. - Decided in favour of assessee.
Issues Involved:
1. Determination of the sale price under the Central Sales Tax Act and M.P. VAT Act, 2002. 2. Validity of the provisional and final pricing mechanism for LPG. 3. Eligibility for tax deductions based on credit notes. 4. Maintainability of the writ petition in light of alternative remedies. Issue-wise Detailed Analysis: 1. Determination of the Sale Price: The primary issue was to determine the sale price in accordance with the provisions of the Central Sales Tax Act and the M.P. VAT Act, 2002. The court examined Section 2(v) of the VAT Act, which defines "sale price" as the amount payable to a dealer as valuable consideration for the sale of any goods, less any sum allowed as a discount according to ordinary trade practice. The court noted that the definition includes any sum charged for anything done by the dealer in respect of the goods at the time of or before delivery, excluding costs separately charged for freight or delivery. 2. Validity of the Provisional and Final Pricing Mechanism: The court considered the pricing mechanism for LPG, which is controlled by the Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas. The petitioner issued provisional invoices at the time of supply and later issued final invoices based on the quarterly price fixed by PPAC. The court highlighted that the petitioner had no liberty to fix the price independently, and the change in sale price was due to the directives and price fixation by PPAC. 3. Eligibility for Tax Deductions Based on Credit Notes: The court examined whether the petitioner could make deductions in the provisional bills based on subsequent credit notes issued due to price revisions by PPAC. The taxing authority had disallowed such deductions, arguing that subsequent credit notes did not qualify as discounts under Section 2(v)(iii) of the VAT Act. The court referred to precedents, including judgments from the Andhra Pradesh High Court and the Supreme Court, which clarified that trade discounts allowed at the end of the year or based on subsequent price adjustments should be considered for tax purposes. The court concluded that the sale price for tax liability should be the final price after adjustments based on credit notes. 4. Maintainability of the Writ Petition: The respondents raised a preliminary objection regarding the maintainability of the writ petition, citing alternative remedies under Section 46 of the VAT Act and the Central Sales Tax Act. The court referred to the Supreme Court's judgments in Filterco v. C.S.T. and State of Tripura v. Manoranjan Chakraborty, which held that the High Court should examine the merits of the case despite the availability of alternative remedies, especially when substantial portions of tax need to be deposited before an appeal. The court found that the issue involved the interpretation of sale price under the relevant tax laws, justifying the writ petition's maintainability. Conclusion: The court allowed the writ petition, quashing the impugned orders dated 25.5.2011 (Annexure P/1) and 25.5.2011 (Annexure P/2), and held that the petitioner was entitled to make deductions in the provisional invoices based on subsequent credit notes issued due to price adjustments by PPAC. The objections regarding the maintainability of the writ petition were dismissed, and no order as to costs was made.
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