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TMI Blog1995 (2) TMI 383X X X X Extracts X X X X X X X X Extracts X X X X ..... he sum of Rs. 20,928 in the turnover of sales on the ground that it constitutes part of the sale price within the meaning of section 2(h) of the Central Sales Tax Act, 1956?" 2.. The controversy pertains to the includibility of the amounts mentioned in the questions, which had been collected by the assessee in addition to the price of the goods, as "State Federation commission" at the rate of one and one half per cent of the sale price of the goods in the "sale price" of those goods. According to the assessee it does not form part of the sale price within the meaning of section 2(29) of the Bombay Act and section 2(h) of the Central Act. The Sales Tax Officer treated it as a part of the sale price and included the amount collected by the assessee on that account in its turnover under both the Acts. The appeals of the assessee against the above action of the Sales Tax Officer were rejected both by the Assistant Commissioner of Sales Tax and the Maharashtra Sales Tax Tribunal. Hence this reference at the instance of the assessee. 3.. The material facts, relevant for the determination of the controversy, are as follows: The assessee, National Co-operative Consumers Federation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the assessee for the very same reason that it formed part of the sale price of the goods supplied by the assessee. The assessee's contention before the Sales Tax Officer was that the amount of State Federation commission was not includible in its taxable turnover as it did not form part of the sale price. It was contended by the assessee that the said amount of State Federation commission was payable to the respective State Federations by the wholesale consumer societies or department stores to whom the goods were supplied by the assessee at the instance of the respective State Federations. It was also contended that the said amount was not payable to the assessee. It was collected by the assessee for and on behalf of the respective State Federations merely for convenience of collection. It was for that reason that the said amount was credited to their accounts forthwith and remitted to them thereafter. It was argued that the amount of commission was not recovered by the assessee on its own account. It was contended that the assessee had acted only as a clearing house for the purpose of collecting the said amount for and on behalf of the State Federations. The Sales Tax Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e State Federations, it was not included by the assessee in the price of the goods and hence sales tax was charged on the value of the goods without taking into consideration the amount of State Federation commission-added in the invoices. Obviously, though the amount of State Federation commission was collected by the assessee from the consumer co-operative societies, etc., under instructions from the State Federations along with the price of the goods, it did not form a part of the sale price but represented the amount due to the State Federations as their commission for procuring orders, which the consumer societies were obliged to pay by virtue of existing arrangement between such societies and the State Federations. The assessee acted merely as an agent for collecting the said amount for the State Federations, which they themselves were entitled to collect in the normal course, even without the agency of the assessee. It is thus obvious that the assessee functioned merely as a collecting agent of the State Federations or as a conduit through which "State Federation commission" passed from the consumer societies to the State Federations. It never formed part of the consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h amounts which they realised from their purchasers. The above scheme, was however, only an executive order and not a statutory scheme. The question that arose for consideration of the High Court was whether the amounts collected by the assessee would come within the scope of the expression "turnover" as defined under section 2(xxvii) of the Kerala General Sales Tax Act, 1963. The Kerala High Court held that the amount collected by the assessee from the purchasers by way of administrative surcharge and price equalisation charge formed part of the assessees, turnover and, therefore, were liable to sales tax. The reason for arriving at the above conclusion given by the High Court was that the said amounts were collected by the assessees from the purchasers as part of the purchase price charged for the goods. It was observed: "It may be that under the scheme promulgated by the State Government, whereunder levy and collection of administrative surcharge and price equalisation charge is provided for, the assessee is bound to pass on to the State Government, all such amounts which he realises from his purchasers. But, admittedly, that is not a statutory scheme, but is only an executive o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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