9911796707
TMI Blog1999 (9) TMI 917X X X X Extracts X X X X X X X X Extracts X X X X ..... [1979] 43 STC 476 (All); 1978 UPTC 653 (U.P. State Cement Corporation Ltd., Churk, Mirzapur v. Commissioner of Sales Tax, U.P.). The Tribunal, however, did not accept the contention of the dealer and relying upon a decision reported in [1979] 43 STC 13 (SC); 1979 UPTC 37 (Hindustan Sugar Mills Ltd. v. State of Rajasthan) held that in view of the Cement Control Orders freight charges were the part of the sale price and therefore, could not be excluded from the taxable turnover. Another controversy relates to liability of the revisionist for payment of interest. The dealer has, therefore, filed the present revisions. 3.. Shri Bharat Ji Agrawal, learned Senior Counsel appearing for the revisionist and Shri S.P. Kesharwani, learned Standing Counsel appearing for the revenue have been heard at length. 4.. Shri Bharat Ji Agrawal has vehemently argued that even though the price was f.o.r. destination but there was a contract of sale between the revisionist and the various purchasers in which there was term No. 18 which specifically provide that although the price was f.o.r. destination railway station basis the responsibility of the suppliers for loss, shortages, or damage en route ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned, that relates to the Central Sales Tax Act, 1956. He has submitted that there is no provision under the Central Sales Tax Act for charging interest. The provisions of the U.P. Sales Tax Act, 1948, are not applicable and hence there is no liability for payment of interest with regard to Central sales tax. He has relied upon a decision of the honourable Supreme Court reported in [1997] 106 STC 460; 1998 UPTC 1 (India Carbon Ltd. v. State of Assam). Shri S.P. Kesharwani has, however, submitted that so far as the liability of interest with regard to delayed payment of U.P. sales tax is concerned, the Control Order specifically provided that freight shall be included in the sale price and shall be part of the turnover. The Control Order has been enforced much prior to the assessment years in question. Therefore, the assessee was liable to pay interest on delayed payment of tax. So far as the S.T.R. No. 1371 of 1990 is concerned, Sri Kesharwani fairly concedes that in view of the decision cited by Sri Bharat Ji Agrawal the revisionist was not liable to pay interest on delayed payment of Central sales tax. 6.. The record shows that the practice of the revisionist was that it used t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any other mode of transport has been specified by the Central Government under clause 4, by such mode of transport in respect of such transactions shall be reimbursed to the producer by the Controller from out of the Cement Regulation Account referred to in clause (11). ............................... (11) Cement Regulation Account.-(1) The Controller shall maintain an account to be known as the Cement Regulation Account to which shall be credited the amounts paid by the producer under clause 9 and such other sums of money as the Central Government may, after due appropriation made by Parliament by law in this behalf, grant from time to time. (2) The amount credited under sub-clause (1) shall be spent only for the following purposes, namely: (i) paying or equalising the expenditure incurred by the producer on freight in accordance with the provisions of this Order; (ii) equalising concession, if any, granted in the matter of price for supplies to Government or for purposes of export under the third proviso to clause 8; (iii) expenses incurred by the Controller in discharging the functions under this Order subject to such limits, if any, as may be laid down by the Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of explanation of section 2(i) of the U.P. Sales Tax Act. Such a controversy had arisen in the case of Hindustan Sugar Mills Ltd. v. State of Rajasthan [1979] 43 STC 13 (SC); 1979 UPTC 37, and the honourable Supreme Court had held that the Cement Control Order has overriding effect. 9.. As already pointed out above clauses (i), (ii) and (iii) of the explanation II of section 2(i) of the U.P. Sales Tax Act are subject to conditions and restrictions as may be prescribed in this behalf and any conditions imposed by law or order or notification having the force of law shall have overriding effect. The Cement Control Order, 1967 was enforced in order to regulate the price and supply of cement. In Hindustan Sugar Mills case [1979] 43 STC 13 (SC); 1979 UPTC 37 (SC), during the assessment year under consideration the assessee entered into diverse contracts of sale of cement with purchasers at the price of Rs. 214.65 per metric tonne "free on rail destination railway station" plus packing charges and excise duty. These contracts were on the terms and conditions set out in the form of "general terms and conditions of supply" adopted by the assessee. Clauses 5, 8 and 11 of the "General ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... destination price) in the invoices made out by the assessee and paid by the purchasers formed part of the "sale price" within the meaning of the definition of that term in section 2(p) of the Rajasthan Sales Tax Act, 1954 and section 2(h) of the Central Sales Tax Act, 1956. The sales tax authorities took the view that the amount of freight formed part of the "sale price" and was, therefore, liable to be included in the turnover of the assessee for the purpose of assessment of sales tax. The Supreme Court on consideration of the provisions of the Rajasthan Sales Tax Act as well as the Central Sales Tax Act as also the provisions contained in the Cement Control Order, 1967 held that the freight charges shall be part of the turnover. 11.. In the case of Hindustan Sugar Mills Ltd. [1979] 43 STC 13; 1979 UPTC 37, the honourable Supreme Court while considering the provisions of the Cement Control Order held that "the underlying object behind these provisions was that cement should be available at uniform price throughout the country and that is why it was provided that no producer shall sell cement at a price exceeding Rs. 214.65 per metric tonne free on rail destination railway stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d only to the terms and conditions of the contract without taking into account the provisions of the Control Order. Clause 8 of the 'General terms and conditions of supply' incorporated in the contract provided that once the goods are handed over to the railway and a railway receipt is obtained, the responsibility of the assessee shall cease and the risk shall pass to the purchaser and, therefore, if there is non-delivery or shortage or delay in delivery, it is the purchaser who, according to this clause, shall be entitled to make a claim against the railways....... But we have to consider the impact of the provisions of the Control Order, for these provisions, having statutory force and authority, have overriding effect and the terms and conditions of the contract to the extent to which they conflict with these provisions must be held to be excluded." 13.. After discussing the various provisions of the Control Order and the provisions of the Rajasthan Sales Tax Act as also the Central Sales Tax Act as well as the terms of the general terms and conditions of supply the Supreme Court held that "the provision in the contract that the delivery to the purchaser shall be complete as s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , etc., in transit.Although the price is f.o.r. destination railway station basis the responsibility of the suppliers for loss/shortages or damage en route or at destination ceases once the goods are handed over to the carriers after booking the consignments under clear railway receipts at railway risk. If there is any shortages or damages in supply, it must be recorded by the consignee with the carriers at the time of taking delivery and a claim for the same should be preferred by him immediately with the carriers concerned. It is obligatory on the consignee to insert suitable remarks in the delivery regarding shortage/damages, etc., and to prefer their claims in time and also to inform the supplier simultaneously." 16.. Delivery has been done by the assessee in the same manner as was done in the case of Hindustan Sugar Mills Ltd. [1979] 43 STC 13 (SC); 1979 UPTC 37 but since the explanation makes it clear that the clauses contained in explanation were subject to conditions as may be imposed and further that the Control Order has its overriding effect, in the case of the assessee the freight even though charged separately cannot be excluded from the definition of the turnover an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Central Act makes a substantive provision for the levy and charge of interest on Central sales tax and only to that extent. There being no substantive provision in the Central Act requiring the payment of interest on Central sales tax the States' sales tax authorities cannot, for the purpose of collecting and enforcing payment of Central sales tax, charge interest thereon." Therefore, so far as the Central Sales Tax Act is concerned, the revisionist is not liable to pay interest on the delayed payment of Central sales tax. 18.. There is no dispute that under the U.P. Sales Tax Act the assessee was liable to pay interest at the rate of 2 per cent on the delayed payment of tax in view of the provisions contained in section 8(1) read with explanation to the aforesaid section. Sub-section (1) of section 8 of the U.P. Sales Tax Act provides that "the tax admittedly payable shall be deposited within the time prescribed or by thirty-first day of August, 1975, whichever is later, failing which simple interest at the rate of two per cent per mensem shall become due and be payable on the unpaid amount with effect from the day immediately following the last date prescribed till the dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, it cannot be said that the assessee was not under a bona fide belief that he was not liable to tax on freight charges which were recovered separately. The liability of the dealer in view of the provisions contained in the Cement Control Order in respect of the freight charges was made clear by the honourable Supreme Court in the case reported in [1979] 43 STC 13; 1979 UPTC 37 (Hindustan Sugar Mills Ltd. v. State of Rajasthan). The question whether in a case where taxability changed on account of judicial interpretation, subsequently the dealer was liable to pay interest on unpaid part of the tax was considered by a division Bench of this Court in Annapurna Biscuit Manufacturing Co. v. State of Uttar Pradesh [1982] 50 STC 56; 1980 UPTC 1320. That was a case in which rate of tax was changed on account of judicial interpretation subsequently. The court held that "if the dealer calculates the tax payable by him on the relevant turnover in consonance with the decision of the concerned authority or the court which, at the time of making the calculation, held the field, it would not be possible to say that he calculated the tax payable by him wrongly. Indeed the law would expect hi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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