1997 (3) TMI 579 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the extra consideration raised by the respondent in the invoice is includible in the turnover for tax purposes.
2. Interpretation of the tripartite agreement in the sale of trawlers.
3. Application of Sections 2(s) and 14-A of the Andhra Pradesh General Sales Tax Act, 1957.

Analysis:
1. The respondent, engaged in the manufacture of fishing trawlers, raised invoices claiming higher prices due to an escalation in the cost of imported components. The assessing authority contended that the higher amounts in the invoices should be included in the turnover for tax assessment. However, the respondent argued that the tripartite agreement between the builder (respondent), buyer, and Shipping Development Fund Committee fixed the trawler price, and any escalation required a mutual agreement involving the Ministry of Agriculture. The Court noted that the disputed turnover did not form part of the original agreed price, as per the tripartite agreement. The Tribunal ruled that the disputed turnover represented price variation, not actual receivable amounts, and thus, Section 2(s) did not apply. Instead, the turnover was accountable under Section 14-A of the Act.

2. The Court examined the provisions of Section 2(s), defining "turnover" as the total amount in the bill of sale, and Section 14-A, concerning assessment in cases of price variations. While amounts charged are typically included in turnover, Section 14-A allows for exclusion if the amount is charged but not receivable due to a dispute beyond the assessee's control. The Court emphasized that the authorities must exercise discretion judiciously based on equitable principles when a genuine dispute is established. In this case, the Tribunal's decision to apply Section 14-A was deemed appropriate, as it aligned with the principles of specific provisions prevailing over general ones. Therefore, the Court upheld the Tribunal's judgment, dismissing the revision petition.

In conclusion, the Court affirmed that the disputed turnover, arising from price escalation in invoices, was not automatically includible in the turnover for tax assessment. The specific provisions of Section 14-A, governing price variations, allowed for exclusion when amounts were charged but not receivable due to genuine disputes. The Tribunal's decision to apply Section 14-A in this case was upheld, emphasizing the need for judicious exercise of discretion by tax authorities based on equitable principles.