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TMI Blog2005 (1) TMI 383X X X X Extracts X X X X X X X X Extracts X X X X ..... and was includible in the turnover of the assessee. - Civil Appeal No. 3750 of 1999 - - - Dated:- 3-1-2005 - VARIAVA S.N., LAKSHMANAN AR. AND KAPADIA S.H. JJ. Dabojit Borkakati and Mohanprasad Meharia, Advocates, for the appellant. P.N. Gupta, Advocate, for the respondent. -------------------------------------------------- The judgment of the Court was delivered by Dr. AR. LAKSHMANAN, J.- The short question involved in this appeal is whether the transportation charges and agent's commission paid by the respondent-M/s. A.P. Paper Mills Ltd. to the agent together with the cost of raw materials constitute "turnover" under section 2(s) and is liable to sales tax under section 6-A of the Andhra Pradesh General Sales Tax Act, 1957 (6 of 1957). 2.. The respondent is a public limited company engaged in the activity of manufacturing paper. The respondent is a registered dealer under the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter called as "the Act") and is an assessee on the rolls of the Commercial Tax Officer, Aryapuram, Rajahmundry. 3.. The respondent purchased hard wood (raw material) from unregistered dealers through persons called agent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the agent to the respondent. Aggrieved by the order of the Tribunal dated May 13, 1998, the appellant filed a tax revision case in the High Court of Andhra Pradesh. The High Court, without going into the merits of the case, dismissed the revision on the summary ground that the transportation charges and agent's commission were incurred subsequent to the purchase of the raw materials and the said charges, therefore, do not represent the sale consideration which had passed from the buyer to the seller is a finding of fact. 6.. Aggrieved by the order passed in the revision by the High Court of Andhra Pradesh, the above appeal by way of special leave petition was filed by the State of Andhra Pradesh. 7.. We have heard Mr. Dabojit Borkakati, learned counsel appearing for the appellant and Mr. P.N. Gupta, learned counsel appearing for the respondent. 8.. It was argued by the learned counsel appearing for the appellant that the High Court is in error in not seeing that the agents appointed by the respondent are engaged in the business of purchase of raw materials from the unregistered dealers and supply- ing the same in the factory on contract rates which included the cost of raw ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is liable to tax under this Act) from a registered dealer in circumstances in which no tax is payable under section 5 or under section 6, as the case may be, or (ii) purchases any goods (the sale or purchase of which is liable to tax under this Act) from a person other than a registered dealer, and (a) consumes such goods in the manufacture of other goods for sale or consumes them otherwise, or (b) disposes of such goods in any manner other than by way of sale in the State, or (c) despatches them to a place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce, shall pay tax on the turnover relating to purchase aforesaid at the same rate at which but for the existence of the aforementioned circumstances, the tax would have been leviable on such goods under section 5 or section 6." 11.. It is an admitted fact that the respondent purchased the hard wood from unregistered dealers through agents and that the respondent appointed certain agents who have opened depots for buying hard wood and transporting the same to the factory premises of the respondent and that the agents were paid a total amount which included the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he planting subsidy paid by the appellants-E.I.D. Parry (I) Ltd., to the sugarcane growers can be said to be a part of the price of sugarcane purchased by it from them and can legitimately be included in the turnover of the appellants. Whether the transport subsidy/charges in excess of 30 km. paid by the appellant to third party, lorry owners, for transporting sugarcane pursuant to the State Government's direction can be aggregated with the price of sugarcane and included in the turnover of the appellants. It was contended before this Court by the counsel for the appellant that the planting subsidy given by the appellants to the cane growers was by way of an incentive to the cane growers for planting a particular variety in the stipulated months preceding the planting season and that the planting subsidy being unrelated to the sale of sugarcane could not have been treated as a part of the price for which the goods were bought and, therefore, could not have been rightly included in the turnover of the appellants for determining their purchase tax liability. On the other hand, the contention raised on behalf of the sales tax authorities was that the act of giving planting subsidy for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delivery by the sugarcane growers at the factory gate and though the transport charges paid by the appellants were not to the sugarcane growers but to third party lorry owners, they were made for securing regular supply of sugarcane as per the requirements. Though payments were made at the instance of Government of Tamil Nadu they also became a part of the implied agreement between the appellants and the sugarcane growers. They were not post-sale expenses. Those amounts were paid to ensure scheduled delivery of sugarcane. The sale of sugarcane became complete only thereafter. Those payments can be regarded either as payments made on behalf of the sugarcane growers or payments made in modification or variation of the earlier agreements entered into by the sugarcane growers for selling sugarcane. In either case they could legitimately be regarded as the components of the sale price as the sellers would have otherwise included those amounts in the sale price." 15.. In the case of D.C. Johar Sons (P.) Ltd. v. Sales Tax Officer, Ernakulam [1971] 27 STC 120 (SC), the appellant-company made a claim for exemption for freight and packing and delivery charges in respect of which separate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery to the purchaser was complete as soon as the goods were put on rail and payment of the freight was the responsibility of the purchaser was wholly inconsistent with the scheme of the Control Order and must be held to be excluded by it. The Control Order was paramount; it had overriding effect and if it stipulated that the freight was payable by the producer, such stipulation must prevail, notwithstanding any term or condition of the contract to the contrary. Therefore, by reason of the provisions of the Control Order, which governed the transactions of sale of cement entered into by the assessee with the purchasers, the amount of freight formed part of the 'sale price' within the meaning of the first part of the definition of that term in section 2(p) of the Rajasthan Act and section 2(h) of the Central Act and was includible in the turnover of the assessee. Under the first part of the definition of 'sale price' in section 2(p) of the Rajasthan Act, the expression meant the amount payable to a dealer as consideration for the sale of any goods and, therefore, the concept of real price or actual price retainable by the dealer is irrelevant. The test is, what is the considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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