TMI Blog2019 (4) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... which is clearly an optional payment made by the buyer cannot be regarded as part of the transaction value for the sale of goods - appeal allowed - decided in favor of appellant. - CIVIL APPEAL No. 5282 OF 2005 - - - Dated:- 9-4-2019 - JUSTICE S. A. BOBDE, JUSTICE DEEPAK GUPTA And JUSTICE VINEET SARAN JUDGMENT S.A. BOBDE, J. The appellant-assessee manufacture goods falling under Chapter 24 of the Schedule of The Central Excise Act, 1944 (hereinafter referred to as the Act ). While selling goods, the appellant-assessee charged the customers invoices for the price of goods plus Dharmada, a charitable donation. According to the appellant, the Dharmada was paid voluntarily by customers and was meant for charity. It was accordingly credited to charity. 2. However, the Superintendent, Central Excise, Nashik issued show cause notices and raised a demand of duty in respect of Dharmada, claiming it was part of the price for the sale of manufactured goods and included it for computing assessable value. 3. Initially, the Adjudicating Authority held that the Dharmada component was not part of the trading receipts and could not be included in the assessable value and dro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he surcharge was a part of the price fixed by the committee under the statutory provisions. The appellant s contention was that the decision in Panchmukhi (supra) which merely followed the decision in Tata Iron Steel (supra) was no authority for the proposition that Dharmada being a donation for charitable purposes was liable to be included in the assessable value. 7. In addition, the appellant contended that this Court has clearly held in the case of The Commissioner of Income Tax (Central) Delhi, New Delhi vs. Bijli Cotton Mills (P) Ltd. Hathras, District Aligarh (1979) 1 SCC 496 that amounts received for Dharmada and earmarked for charitable purposes are amounts received by the assessee under an obligation to spend the same for charitable purposes. Therefore, these receipts cannot be regarded as income of the assessee. 8. On noticing the above contentions, a Division Bench of this Court vide order dated 29.7.2015 has referred the following question to this larger Bench: - Whether the Dharmada collected by the appellant which is clearly an optional payment made by the buyer can be regarded as part of the transaction value for the sale of goods. 9. An important fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods . 14. In case of a sale of goods, excise duty is chargeable where price is the sole consideration of a sale on `Transaction value . `Transaction value means the price actually paid or payable for the goods and any additional amount the buyer is liable to pay to the assessee or anyone on his behalf in connection with the sale vide Section 4(3)(d) supra. Rule 6 of the Central Excise Valuation (Determination of Price and Excisable Goods), Rules 20006 provides that in case of a sale, the value of such goods shall be deemed to be the transaction value and the amount of money value of any considerations following directly or indirectly from the buyer to the assessee. Thus, duty is chargeable on the price actually paid for the goods , in other words, the price paid as consideration for transfer of property in the goods. The test for determining whether in a transaction of sale any amount has been paid as price so that it can be treated as transaction value is only whether, the money was paid for the goods as consideration or the money value on any additional consideration pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the sale price which was evident from the fact that such realisations were never credited to the trading account nor shown in the profit and loss statement for any year. This Court considered the question in great detail and after referring to Professor Wilson s Glossary and Molesworth s Dictionary observed that Dharmada means an alms or a gift in charity . This Court observed that though there might be some vagueness as a matter of law, in the word Dharma, there was none in relation to Dharmada or Dharmadaya and such a payment would not be invalid for vagueness or uncertainty. This Court accepted the decision of the Allahabad High Court in Thakur Das Shyam Sunder vs. Additional CIT 93 ITR 27 and observed that it cannot be disputed that among the trading or commercial community in various parts of the country, a gift or payment for Dharmada is by custom invariably regarded as a gift for charitable purposes . This Court observed that the answer to the question depended on the nature of the obligation created by the customer and approved the finding of the Allahabad High Court to the effect that merely because under the law relating to trust legal ownership over the trust fund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but a payment for the specific purpose of being spent on charitable purposes. ... 19. In this case, the CESTAT decided against the assessee relaying on Panchmukhi (supra). The case of Panchmukhi (supra) was apparently decided not after a discussion on facts and law but because the counsel for the revenue submitted that the matter is covered by the decision in Tata Iron Steel (supra) and the counsel for the assessee was not in a position to dispute this legal position . The judgment in Panchmukhi (supra) has little precedential value. The point whether Dharmada involved in Panchmukhi (supra) and the surcharge held as price in Tata Iron Steel (supra) were identical and liable to be included in the transaction value passed sub-silentio. Salmond on Jurisprudence Twelfth Edition p.15h states that a decision held is not binding since it was decided without argument, without reference to the crucial words of the rule, and without any citation of authority , therefore, would not be followed. The author also states that precedents sub-silentio and without arguments are of no moment. This is enough reason for not treating the decision in Panchmukhi (supra) as a binding precede ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances we hold that when an amount is paid as Dharmada along with the sale price of goods, such payment is not made in consideration of the transfer of goods. Such payment is meant for charity and is received and held in trust by the seller. If such amounts are meant to be credited to charity and do not form part of the income of the assessee they cannot be included in the transaction value or assessable value of the goods. 24. Thus, the answer to the question referred by the Division Bench is as follows: - The Dharmada collected by the appellant which is clearly an optional payment made by the buyer cannot be regarded as part of the transaction value for the sale of goods. 25. The judgment of the CESTAT is accordingly set aside. The appeal is allowed. 4 Section 4 of The Sale of Goods Act, 1930 4. Sale and agreement to sell.- (1) A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one part-owner and another. (2) A contract of sale may be absolute or conditional. (3) Where under a contract of sale the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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