9911796707
TMI Blog1997 (12) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, form part of the producers turnover. - Civil Appeal No. 4596-4598 of 1989, - - - Dated:- 19-12-1997 - AGRAWAL S.C., KIRPAL B.N. AND WADHWA D.P. JJ. Civil Appeal No. 3435, Civil Appeal No. 3436 of 1991, Civil Appeal No. 69 of 1992, Civil Appeal No. 659 of 1993, Civil Appeal No. 820 of 1993, Civil Appeal No. 657 of 1993, Civil Appeal No. 4983 of 1991, Civil Appeal No. 5656, Civil Appeal No. 5657 of 1994, Civil Appeal No. 5594, Civil Appeal No. 5595 of 1995, Civil Appeal No. 5759, Civil Appeal No. 5760, Civil Appeal No. 5761, Civil Appeal No. 5762, Civil Appeal No. 5763, Civil Appeal No. 5764, Civil Appeal No. 5765, Civil Appeal No. 5766, Civil Appeal No. 5767, Civil Appeal No. 5768, Civil Appeal No. 5769, Civil Appeal No. 5770, Civil Appeal No. 5771, Civil Appeal No. 5772 of 1995, Civil Appeal No. 6225, Civil Appeal No. 8014, Civil Appeal No. 9132 of 1995, Civil Appeal No. 4839 of 1991, Civil Appeal No. 7230 of 1993, Civil Appeal No. 5296 of 1993, Civil Appeal No. 2193 of 1996, Civil Appeal No. 9183 of 1995, Civil Appeal No. 4742 of 1991, Civil Appeal No. 3442, Civil Appeal No. 3443 of 1991, Civil Appeal No. 10386, Civil Appeal No. 10387, Civil Appeal No. 10388, Civil A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act, 1963 (hereinafter referred to as the Sales Tax Act ) the tax on rubber is a single point tax. According to the said section read with the Schedule thereto the tax is leviable on the last producer of rubber within the State. The liability to pay tax on the purchases so made under the Sales Tax Act is not in dispute but what has been contended by the dealers is that in computing the turnover on which the tax is to be paid, the quantum of cess payable under the provisions of the Rubber Act, 1947 (hereinafter referred to as the Rubber Act ) could not be included in the purchase turnover. The contention of the dealers, before the sales tax authority, was that the said cess was not a part of the purchase price and, therefore, not includible in their turnover. The assessing authority did not agree and following the decision of the Kerala High Court in the case of Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes) v. Bata India Ltd. [1986] 62 STC 436, it included the cess in the purchase turnover of the dealers. This order was confirmed in appeal by the Deputy Commissioner and thereafter by the Appellate Tribunal. 4.. The revision petition filed by the dealers c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is not less than one lakh rupees and every casual trader or agent of a non-resident dealer, whatever be his total turnover for the year, shall pay tax on his taxable turnover for that year,- (i) In the case of goods specified in the First or Second Schedule, at the rates and only at the points specified against such goods in the said Schedules. SCHEDULE I Entry 71: Rubber At the point of last purchase in the State by a dealer who is liable to tax under section 5. Rule 8. Determination of total turnover.-(1) Save as provided in sub-rules (2) and (3) the total turnover of a dealer for the purposes of these Rules shall be the amount for which the goods are sold by the dealer. (2) In the case of goods mentioned below the total turnover of a dealer for the purposes of these Rules shall be the amount for which the goods are bought by the dealer,- (a) (i) Garbled pepper (ii) Ungarbled pepper (b) green and dried ginger (c) to (m)............... (n) rubber . The controversy being with regard to the inclusion of the cess payable under the Rubber Act, 1947, on the purchase turnover of the dealers, it is appropriate to refer to the relevant provisions, nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India) reduced by the cost of collection as determined by the Central Government shall, if Parliament by appropriation made by law in this behalf so provides, be paid to the Board for being utilised for the purposes of this Act. Section 12 of the Rubber Act, after its amendment by Act 21 of 1960, is extracted hereinbelow: Imposition of new rubber cess.-(1) With effect from such date as the Central Government may, by notification in the Official Gazette, appoint, there shall be levied as a cess for the purposes of this Act, a duty of excise on all rubber produced in India at such rate, not exceeding fifty naye paise per kilogram of rubber so produced, as the Central Government may fix. (2) The duty of excise levied under sub-section (1) shall be collected by the Board in accordance with rules made in this behalf either from the owner of the estate on which the rubber is produced or from the manufacturer by whom such rubber is used. (3) The owner or, as the case may be, the manufacturer shall pay to the Board the amount of the duty within one month from the date on which he receives a notice of demand therefor from the Board and, if he fails to do so, the duty may be rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecified therein either in cash at the Board s office at Kottayam or by money order or by bank draft or cheque duly crossed and payable at Kottayam to the Secretary of the Board within 30 days from the date of receipt of the said notice. (2) On such demand being made, if a manufacturer fails to pay the amount within the due date, the Board may take steps to report the fact to the Central Government or the State Government concerned for recovery of the outstanding amount as an arrear of land revenue. 7.. On behalf of the appellant it was submitted by Mr. K.N. Bhat, learned Additional Solicitor-General, that under section 12(1) what is levied is a cess which is duty of excise on all rubber produced in India. Before the amendment in 1960 this duty was payable by the owner of the estate. After its amendment the Rubber Board is empowered to collect the duty of excise levied under section 12 either from the owner of the estate or from the manufacturer by whom the rubber is used in accordance with the rules. The incidence of duty of excise was relatable to the production of rubber and this position did not alter after the amendment in 1960. The incidence of the cess, being in the nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the owner of the estate on which the rubber is produced or from the manufacturer by whom such rubber is used. What is important to note, however, is that the opening words of this sub-section (2) refers to the duty of excise levied under sub-section (1) (emphasis added). These words clearly provide that the levy of excise duty is not under sub-section (2) but is under sub-section (1) of section 12. It is the duty which is statutorily levied under sub-section (1) on the rubber produced which is to be collected, under sub- section (2), in the manner provided by the rules. 10.. By reason of section 12(1) of the Rubber Act a cess at the rate prescribed is statutorily levied on the rubber so produced and the liability to pay the said amount of cess gets attached to the rubber so produced. If the rules do not provide for the excise duty to be paid by the producer then whoever purchases the said rubber would be purchasing goods to which is attached the liability of payment of duty. In other words, the duty element would be inherent in the price which is paid for the purchase of the said goods. The duty of excise is one which is directly relatable to the production or manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a definite provision with regard to the category of persons from whom the collection of the duty is to be made, namely, the manufacturers. 12.. From the above the learned counsel contended that this Court had clearly held that the statutory liability for payment of cess was on the manufacturer alone who would be paying the same directly to the Central Government and/ or the Rubber Board. It was submitted that no part of this amount which is directly paid by the manufacturer to a person other than the grower of rubber in fulfilment of its own statutory liability could form part of the sale price which a manufacturer has to pay. 13.. In our opinion the aforesaid decision does not lead to the inference which the dealers are seeking to derive. In Jullundur Rubber Goods Manufacturers Association case [1970] 2 SCR 68 the challenge was to the amended provisions of the Rubber Act, 1947, whereby section 12(2) was amended giving the discretion to the Rubber Board to frame rules for the purpose of providing whether to collect the cess from the consumer or the manufacturer. Three contentions had been raised before the court and they were as follows: The contentions which have been rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is only the manufacturers who are liable to pay the amount of duty, it was referring only to the persons or the stage at which the duty which is levied under section 12(1), is to be collected. In other words, the rules stated as to who was to discharge the liability of cess imposed under section 12(1) by payment of the amount of duty. 16.. It was also contended by Mr. Harish N. Salve, learned Senior Counsel appearing for the dealers, that the manner in which the consideration has been made and the components thereof do not matter and any payment made directly or indirectly by the buyer to the seller, including any sum paid by the buyer for and on behalf of the seller, would be includible in the turnover as long as the same is paid as a term of the contract of sale. It is the aggregate of the sums paid by the buyer to the seller including payment made on his behalf , which would constitute a part of the turnover of the buyer for levy of purchase tax. It was further submitted that the right of the seller to recover the said amount must flow from a contract to sell the goods. If, however, the seller has any statutory right to pass on any burden of any charge or levy to the buye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emerges in law in regard to them. No support is available from that decision for the appellant s case. We would like to point out that the relevant consideration is not whether the law permits the incidence of the duty to be passed on to the purchaser but whether there is a prohibition against the passing of it. If there is no bar, the incidence would be passed on to the purchaser in accordance with normal commercial practice. 17.. On behalf of the dealers it was also contended that though section 12(2) postulates that the cess can be collected either from the owner of the estate or manufacturer, it can, in no circumstances, be collected from the dealer from whom the manufacturers purchase raw rubber. Therefore, it was submitted, that the sale price to the licensed dealer is wholly independent of the cess paid by the manufacturer on his own account to the Central Government. In our opinion, there is an inherent fallacy in this contention. As we have already noted, and this is apparent from the reading of section 12(1) and (2), the incidence of the duty arises the moment the rubber is produced. On the rubber so produced duty at a specified rate becomes payable. When the producer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the price payable in respect thereof. 19.. The aforesaid analysis is also supported by a recent decision of this Court in the case of Mohan Breweries Distilleries Ltd. v. Commercial Tax Officer, Madras [1997] 107 STC 212; JT 1997 (8) 36. In that case liquor was manufactured by the appellant. According to section 18-B of the Tamil Nadu Prohibition Act, 1937, excise duty at a specified rate was leviable on all excisable items manufactured under any licence granted under the Act. Section 18C provided that the excise duty under section 18-B could be paid in one or more of the ways provided under section 18-C. Rule 22 of the TNIMFL Rules, 1981 provided that the excise duty shall be paid by the person who removes the goods from a manufactory. Sub-rule (2) of rule 22 further provided that a vend fee of rupees two per bulk litre shall be paid by the licensee on all stocks of Indian- made foreign spirit issued from the manufacturer. Rule 15(1) of the Tamil Nadu Indian-made Foreign Spirits (Supply by Wholesale) Rules, 1981, required the licensee, namely, the wholesaler to pay the excise duty on removal of the stock by him. The contention which was raised by the manufacturer was that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing whether or not it would be a part of the manufacturer s turnover . 20.. In our opinion the aforesaid decision is clearly applicable to the present case. Like the Mohan Breweries case [1997] 107 STC 212 (SC) the excise duty under section 12(1) is levied on the production or manufacture of rubber at the rate specified thereunder. It is only by rule 33-D(1), similar to rule 22 of TNIMFL that the cess had to be paid at a stage subsequent to the production. Merely because for the sake of convenience the excise duty, which would essentially be payable at the time of production of rubber is realised at a later point of time it cannot mean that the excise duty, in the form of cess, was not part of the sales turnover of the producer and, correspondingly, be the purchase turnover of the purchaser of rubber. 21.. In our opinion, therefore, the incidence of duty is directly relatable to the production of rubber. The character of levy is not altered merely because the payment of duty is deferred till the purchase of the rubber by the manufacturer. The character of levy is on the production of the rubber and the duty paid should, therefore, be deemed to be part of the price that the prod ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
