2016 (9) TMI 312 - SC - VAT and Sales Tax

Valuation - rubber cess - rubber plantations - inclusion of notional rubber cess in the sales turnover - Held that - the issue is similar as decided in the case M/s. Jullunder Rubber Goods Manufacturers Association vs. Union of India & Anr. 1969 (8) TMI 33 - SUPREME COURT OF INDIA where it was held that the liability to pay the rubber cess is only that of a manufacturer and the event of liability is the manufacture of goods and not earlier - the stage of sale of goods by the appellant was much prior to the taxable event of rubber cess. The appellants were neither paying the rubber cess nor collecting the same from the traders to whom they have sold the goods. Therefore, the notional rubber cess could not be included in the sales turnover - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Inclusion of rubber cess in sales tax turnover.

Analysis:
The Supreme Court addressed the issue of whether the rubber cess, payable under the Rubber Act, should be treated as part of the sales tax turnover of the appellants who operate rubber plantations. The assessing officer had included the rubber cess in the sales tax turnover, leading to a dispute. The appellants argued that since they were not liable to pay the rubber cess under the Rubber Act, it should not be included in their sales tax turnover. The High Court had dismissed the revision petitions of the appellants, upholding the inclusion of the rubber cess in the turnover.

In its analysis, the Supreme Court referred to the case of M/s. Jullunder Rubber Goods Manufacturers' Association vs. Union of India & Anr. 1969 (2) SCC 644, which established that only manufacturers of rubber products are liable to pay the rubber cess under the Rubber Act. The Court emphasized that the liability to pay the rubber cess arises at the manufacturing stage and not earlier. Since the appellants were not paying or collecting the rubber cess, it could not be included in their sales turnover, even on a notional basis. The Court concluded that the rubber cess was not exigible to the appellants and allowed the appeals, setting aside the judgment of the High Court.

Therefore, the Supreme Court clarified that the liability to pay rubber cess under the Rubber Act rests with manufacturers of rubber products and not with those engaged in selling raw rubber. The Court's decision highlighted the distinction between the taxable event of manufacturing and the sale of goods, ensuring that only those directly liable for the rubber cess are held accountable for its payment.