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TMI Blog2011 (3) TMI 1538X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1999-2000 under the Central Sales Tax Act (called the Central Act , for short). The applicant is a Government of India undertaking and is controlled by the Ministry of Petroleum, Government of India, New Delhi. It has its refinery unit at Mathura wherein it manufactures petroleum products. It is registered both under the U.P. Trade Tax Act (called the Act , for brevity) and under the Central Act. The assessing authority passed the assessment order for the year under consideration. The assessing authority has rejected the books of account and the enhanced turnover. The assessing authority has also added the amount of the excise duty paid by the purchaser outside the State of U.P. in the turnover. Being aggrieved by the assessment order the applicant filed an appeal before the Deputy Commissioner (Appeals), Trade Tax, Agra, which has been dismissed vide order dated July 24, 2002. Aggrieved by the order of the Deputy Commissioner (Appeals), the applicant filed second appeal before the Tribunal. The Tribunal by the order dated February 22, 2003 allowed the appeal in part. The Tribunal has sustained the enhancement of the turnover by ₹ 5 crores. The Tribunal has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argeable with reference to the value, such value be deemed to be the normal price thereof, i.e., the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for the delivery at the time and place of removal. Section 4(4) provides that the assessee means the person who is liable to pay the duty of excise under this Act and includes his agent; place of removal means a factory or any other place or premises of production or manufacture of the excisable goods; or a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty, from where such goods are removed. The assessee is defined under rule 2(ib) of the Central Excise Rules, 1944 (hereinafter referred to as, the Excise Rules ). It says that any person who is liable for payment of duty assessed and also includes any producer or manufacturer of excisable goods or a registered person of a private warehouse in which excisable goods are stored. Rule 7 of the Excise Rules provides that every person who produces, cures or manufactures any excisable goods, or who stores such goods in a warehouse, shall pay the duty o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... places specified below to any other warehouse so licensed and so located. It permits the removal of the goods without payment of duty from Mathura Refinery. Mathura Refinery is included in the list of the warehouse from where the goods excisable can be transferred to any other warehouse so licensed. He submitted that under the aforesaid provisions the excisable goods have been transferred from the warehouse of the applicant to the warehouse of the purchaser without the payment of duty. The duty is not only leviable on the manufacturer but also leviable on any other person also. The purchaser is also liable for the payment of excise duty under the aforesaid provision while clearing the goods from their warehouse. In the circumstances it is wrong to say that the excise duty is leviable only on the manufacturer. In the present case the excise duty was leviable on the purchaser at the time of removal of the goods from their warehouse situate outside the State of U.P. Such purchaser has also paid the excise duty while removing the goods from the warehouse. Therefore, the amount of excise duty paid by the warehouse would not be a part of the sale price of the petroleum product. Such exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of turnover are concerned, learned standing counsel submitted that the assessee was not able to reconcile the differences between the turnover as per account books and return; not able to verify the information received; not able to verify the goods imported from outside the State; not able to produce the quantitative details of the manufacturing and trading goods; the enhancement is only 2.21 per cent of the declared turnover which cannot be said to be excessive having regard to the discrepancies found. Having heard learned counsel for the parties, I have perused the impugned order and the orders of the authorities below and given my anxious consideration to the rival submissions. So far as the enhancement of the turnover is concerned, in my view the matter requires reconsideration by the Tribunal. The Tribunal has not given any basis for the enhancement of the turnover by ₹ 5 crores. The Tribunal even has not referred the discrepancies found in the books of account. Therefore, the order of the Tribunal in this regard is liable to be set aside. Now, coming to the another question whether the excise duty paid by the purchaser would be liable to be included in the tu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble and payable under the Act, by the manufacturer does not cease. It would be appropriate to refer the definition of the sale price given in section 2(h) of the Central Act. The Federal Court in Province of Madras v. Boddu Paidanna Sons [1942] 1 STC 104 (FC); [1942] FCR 90, held (page 120 in 1 STC): . . . There is in theory nothing to prevent the Central Legislature from imposing a duty of excise on a commodity as soon as it comes into existence, no matter what happens to it afterwards, whether it be sold, consumed, destroyed or given away. A taxing authority will not ordinarily impose such a duty, because it is much more convenient administratively to collect the duty (as in the case of most of the Indian Excise Acts) when the commodity leaves the factory for the first time, and also because the duty is intended to be an indirect duty which the manufacturer or producer is to pass on to the ultimate consumer, which he could not do if the commodity had, for example, been destroyed in the factory itself. It is the fact of manufacture which attracts the duty, even though it may be collected later. . . This view has been followed by the apex court and the position has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacturer or the producer, yet laws are to be found which impose a duty of excise at stages subsequent to the manufacture or production. In the case of Har Shankar v. Deputy Excise and Taxation Commissioner reported in AIR 1975 SC 1121, the apex court has held that excise duty is primarily the duty on the production or manufacture of the goods produced by the manufacturer. Thus, the incidence of excise duty is directly relatable to manufacture but its collection can be deferred to later stage as a measure of convenience or expediency. In the case of McDowell Company Limited [1985] 59 STC 277 (SC); 1985 UPTC 747 while dealing with the identical question whether the excise duty paid by the purchaser under the Andhra Pradesh Excise Act, 1968 and Andhra Pradesh Foreign Liquor and Indian Liquor Rules would be a part of the sale turnover of the manufacturer, held that excise duty as defined in section 2(10) of the Excise Act is leviable on the manufacturer of liquor and the manufacturer could not remove the same from the distillery unless the duty imposed under the Excise Act has been paid. Rule 76 of the Distillery Rules provides that no spirit or liquor manufactured or s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction of sale, there is bound to be a seller at one end and a buyer at the other and transfer of title in the goods takes place for a consideration. The Constitution Bench has considered the definition of the turnover as defined in section 2(s) of the Andhra Pradesh General Sales Tax Act, 1957 and held as follows (pages 290-292 in 59 STC): 11. 'Turnover' is defined in section 2(s) of the Sales Tax Act to mean: 'The total amount set out in the bill of sale (or if there is no bill of sale, the total amount charged) as the consideration for the sale or purchase of goods (whether such consideration be cash, deferred payment or any other thing of value) including any sums charged by the dealer for anything done in respect of goods sold at the time of or before the delivery of the goods and any other sums charged by the dealer, whatever be the description, name or object thereof'. 12. The definition clearly indicates that the total amount charged as the consideration for the sale is to be taken into account for determining the turnover. Where a bill of sale is issued (and obviously the bill has to state the total amount charged as consideration), the to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated: 'Whenever a sale attracts purchase tax, that tax presumably affects the price which the seller who is liable to pay the tax demands but it does not cease to be the price which the buyer has to pay even if the price is expressed as X plus purchase tax.' This court in George Oakes (Private) Ltd. v. State of Madras [1961] 12 STC 476 (SC); [1962] 2 SCR 570 quoted this extract with approval and also referred to the following passage in the judgment of Goddard, L. J., in Love v. Norman Wright (Builders) Ltd. [1944] 1 All ER 618: 'Where an article is taxed, whether by purchase tax, customs duty, or excise duty, the tax becomes part of the price which ordinarily the buyer will have to pay. The price of an ounce of tobacco is what it is because of the rate of tax, but on a sale there is only one consideration though made up, of cost plus profit plus tax. So if a seller offers goods for sale, it is for him to quote a price which includes the tax if he desires to pass it on to the buyer. If the buyer agrees to the price, it is not for him to consider how it is made up or whether that seller has included tax or not . . . So far as the purchaser is concerned, he pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Seventh Schedule to the Constitution). Its incidence falls, therefore, on the manufacturer or producer of the goods. The collection of excise duty may be deferred to such later stage as is, administratively or otherwise, most convenient. In the case of In re Central Provinces and Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938 [1938] 1 STC 1 (FC) it was noted that excise duty was a duty ordinarily levied on the manufacturer or producer in respect of the manufacture or production of the commodity taxed. A distinction was made between the nature of the tax and the point at which it was collected. It was subject to the legislative competence of the taxing authority to impose the duty at the stage which was most convenient and the most lucrative, wherever it might be, but 'that is a matter of machinery of collection, and does not affect the essential nature of the tax.' This was reiterated by the Federal Court in Boddu Paidanna's case [1942] 1 STC 104 (FC); [1942] FCR 90. In the Bombay Tyre's case [1984] 1 SCC 467, this court referred to the aforementioned two authorities of the Federal Court and several authorities of this court to hold that excise ..... X X X X Extracts X X X X X X X X Extracts X X X X
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