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2017 (8) TMI 344 - HC - VAT and Sales TaxValuation - includibility - designing charges - tooling cost - Whether on the facts and circumstances of the case, the Tribunal was justified in law in holding that designing charges and tooling cost reimbursed to the applicant by its customer forms part of sale price as defined u/s.2(29) of the Bombay Sales Tax Act, 1959? Held that: - The payment of designing and tool cost is necessary concomitant of the final sale price of the seating system. The amount of money which goes from the pocket of the vendee to the pocket of the vendor as a consideration for passing of the property in the goods is the “sale price”. It is the amount but for the payment of which the vendor would not transmit his title of the goods in favour of the vendee. The applicant / seller would not deliver / sale the seating system without recovering the cost of designing and moulds required for manufacture of seating system. The cost paid towards designing and tooling is a part of the same series of transaction of sale of seating system. The sale cannot be segregated. It is also not the case that the said tools are provided by the customer / buyer. The design and tools are prepared by the applicant to enable the applicant / vendor to manufacture seating systems. The development charges for design and tooling and price of seating system is artificially being segregated to avoid payment of sales tax. Without payment of designing and tooling cost, the applicant would not part with the seating system. The definition of “purchase price” will have to be read in conjunction with the “sale price”. The production / manufacture of the seating system is only on the basis of the said mould which is designed. Without the said mould, the seating system could not be manufactured. The said mould is retained by the vendor. The said mould cannot be used for any other purpose. The development charges for the mould is agreed to be charged and paid as a part of the contract of supply of seating system. The development charges for designing and tool have inescapable bearing on the delivery of the seating system and, therefore, they will have to be held as part of the sale price of the seating system. The said designing charges and tooling cost reimbursed to the applicant by its customers, would form part of the “sale price” as defined under Section 2(29) of the Bombay Sales Tax Act - appeal dismissed - decided against appellant-assessee.
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