TMI Blog1961 (7) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... after obtaining the necessary permission for that purpose, removed those quantities of tobacco along with others for the purpose of preparing manufactured tobacco, viz., beedies. At the time of the removal of the tobacco in that way, the company paid a sum of Rs. 10,111-7-6 as the excise duty payable in respect of those goods under the provisions of the Act. For the assessment year 1955-56, the company's turnover was taxed by the Deputy Commercial Tax Officer under the provisions of the Madras General Sales Tax Act. Then, the Assessing Officer did not include in the turnover of the company this sum of Rs. 10,111-7-6 as part of the taxable turnover. This assessment was made on 15th January, 1957. Acting under the provisions of section 12(1) of the Act, the Commercial Tax Officer, in the exercise of his revisional powers, revised the assessment and made an assessment on 8th October, 1957, in the course of which he treated the excise duty amounting to Rs. 10,111-7-6 paid by the company as part of the taxable turnover. The company appealed to the Deputy Commissioner of Commercial Taxes and the Sales Tax Appellate Tribunal and eventually to the Commissioner of Commercial Taxes, withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule I, consist of three classes of goods, viz., cigars or cheroots, cigarettes and biris. The biris referred to in this item are no other than those which are referred to as beedies in this part of the country. It is not disputed that what was purchased by the company from Baliga Co., on 1st June, 1955, and 2nd June, 1955, was unmanufactured tobacco within the meaning of that expression occurring in item 9 of Schedule I to the Central Excises and Salt Act. What the company purchased in that way was cured tobacco and was therefore cured unmanufactured tobacco. That being so, cured unmanufactured tobacco so purchased by the company from Baliga Co. clearly constituted goods on which excise duty was payable under section 3 of the Act. The persons from whom excise duty recoverable in respect of excisable goods could be collected are enumerated in rule 7 of the Central Excise Rules and that rule reads"Every person who produces, cures or manufactures any excisable goods, or who stores such goods in a warehouse shall pay the duty or duties leviable on such goods, at such time and place and to such person as may be designated in, or under the authority of these rules, whether the paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... buyer and not the sale turnover of the seller. So, what has been directed by the Act and the rules is that where unmanufactured tobacco is purchased, the price for which it is so purchased is the turnover which can be taxed under the provisions of the Act. The turnover of the company which was therefore taxable under the statutory provisions was the amount for which the tobacco was bought by the petitioner-company in this case. It is stated in the invoices prepared when the company purchased the tobacco that the amount for which the company purchased tobacco from Baliga Co., was Rs. 15,650 in the one case and Rs. 16,060 in the other. It is contended on behalf of the petitioner-company that these are the amounts for which the company bought the goods and that those amounts are the only amounts which can constitute the turnover in respect of the unmanufactured tobacco which it purchased from Baliga Co. On the contrary, what is contended by the learned Government Pleader is that the amount for which the company purchased the tobacco was not only the amount which is the aggregate of those sums of money which the company paid to Baliga Co., but also Rs. 10,111-7-6 which represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealer is the aggregate of the amounts for which the goods are bought or sold. Mr. Shetty appearing on behalf of the company has urged that the excise duty paid by the company in this case is no part of the price since, according to him, the company paid the duty only in discharge of its own statutory liability imposed on it by rule 7 of the Central Exise Rules. The learned Government Pleader however urges that part of the consideration for the sale was the acceptance by the company of the liability of Baliga Co., to pay the excise duty. He also submits that the excise duty should be regarded as the amount of a deferred payment within the meaning of that expression occurring in section 2(h) of the Sales Tax Act. If excisable goods are sold after the payment of duty, ordinarily, the duty so paid is part of the price. Before section 5 of the Madras General Sales Tax Act was amended, the seller of unmanufactured tobacco was liable to pay sales tax on his sale turnover. Since the amount for which the dealer sold his tobacco constituted the taxable turnover, and since it would ordinarily include the excise duty paid by him if he had paid it, the rule-making authority, in order to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nderstand how the excise duty payable in respect of the goods sold, is part of the price payable by the buyer to the seller. The duty paid by the company in this case is what it was liable to pay under rule 7 of the Central Excise Rules. If, as it is well settled, the consideration is a benefit which flows from the buyer to the seller, normally it would be impossible to suggest that the excise duty paid by the buyer in discharge of his own statutory liability involved any benefit to the seller, unless the duty was paid on behalf of the seller. Now, in this case, the goods sold to the company were goods non-duty-paid. There was no stipulation that the duty payable in respect of those goods should be paid by the buyer or that it should be paid by the buyer on behalf of the seller. The buyer in this case paid the excise duty in discharge of his own liability to pay it under rule 7, since it was impossible for the buyer under the provisions of the Excises and Salt Act and the rules made thereunder to remove the goods for the purpose of manufacturing beedies from his licensed warehouse without making payment of such excise duty. In a case like this where the only material before us is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be that in a case where goods non-duty-paid are sold by one person to another and the goods of which the buyer had got possession were in transit and the buyer then became an insolvent, the seller could, claiming to be an unpaid seller within meaning of that expression occurring in section 45 of the Sale of Goods Act, claim the right to stop the goods in transit for the reason that the excise duty had not been paid by the buyer, since the seller would be an unpaid seller. Then, section 55(1) entitles a seller to sue for the price of the goods, and if the excise duty is also part of the price, it would lead to the result that the seller could sue the buyer for the recovery of the excise duty as part of the price although such duty is payable only to the Central Excise Authorities. Then again, there is section 58 of the Sale of Goods Act under the provisions of which a suit may be brought for specific performance of the contract of sale in which it would be open to the Court to make a decree for the specific performance of the contract, instead of merely making a decree for damages. Such decree may be conditional upon such terms as to payment of the price or otherwise, and if a Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection contains an unmistakable indication that where there is a sale of goods non-duty-paid and the sale takes place when the duty was chargeable on those goods, the duty payable in respect of such goods does not constitute part of the contract price. Any other construction would lead to this result that, if a sale takes place of goods nonduty-paid and after the sale is made there is a decrease in the amount of duty or its total remission, the buyer would be entitled to claim from the seller the amount which is equivalent to the decrease of the duty or the remitted duty notwithstanding the fact that the buyer himself did not pay any duty in respect of those goods. This claim he would be entitled to make on the ground that, although no one paid any duty on the goods, since the duty formed part of the contract price, or its remission, there was a corresponding abatement of the contract price to the benefit of which the buyer became entitled. The fact that section 64-A makes no provision at all in respect of sales of goods non-duty-paid, is to my mind of the greatest significance. Likewise, the fact that when the rule making authority under the Madras General Sales Tax Act made a rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be understood to say that in no case can the excise duty paid by a buyer form part of the purchase turnover. There may be cases in which, if there is a stipulation to that effect or the terms of the contract of sale are such as to justify that conclusion, the excise duty paid by the buyer may form part of the contract price. But this case is not one such. The decision in Dayabhai Gokulbhai Patel v. The State of Bihar(1), on which the Government Pleader placed strong reliance, was one in which there was a contractual agreement between the parties under which the buyer agreed to pay the excise duty payable in respect of the goods. The decision in Mohammed Kunju Abdul Kadir v. The Sales Tax Officer(2) on which the Commissioner of Commercial Taxes relied is clearly distinguishable. That was a case in which the excise duty was paid by the buyer to the warehouse licensee. In the view that I take, it becomes unnecessary for us to consider the second contention urged on behalf of the company that the Commercial Tax Officer included in the turnover of the company excise duty paid in respect of goods other than those purchased by it from Baliga Co. In my opinion, this writ petition s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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