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TMI Blog1984 (11) TMI 301X X X X Extracts X X X X X X X X Extracts X X X X ..... er found that the respondent had collected "service pool charges" at the rate of Rs. 10 per vehicle from its distributors. These service pool charges were not included in the turnover shown by the respondent and no tax was paid by the respondent on these charges. The contention of the respondent was that these charges could not be included in the turnover of sales, as they were not the consideration for the sale of the vehicles in question. The Sales Tax Officer found that these service pool charges were collected from distributors who had no option regarding the payment of these charges. If the distributors wanted to get delivery of the vehicle allotted to them, they had to pay the service pool charges. The Sales Tax Officer held that these service pool charges were liable to be included in the gross turnover and the taxable turnover of the respondent and he subjected them to tax at appropriate rate. These service pool charges were collected by the respondent on local sales as well as sales in the course of inter-State trade and commerce. Separate accounts were maintained for such charges collected on local sales and those collected on sales in the course of inter-State trade and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at, in the event of discontinuance of this sales and service promotion pool scheme, the balance amount lying to the credit of this account, after providing for all expenditure and contingent liabilities was to be distributed amongst those of the respondent's authorised dealers and contributors as were on the list on the date of discontinuance of the pool in proportion of their percentage of contribution to the pool. The next document is a prototype of a letter received by the respondent from its distributors confirming having received the aforesaid circular letter and accepting the proposal made by the respondent. There is further a letter addressed by the respondent dated June 5, 1959 to one of its distributors which shows, inter alia, that 50 per cent of the expenses required for the service promotion programme were to be contributed by the respondent and the balance would have to be paid by the distributors. The said letter further makes it clear that it was in order to avoid the distributors having to pay large amounts at one time that their contributions were collected at the rate of Rs. 10 per vehicle sold to them and that amount was debited in their account as set out in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reight or delivery or the cost of installation in cases where such cost is separately charged." From the aforesaid definition it is clear that, in the first place, to be included in the sale price the amount concerned must be payable to the dealer as consideration for the sale of any goods. The inclusive or extensive portion of the definition includes within the sale price any sum charged for anything done by the seller in respect of the goods sold at or before the time of delivery other than the costs for the things mentioned therein. In the present case, considering the facts on record, which are the same as the facts found by the Tribunal, it appears clear to us that the service pool charges collected by the respondent from its distributors were not a part of the consideration for the vehicle sold to the distributor at all. The correct position was that with a view to establish and maintain the service promotion pool and participate in the benefit provided thereunder the distributors had to pay certain amounts as their contributions, the balance amount required being contributed by the respondent-dealer. The collection of Rs. 10 per car was really a mode of collecting the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over. It was pointed out by Mr. Jetly that, in material regards the definition of the term "sale price" contained in sub-section (29) of section 2 of the Bombay Sales Tax Act, 1959 is similar to the definition of the said term under the Central Sales Tax Act, 1956. It was pointed out by Mr. Jetly that, in the course of the judgment, the Division Bench has pointed out as follows: "In other words, the service charges are entirely dependent on the food consumed by the customer after placing an order. It is because there is a sale of the food ordered by the customer that the service charges are collected; it is because the price of the food and service charges are inseparably wedded together that it is not possible to view one without the other." The Division Bench further held that the customers had no choice whether to pay the service charges or not as in the case of tips given by the customers. The Division Bench further observed as follows: "It is true that the kind of service of a particular establishment may be of a particularly attractive order. The furniture may be good, the servants may be well dressed, there may be an accompaniment of music or a floor-show and many ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant was not taxable under the Act and this was so whether a charge was imposed for the meal as a whole or according to the dishes separately ordered. The Supreme Court pointed out that the classical legal view being that a number of services are concomitantly provided by way of hospitality, the supply of meals must be regarded as ministering to a bodily want or to the satisfaction of a human need. The definition of the term "sale" under the Bengal Finance (Sales Tax) Act, 1941 shows that the said term was defined as "any transfer of property in goods for cash or deferred payment or other valuable consideration including a transfer of property in goods involved in the execution of a contract". The position of an inn-keeper under the English common law was analysed by the Supreme Court. It was observed by the Supreme Court that under the English common law the gain made by an innkeeper was "not only by uttering of their commodities, but for the attendance of their servants, and for the furniture of their house, rooms and lodgings for their guests". Under the English common law the keeper of an eating house or victualler was regarded fundamentally as providing sustenance to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Madras General Sales Tax Act, 1959. It was held that what could be legitimately brought to tax under that Act was the aggregation of the consideration for the transfer of property in the goods and the aforesaid service charges cannot be equated to the consideration for transfer of property in the goods. This decision supports the view which we have taken to some extent. But we may point out that that decision turns on its own facts and we do not rely on the reasoning in that decision for the view which we have taken. 6.. Mr. jetty referred us to the decision of a Division Bench of the Karnataka High Court in State of Karnataka v. Dada Co. [1984] 55 STC 367, where it was held that the charity collections made by the assessee in that case were inextricably connected with the sales and were collected on the occasion of sales and should necessarily form part of the turnover also. The ratio of this case has no application to the case before us. Charity collections made by the assessee in that case in no way be compared to the collection of service pool charges in the case before us. It is obvious that when an amount is collected by way of charity commission from a purchaser, the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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