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TMI Blog1995 (7) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... efines the term "sale price" and hence not chargeable to Central sales tax. 3.. As already indicated while the first two authorities have held that those charges are includible in the turnover and chargeable to tax, the Tribunal has decided differently, holding that those charges are not chargeable to Central sales tax. The reasoning of the Tribunal can be seen from the following passage in the order of the Tribunal: "According to the appellants, the said charges have been charged for separately in the sale bill and there is no proof that the baling charges have been incurred prior to the completion of sale. But the specific plea of the Revenue is that baling charges are pre-sale charges. As correctly argued by the learned counsel for the appellants that there is no proof on the side of the Revenue to the point that the baling charges have been incurred prior to the completion of sale. Furthermore, we are able to see from the bills that baling charges have been charged separately. There is proof on the side of the appellants to the point that baling charges are in the nature of labour charges for baling the cotton. Therefore, we are of the view that baling charges cannot be ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. We shall first deal with the abovesaid question relating to the assessability to tax of the abovesaid baling charges and then proceed to deal with the said penalty question. 5.. In relation to the assessability to tax of the abovesaid baling charges, the argument of learned counsel for the respondent-assessee is that whether the said baling charges were pre-sale charges or post-sale charges is not relevant and according to him, what is relevant is whether the said charges would come under the term "turnover" defined under section 2(j) of the Central Sales Tax Act read with the term "sale price" defined under section 2(h) of the Act. According to him, the abovesaid baling charges are not part of the "sale price" since the assessee only sold cotton simpliciter and the charges for baling of the cotton is only in the nature of labour charges incurred by the assessee in packing the cotton sold. He also argued that the trade practice in the cotton trade would also establish the said contention. In this connection he also relied on Srinivasa Timber Depot v. Deputy Commercial Tax Officer [1969] 23 STC 158 (Mad.), whose decision was also approved in State of Tamil Nadu v. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to ask is as to what is the amount payable by the purchaser to the dealer as consideration for the sale and not as to what is the net consideration retainable by the dealer. Take for example, excise duty payable by a dealer who is a manufacturer. When he sells goods manufactured by him, he always passes on the excise duty Here italicised. to the purchaser. Ordinarily, it is not shown as a separate item in the bill, but it is included in the price charged by him. The 'sale price' in such a case could be the entire price inclusive of excise duty because that would be the consideration payable by the purchaser for the sale of the goods. True, the excise duty component of the price would not be an addition to the coffers of the dealer, as it would go to reimburse him in respect of the excise duty already paid by him on the manufacture of the goods. But, even so, it would be part of the 'sale price' because it forms a component of the consideration payable by the purchaser to the dealer. It is only as part of the consideration for the sale of the goods that the amount representing excise duty would be payable by the purchaser. There is no other manner of liability, statutory or ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause for the purpose of bringing a particular amount within the definition of 'sale price'. But if the State is able to show that the particular amount falls within the first part of the definition and is, therefore, part of the 'sale price', the exclusion clause cannot avail the assessee to take the amount in question out of the definition of 'sale price'." (Emphasis* supplied). 9.. Further in [1993] 88 STC 151 at page 163 (Ramco Cement Distribution Co. Pvt. Ltd. v. State of Tamil Nadu) the following observation of the Supreme Court is significant: "The position in regard to packing charges as well as the excise duty on packing charges is also no different. As pointed out by this Court in the Hindustan Sugar Mills case [1979] 43 STC 13 and in Commissioner of Sales Tax v. Rai Bharat Das Bros. [1988] 71 STC 277 (SC), packing charges form part of 'sale price' because the expression 'any sum charged for anything done by the dealer in respect of the goods' used in the definition in section 2(h) of the Central Sales Tax Act, 1956, squarely covers such charges, as packing is an integral element of the transaction of sale and packing charges are an integral part of the sale price." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court gave its approval to the said Madras decision. Further, though learned counsel for the respondent sought to urge that there was some trade practice, by which the abovesaid baling charges were incurred by the seller, de hors the sale, there is no proof at all for such a trade practice. Here also, the onus is only on the assessee to prove so. 12A. The other decision relied on by learned counsel for the respondent, viz., [1977] 39 STC 277 (Mad.) [Deputy Commissioner v. Sri Ram Cotton Pressing Factory (P.) Limited] has no application to the present case. There, the assessee was not selling cotton as in the present case. But, it only engaged in the business of pressing cotton waste brought by its customers and in the course of its business, it purchased hessian cloth and hoop iron and utilised the same in the packing of cotton waste pressed by it. Only in that connection, this Court found that there was no express contract for sale of the abovesaid packing materials like hessian cloth and hoop iron and that the department did not prove that there was any contract, for the sale of the abovesaid packing materials. Only in that context, this Court held that the charges incurred f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty under section 12(5)(iii) of the Act, originally the assessing officer by his order dated June 11, 1986, levied a penalty of Rs. 5,500 since the abovesaid baling charges were not included even in the revised return submitted by the assessee (on January 27, 1986, that is, long after the close of assessment year 1984-85). Thus, on the footing that the said return submitted was "incomplete" as said in section 12(4)(iii) of the Act, the said penalty was levied under section 12(5)(iii). However, this penalty was reduced by the Appellate Assistant Commissioner to Rs. 3,000. No doubt, the assessee, before the assessment is completed, filed a revised return. (While the original returns disclosed a turnover of Rs. 72,22,347, the abovesaid revised return disclosed a turnover of Rs. 80,85,823). But, in the revised return too, it did not include the abovesaid baling charges as part of its turnover. Therefore, learned Additional Government Pleader (Taxes) contended that the assessee was not acting bona fide and hence the abovesaid penalty of Rs. 3,000 as held by the Appellate Assistant Commissioner must be sustained. In this connection, the decision in State of Tamil Nadu v. Indian Sil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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