Feedback   New User   Login      
Tax Management India. Com TMI - Tax Management India. Com
Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Case Laws Manuals Short Notes Articles SMS News Highlights
        Home        
Extracts
Home List
← Previous Next →

The Commissioner of Sales Tax, Maharashtra State, Bombay Versus M/s. Ravi Trading Company,

2017 (10) TMI 490 - BOMBAY HIGH COURT

Valuation - Interpretation of Statute - clause (29) of section 2 of the Bombay Sales Tax Act, 1959 and clause (h) of Section 2 of the Central Sales Tax Act, 1956 - insurance charges and carrying charges - includibility - whether insurance charges and carrying charges forms part of sale price - Whether on the facts and in the circumstances of the case and on a true and correct interpretation of clause (29) of section 2 of the Bombay Sales Tax Act, 1959 and clause (h) of Section 2 of the Central S .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

different intention appears, the rules contained in Sections 20 to 24 are the rules for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer. It is thus, the transfer of right to use the goods is deemed to be sale of goods, attracting the incidence of tax. - In the present case, passing of the property in goods to the buyer is at the place and time of spot delivery. After the sale is complete, even if the assessee­sellor retains .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ing of Section 2(29) of the BST Act. - The Tribunal was justified in holding that the insurance charges and carrying charges do not form part of the sale price for the reason that the sale was completed at the point of spot delivery and the insurance and carrying charges were incurred thereafter - question is answered in the affirmative - decided against Revenue. - Sales Tax Reference No. 02 of 2004 - Dated:- 10-10-2017 - R. K. DESHPANDE, AND MANISH PITALE, JJ. Shri S.M.Ukey, Addl.Govt. Pl .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

56, the Tribunal was justified in law in holding that the insurance charges and carrying charges do not form part of the sale price? (ii) Whether on the facts and in the circumstances of the case and on a true and correct interpretation of clause (c) of sub­section (2) of section 36 read with Explanation (I) to the Bombay Sales Tax Act, 1959, the Tribunal was justified in law in deleting the penalty by placing reliance on the ratio of the decision of the Bombay High Court in case of Indoswe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

considered being the landmark judgment throwing light on the controversy involved and considered by the Tribunal also. In the said decision, the Apex Court considered the question as to whether in sales of cement effected under the Cement Control Order, 1967, the amount of freight forms part of the sale price so as to be exigible to sales tax under the provisions of the Rajasthan Sales Tax Act, 1954 and the Central Sales Tax Act, 1956. The Apex Court considered the provisions of Section 3 of th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ved or receivable by a dealer in respect of the sale or supply of goods...... . 4] The Court considers the definition of sale price given in Section 2(p). The relevant portion of it is reproduced below; …. the amount payable to a dealer as consideration for the sale of any goods, less any sum allowed as cash discount according to the practice normally prevailing in the trade, but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the net consideration retainable by the dealer. 5] The Court in para 8, takes into consideration a case where a dealer transports goods from his factory to his place of business and sells them at a price which is arrived at after taking into account 'freight and handling charges' incurred by him in transporting the goods. The Court holds that the amount of 'freight and handling charges' included in the price would obviously be the part of the 'sale price', because it wou .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the meaning of first part of the definition. 6] The Court thereafter considers another example based upon the contract of sale entered into between the parties, where the dealer instead of transporting the goods from his factory or his place of business and selling them there, enter into a contract of sale freight on rail (F.O.R.) destination railway station. Where such a contract is made, the seller undertakes an obligation to put the goods on rail and arrange to have them carried to the destin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed price and not as freight vis­a­vis the dealer. The amount of freight paid by the purchaser and shown in the bill as deducted from the agreed price would, therefore, clearly form part of sale price and fall within the first part of the definition. 7] In para 10 of the said decision, the Court, however, deals with a distinctive case where the contract of sale may not be F.O.R. destination railway station, but the price alone may be so. The Court holds that the contract does not have all .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tation. The Court holds that the amount representing freight would not be payable as part of the consideration for the sale of the goods but by way of reimbursement of the freight which was payable by the purchaser, but, in fact, disbursed by the dealer and hence it would not form part of the 'sale price'. 8] In paragraph 16, the Apex Court considers the latter part of the definition of 'sale price' containing the exclusion of the amount of freight from 'sale price'. It c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e time of or before the delivery thereof are covered by the inclusive clause. It holds that the exclusion clause does not operate as an exception to the first part of the definition and it merely enacts an exclusion out of the inclusive clause and takes out something which would otherwise be within the inclusive clause. It holds that obviously, therefore, this exclusion clause can be availed of by the assessee only if the State seeks to rely on the inclusive clause for the purpose of bringing a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ST Act ) as well as the Central Sales Tax Act, 1956 (in short the CST Act ), as dealer. In the return filed by the assessee for the period from 25.10.1984 to 12.11.1985 and 13.11.1985 to 02.11.1986 under the provisions of BST and CST Acts, the deduction of amount of insurance of ₹ 51,373/­ and freight/carrying charges of ₹ 11,00,523/­ was claimed on the ground that the same do not constitute 'sale price' as defined under Section 2(29) of the BST Act and Section 2(h) o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ders the services to the buyer, the charges in respect of insurance and carrying are the post sale charges which canot be legally included in the sale price. The Tribunal, therefore, takes the view that the charges of insurance and freight/carrying charges in the present case levied by the assessee after delivery of the goods do not form part of the sale price and should, therefore, be exempted from the sale. 11] In the order of reference, the Tribunal considers the decision of the Apex Court in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

espect of the goods sold are included in the sale price because the assessee retains physical possession of the goods, even if, sale was on the spot delivery. 12] The question to be considered in this case is whether the Tribunal was justified in the facts and circumstances of this case in holding that the insurance charges and carrying charges do not form part of the sale price? Though we are concerned in this reference with the assessment made under the provisions of BST and CST Acts, it would .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

made on or after the notified day. The turnover of sales is defined under Section 2(36) of the BST Act means the aggregate of the amounts of sale price received or receivable by a dealer in respect of any sale of goods made during a given period after deducting the amount of sale price, if any, refunded by the dealer to purchaser, in respect of any goods purchased and returned by the purchaser within the prescribed period. 14] Section 2(29) of the BST Act defines sale price . The relevant porti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ex Court in the judgment in Hindustan Sugar Mill's case, cited supra. The first part says that 'sale price' means the amount of valuable consideration paid or payable to a dealer for any sale made and the only relevant question to be asked in respect of it is, what is the amount payable by the purchaser to the dealer as consideration for sale and not as to what is the net consideration retainable by the dealer. The latter part of the definition of 'sale price' in the present .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ly if the State seeks to rely on the inclusive clause for the purposes of bringing the particular amount within the definition of sale price . 15] In the order of reference, the Tribunal has held that it is possible to take a view that the insurance and carrying charges incurred by the buyer after sale of goods constitute a sale price because the seller has retained the possession even in case of spot delivery. This is also the contention raised by Shri Ukey, the learned Additional Government Pl .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ct of the goods at the time of or before the delivery thereof. The finding in this case by theTribunal is that the charges in respect of insurance and carrying are the post­sale charges, which cannot be included in the sale price, and we agree with it. 16] Shri Ukey, the learned Additional Government Pleader has urged that the insurance and carrying charges would constitute a sale price of the goods in question. He has relied upon the decision of the Apex Court in Hindustan Sugar Mills case, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

al in the present case. 17] In the decision of M/s. India Meters Limited vrs. State of Tamil Nadu, delivered by the Apex Court in Civil Appeal No. 1032­33 of 2003, decided on 07.09.2010, relied upon by Shri Ukey, the learned Additional Government Pleader, it was the obligation to pay freight as the goods were to be delivered to the premises of buyer which was incurred by the seller and therefore, the Apex Court has held that the amount of freight was included in the definition of sale price .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the sale was agreed to be effected, render it the point or the location at which the sale can be said to have been completed. Had the sale been completed at the factory gate, the expenses incurred thereafter by way of freight charges would then be capable of being regarded as expenditure which was in the nature of a post­sale expenditure and, if paid by the seller, regarded as an amount paid by such seller on behalf of the buyer . In view of above, it is clear that if the sale was completed .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

produced below : 19. Property passes when intended to pass.­­ (1) Where there is a contract for the sale of specific or ascertained goods, the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred. (2) For the purpose of ascertaining the intention of the parties regard shall be had to the terms of the contract, the conduct of the parties and the circumstances of the case. (3) Unless a different intention appears, the rules co .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the intention of the parties as to the time at which the property in the goods is to pass to the buyer. It is thus, the transfer of right to use the goods is deemed to be sale of goods, attracting the incidence of tax. 19] In the present case, the Tribunal has recorded in para 12 of its judgment dated 07.06.1996 delivered in Second Appeal Nos.1337, 1338 and 1339 of 1991 that the perusal of the documents will show the following facts : (a) Delivery is a spot delivery; (b) Insurance charges are as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Discussion Forum
what is new what is new
 


Share:            

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version