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TMI Blog1973 (7) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... rice payable by them for the goods sold. But the said claim was rejected by the assessing authority as well as the Appellate Assistant Commissioner on the ground that the "lot cooly charge" will form part of the turnover in view of explanation (2)(ii) to section 2(r) of the Madras General Sales Tax Act, 1959, defining "turnover" which is as follows: "The amount for which goods are sold shall include any sums charged for anything done by the dealer in respect of the goods sold at the time of, or before the delivery thereof." The Tribunal, however, following an eariler decision of this court in Srinivasa Timber Depot v. Deputy Commercial Tax Officer[1969] 23 S.T.C. 158. upheld the claim of the assessees for deduction of the "lot cooly cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 2(r) of the Act. As regards the first ground the court held that though "lot cooly charges" had been paid by the customers along with the price for the goods, they have been shown separately in the bills. As regards the second ground based on explanation (2)(ii) to section 2(r), the court expressed: "In our opinion, the explanation cannot be read in the abstract. Its context is with reference to the sale and turnover as defined. It is now wellsettled that the expression "sale of goods" in the State legislative entry bears the same meaning and scope as it has been understood in the legislative practice of this country since the enactment of the Sale of Goods Act. The object of the Madras General Sales Tax Act is to levy a general ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors it." The learned counsel for the revenue would, however, contend that the construction of explanation (2)(ii) to section 2(r) placed in that case is not the proper one and that the said provision will include all sums charged by the dealer at the time of the sale, whether the services have been rendered in respect of the goods sold or de hors it. The learned Government Pleader refers to the decision in Associated Cement Companies Ltd. v. State of Bombay[1956] 7 S.T.C. 373., in support of his stand. In that case, the Associated Cement Company Ltd., who are dealers in cement charged in their bills the price of cement at the controlled rate at Rs. 89-8-0 per ton plus sales tax at half anna per rupee and town duty at one rupee per ton pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ociate this part of the bill from the total contract which a customer enters into with the assessee when ordering any food." The following observations in that case are strongly relied on by the revenue: "The contention of the assessee, that It merely acts as if it were a channel or conduit through which the benefits flow from the collection of this amount for the purpose of distribution to its employees, cannot be accepted. For one thing there is no direct nexus between the whole body of employees to whom the benefits go and the customer who is served by an employee. In the case of a tip, it is a direct payment for satisfactory service rendered by a particular employee who serves the customer. For aught one knows, the customer may not kn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epot for the purchase of specific varieties of timber of particular measurements take meticulous care in selecting the cut timber for the specified purposes and this would involve some labour such as lifting of logs of timber, showing them to the purchasers, cutting them to sizes on purchasers' approval of the quality of the timber and so on and that the trade practice is to collect certain charges as "lot cooly charges" if ultimately the purchaser selects the articles and purchases them. In the sale bills the lot cooly charges are shown separately, without including the same in the sale price. The nature of the work for which lot cooly charges are collected appears to consist in taking out the logs of timber from the place of storage so as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is claim was rejected by the Supreme Court on the ground that all the expenditure incurred by the assessee towards freight and handling charges was incurred prior to the sale and was, therefore, a component of the price for which the goods were sold and hence the assessee was not entitled to the deduction claimed. According to their Lordships of the Supreme Court, the said rule 9(f) can be used to exclude only those charges which are incurred either expressly or by necessary implication for or on behalf of the purchaser, after the sale, when the dealer undertakes to transport the goods and to deliver the same or where the expenditure is incurred as an incident of sale, and that the rule is not intended to exclude from the taxable turnover a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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