1993 (2) TMI 292 - HC - VAT and Sales Tax

Summary

Issues:
1. Inclusion of sale proceeds of motor car and purchase turnover of cinnamon leaves in taxable turnover.
2. Inclusion of forwarding charges collected by the assessee in taxable turnover.

Analysis:

Issue 1: Inclusion of sale proceeds of motor car and purchase turnover of cinnamon leaves in taxable turnover.
The revision-petitioner, a limited company dealing in Indian made foreign liquor and beer, contested the inclusion of the sale proceeds of a motor car and purchase turnover of cinnamon leaves in its taxable turnover for the assessment year 1979-80. The Appellate Tribunal initially upheld the inclusion based on earlier appellate orders. However, the High Court clarified that in proceedings against the revised assessment order, the higher appellate authority can review the correctness of the earlier decision. The Court held that the Sales Tax Appellate Tribunal erred in considering the matter precluded by the earlier appellate order and directed a remit for fresh consideration. The decision highlighted the importance of the Full Bench decision in Syed Alavi v. State of Kerala, allowing for scrutiny of earlier decisions in subsequent appeals.

Issue 2: Inclusion of forwarding charges collected by the assessee in taxable turnover.
The second aspect raised before the Appellate Tribunal was the inclusion of forwarding charges collected by the assessee from M/s. Michaels in the taxable turnover. The Tribunal questioned the genuineness of the agreement between the parties and found no evidence of services rendered by the assessee to M/s. Michaels. Consequently, the Appellate Tribunal held that the forwarding charges formed part of the taxable turnover. The High Court upheld this decision, emphasizing that the findings of fact supported the conclusion that the charges were rightly included in the taxable turnover. The Court affirmed that the agreement pleaded by the assessee was not genuine, and no services were rendered to M/s. Michaels, thereby justifying the inclusion of forwarding charges in the taxable turnover.

In conclusion, the High Court allowed the tax revision case in part, remitting the matter concerning the inclusion of sale proceeds of motor car and purchase turnover of cinnamon leaves back to the Sales Tax Appellate Tribunal for fresh consideration. The Court affirmed the decision regarding the inclusion of forwarding charges in the taxable turnover, based on the findings of fact by the Tribunal. The judgment emphasized the importance of legal scrutiny and factual evidence in determining the components of taxable turnover for the assessee.