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TMI Blog2017 (3) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... illegally added incentive amount received by IOC to the sale price? - Held that: - sale price includes the amount payable to dealer as consideration for the sale of any goods less any sum allowed as cash discount, but inclusive of any sum charged for anything done by the dealer in respect of goods at that time or before the delivery of such goods, other than cost of outward freight or delivery, in the case where such cost is separately charged. The amount of incentive is not an amount payable to a dealer as consideration for the sale of any goods. This amount is received by the dealer from IOC, and therefore, it cannot be treated to be a part of sale price - Tribunal was not justified in adding the incentive of 64,85,695/- received from IOC towards the sale price/turnover of sale. Whether the Tribunal was justified in rejecting books of account of the applicant, without any adverse material available on record to justify it? - Held that: - the physical stock available with the dealer on the date of survey tallied with books of account, the same was not liable to be discarded. However, the entry in the books of account appropriating the amount of freight towards expenses and not inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority added ₹ 49.47 lacs to the turnover of purchase, rejecting revisionist's plea of having incurred it towards transportation expenses and added it to the purchase price, and thus worked out the sale price as ₹ 130/- per litre. The turnover of revisionist was assessed at ₹ 9,61,68,364.50. The loose parcha found during survey was made the basis for rejecting account books of the revisionist. The assessing authority estimated 12000 litres of lubricant oil to have been sold by the revisionist without reflecting it in the account books, and added it to the turnover of the assessee. The assessing authority based upon the average sale price worked out at ₹ 130/- per litre held that a sum of ₹ 14,68,320/- was additional purchase that had not been reflected in the account books. The turnover disclosed by revisionist at ₹ 8,62,62,905.27 was not accepted, and stood enhanced to ₹ 9,91,96,684.50. As against the admitted tax of ₹ 1,15,36,928.23, the assessee was held liable to pay ₹ 1,32,60,905.70 as tax. 3. The assessee preferred first appeal, and various grounds were urged in support thereof. However, the Additional Commissioner ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. It is submitted that IOC has sold the product from its depot, which is transported by the dealer out of its own expenses, and the cost of freight in bringing the goods from IOC depot to the dealer's place is a part of expenses incurred by the assessee, which cannot be treated to be the purchase price under the Act. Arguments are raised that authorities as well as Tribunal have erred in including the transportation cost in the purchase price. Learned counsel has placed heavy reliance upon a decision of this Court in M/S. Bharat Rice Mills, Rampur Vs. Commissioner of Sales Tax, 1995 UPTC 689. It is contended that there is a distinction between the purchase price and cost price, and that the transportation cost may be a part of the cost price, but it cannot be treated to be purchased price, as purchase price would constitute only that part of cost, which is actually paid to the seller. 8. Per contra, learned Standing Counsel submits that purchase price is not confined to the amount actually paid, but refers to the amount payable to a seller, and since the purchase of goods is being made at the sight of the dealer, therefore, the cost incurred towards transportation in getting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hing done by the dealer in respect of goods at the time of or before the delivery of such goods, other than cost of outward freight or delivery or cost of installation in cases where such cost is separately charged; Explanation:- (i) In a case in which any amount of any duty payable by a dealer is deferred for a period or in a case in which point of payment of any duty is shifted, amount of such duty shall be deemed part of the sale price; (ii) The price of packing material in which any goods are packed shall be deemed part of sale price of goods sold. (iii) Sale price of goods in relation to transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract, shall be determined after deducting the aggregate of actual amount incurred towards labour and services, amount of profit relating to supply of labour and services and such other amounts as may be prescribed from the total amount received or receivable in respect of such works contract; (iv) In respect of transfer of right to use goods, any goods for any purpose (whether or not for a specified period) sale price means the valuable consideration received or receivable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for sale from the factories to its warehouse at Ernakulam. It was not brought for any individual customer. All the expenditure incurred is prior to the sale and was evidently a component of the price for which the goods were sold. It is true that separate bills were made out for the price of the goods ex-factory and for "freight and handling charges". But, in our judgment, the Tribunal was right in holding that the exemption under Clause (f) of Rule 9 applies when the freight and charges for packing and delivery are found to be incidental to the sale and when they are specified and charged for by the dealer separately and expenditure incurred for freight and packing and delivery charges prior to the sale and for transporting the goods from the factories to the warehouse of the company is not admissible under Rule 9(f). Rule 9(f) seeks to exclude only those charges which are incurred by the dealer either expressly or by necessary implication for and on behalf of the purchaser after the sale when the, dealer undertakes to transport the goods and to deliver the same or where the expenditure is incurred as an incident of sale. It is not intended to exclude from the taxable tu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e at which he would sell his goods. But if the sale price is fixed statutorily then the only obligation of the purchaser under the agreement would to pay that price only and no other amount can be included in the purchase price even if the same is paid by the purchaser to the seller." Other judgments are also relied upon by the learned Standing Counsel in Commissioner of Sale Tax (supra), M/s. K.S. Suppliers (supra), Commissioner of Trade Tax (supra), Commissioner of Sales Tax (supra), M/S. Ghaziabad Bhatta Samiti, Ghaziabad (supra), and M/s. Mc Dowell & Company Ltd. (supra), which are to the same effect. 13. The judgment of this Court in M/S. Bharat Rice Mills, Rampur (supra) relied upon by Sri Rahul Agrawal holds as under in Para-4:- "4. ..... The Hon'ble Supreme Court has held that tulai shall be a part of delivery charges and in case it has been separately charged in respect of each of the sale transaction entered into between the customers and the assessee, the same would be entitled to exemption of tax otherwise it would come within the definition of purchase price and taxable turnover. In this case the seller or anybody else has not charged anything from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turnover of purchase. 15. Second question urged relates to adding of incentive of ₹ 64,85,695/- towards the sale price of the revisionist. The sale price as is defined under Section 2(ad), has already been extracted above. It includes the amount payable to dealer as consideration for the sale of any goods less any sum allowed as cash discount, but inclusive of any sum charged for anything done by the dealer in respect of goods at that time or before the delivery of such goods, other than cost of outward freight or delivery, in the case where such cost is separately charged. The amount of incentive is not an amount payable to a dealer as consideration for the sale of any goods. This amount is received by the dealer from IOC, and therefore, it cannot be treated to be a part of sale price. The amount of incentive has not been shown to have been received pursuant to contract of sale and any amount received dehors the contract of sale cannot be included within the definition of sale price, in terms of Section 2(ad). Learned Standing Counsel has not been able to demonstrate any provision of law, whereunder an amount of incentive received by the dealer from IOC could be added to t ..... 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