TMI Blog2014 (11) TMI 966X X X X Extracts X X X X X X X X Extracts X X X X ..... dealers - held that:- Neither the price structure nor the taxation regime gets affected by the quantum of commission disbursed to the dealers because gross turn over in terms of Section 2(1)(u) after certain deductions in terms of Section 6 is computed to arrive at a figure of taxable turn over in terms of Section 2(1) (zn). Thus, there is no case of payment of tax on the amount of commission paid to the dealers by the oil companies. The plea regarding notional or artificial sale value or price of the diesel/petrol on which pursuant to the explanation, tax is levied, is also incorrrect. Rather, the levy of tax is on the sale price of petrol/diesel price whereof is fixed by oil companies and is declared and predetermined by oil companies and VAT is charged on the said actual value and not on the notional/ artificial value. The amendment brought about in the term "sale price" vide the impugned notification is in conformity with term 'sale' as is understood in the Sales of Goods Act, 1930. The evaporation loss is fully taken care of by the provisions of the Principal Act. The petrol outlets/dealers receive the commission as per quantity of petrol/diesel sold which aspect is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o levy tax on sale or purchase of goods subject to provisions of Entry 92A of List I which in turn deals with matters relating to tax on sale or purchase of goods in the course of inter-State trade or commerce. While calculating tax liability under Section 2(1)(u) of the Act, an assessee is required to calculate his gross turn over i.e. the aggregate of the sale prices received or receivable in respect of any goods sold. Section 2(1)(u) of the Act, reads as follows:- (u) gross turnover when used in relation to any dealer means the aggregate of the sale prices received or receivable in respect of any goods sold, whether as principal, agent or in any other capacity, by such dealer and includes the value of goods exported out of the State or disposed of otherwise than by sale; Explanation:- (i) The aggregate of prices of goods in respect of transactions of forward contracts, in which goods are actually not delivered, shall not be included in the gross turnover. (ii) Any amount received or receivable or paid or payable on account of variation, escalation or de-escalation in the price of any goods sold previously to any person but n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of List II of 7th Schedule appended to the Constitution of India as the amendment seeks to bring to tax something which is not part of the sale price of the goods. Counsel for the petitioner also places further reliance upon a judgment in State of Gujarat V/s Raman Lal Sankal Chand and Company , 16 STC 329. It is further submitted that by way of the impugned amendment, the State of Haryana has sought to levy tax on profits of seller , a power not conferred upon the State of Haryana as it falls within the sole purview of the Union Government. The State of Haryana is only empowered to tax goods on the price fixed for sale between the oil companies and the retail outlets and not on a notional price which is not charged or recovered from a customer. It is further submitted that in practice, the effect of this amendment is that members of the petitioner-association, though entitled to input tax credit on such tax have excess tax in their hands. The output tax liability is lower on account of evaporation loss leading to tax being carried forward on a regular basis. The excess being carried forward has become perpetual as Section 20 of the Act does not permit refund confining it to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the words disposed of otherwise than by sale. It is further submitted that an agreement Annexure R-1, appended with reply, between oil companies and petrol outlets, fixes the sale price of petrol and diesel while making sale to the consumer. A perusal of agreement Annexure R-1, makes it abundantly clear that sale price as defined under Section 2(1)(zg) of Act, is in confirmity with the definition of sale as provided under the Sale of Goods Act, 1930. The judgment in State of Gujarat V/s Raman Lal Sankal Chand and Company's case (supra) relied by the petitioner while declaring certain provisions of the Bombay Sales Tax Act, 1953, ultra vires, does not apply to the present case as money consideration in the present transactions are well defined. The other judgment relied upon by the petitioner, pertaining to levy of tax on maximum retail price, did not find favour with the court, as in the present case, there is no question of levying tax on maximum retail price as retail price is determined by oil companies being a highly regulated commodity. It is also contended that as petroleum products are highly regulated commodities and are sold at a specific price to consumers, fixed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessments were framed and tax was paid on the basis of price of petrol and diesel determined at the time of delivery to the retail outlet whereas by the amended provision, explanation (v) has altered the definition of sale price of diesel and petrol as it has to be calculated as the price offered to consumers thereby including margin/commission received by retail outlets from oil companies. At this stage, it would be appropriate to clarify that oil companies sell petrol and diesel to retail outlets for further sale to individual retail consumers. The outlets are paid commission based on the value of sale of petrol and diesel. The effect of the amendment is that tax would be paid by including the commission paid on petrol and diesel sold to retail outlet. The petitioner lays challenge to this amendment primarily on a plea that such an amendment is beyond legislative competence of the State of Haryana as Entry 54 of List II of 7th Schedule to the Constitution of India empowers State Legislature to impose tax on sale or purchase of goods and as commission paid to petrol dealers is not part of the sale price determined between an oil company and a retail outlet, the amendment is b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oil companies and petrol outlets by way of an agreement wherein price of sale to the ultimate consumers is pre-determined. Sequelly, the sale price chargeable from the dealers does not fall foul of the definition of sale as is provided under the Sales of Goods Act, 1930. Money consideration in transactions involved in the present case is well-defined and is not dependent upon vagaries of market forces, as is true of other commodities. There is no application of maximum or minimum price because no variations in sale price of petrol/diesel is contemplated as petrol/diesel are highly regulated commodities and their sale price from oil companies to dealers and then from dealers to consumers is part of the agreement between the oil companies and the dealers. In short, dealers have no control muchless any role in fixing the sale price. It thus follows that the tax element chargeable by the oil companies would be deposited by themselves with the State exchequer and dealers would be saved from this duty. The retail outlets are not entitled to any value addition on their own level in the sale price already fixed by the oil companies as per the agreement between the two. The petitionerassoci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;s apprehension on this count is clearly unfounded as dealers are given full claim of input tax credit. The shortage on account of evaporation is taken care of by this clause. It may not be out of place to mention that on 21.9.2013, another circular has been issued by the Excise and Taxation Department, Haryana for compliance of all assessing officers, interalia, regarding treatment of evaporation loss and stock loss in respect of motor-spirit and high speed diesel. Following paragraphs from the said circular are worthy of notice here and thus are reproduced as below:- 2. Further, an issue relating to evaporation loss in petrol and diesel was also discussed in the guidelines referred to above. It is accepted by the oil marketing companies that when petrol and diesel pass from the companies to the petrol pumps for onward sale to the consumers there occurs a certain loss due to evaporation. So what should be the treatment under the Haryana VAT Act towards these losses for the purpose of input tax and output tax? Since output tax is a tax levied on the sale of goods effected by a dealer in the State during a tax period, so in the given case when there is no sale of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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