TMI Blog2020 (1) TMI 937X X X X Extracts X X X X X X X X Extracts X X X X ..... ions raised by the appellants/assessees in these cases. It is stated that all the materials were very much available with the adjudicating authority at the time of original assessment itself and that there was no instance of any suppression or non-disclosure of the full materials necessary for the assessment by virtue of which no reassessment proceeding could have been initiated, pursued or finalized by the adjudicating officer. However, based on the observation that the question still would be whether, in the present case, the Assessing Authority was satisfied or not, a decision was rendered as contained in paragraphs 30 and 31 holding that it was not so, and hence decided against the Revenue. When all any tax is to be paid on the freight charges as well, by virtue of the specific terms agreed between the appellants/suppliers/ dealers and the respondent-Bhilai Steel Plant (BSP)/buyer, it has to be shifted to the shoulders by the respondent-BSP or not? - HELD THAT:- The question whether freight was forming part of the sale price was never subjected, considered or any opinion was expressed in this regard by the adjudicating officer in the first round of the proceedings. This e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing undue reliance on the verdict passed by the apex court in Hindustan Sugar Mills Ltd. v. State of Rajasthan [1979] 43 STC 13 (SC) ; [1978] 4 SCC 271, where the finding was based on the control orders issued by the State which governed the field and not applicable to the cases in hand by virtue of very nature of the commodities sold and transported. 4. The appellants are engaged in the trade of selling dolomite, quartzite, runner sand, silica, etc. On satisfaction of the credentials, an agreement has been executed between the appellants and the respondent-BSP for the sale of dolomite, specifically agreeing to the unit sale price exmines, the royalty/cess payable, the rate and the quantum of tax to be satisfied and also the freight charge , to be billed separately and to be borne by the buyer. It was accordingly, that the goods were being sold and transported by the appellants and due payments were being effected by the BSP without any complaint. 5. On filing return, the assessment was finalized by the Commercial Tax Officer fixing the taxable turnover in terms of section 2(w) of the Act, 1994, and showing the tax and such other payments to be effected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apex court in India Meters Limited v. State of Tamil Nadu [2010] 34 VST 273 (SC) ; [2010] 9 SCC 423. The observation of the apex court in paragraphs 18, 19 and 38 of the said decision were also extracted, to hold that freight charge was definitely to form part of the sale price and that the second limb of the definition under section 2(u) of the Act, 1994 would never be applicable to the cases of the assessees. The learned single judge (Kasturchand Bafna v. State of Chhattisgarh [2017] 100 VST 251 (Chhattisgarh)) also held that, it was never a case of change in opinion , but a clear case of escape of assessment, which was held as squarely coming within the purview of section 28 of the Act, 1994 and hence that the assessing officer had rightly invoked the jurisdiction to fix the liability. It was accordingly, that interference was declined and writ petitions were dismissed as per the common judgment dated December 7, 2016 (Kasturchand Bafna v. State of Chhattisgarh [2017] 100 VST 251 (Chhattisgarh)), which is under challenge in the appeals preferred by the different asses- sees/writ petitioners. 8. Mr. Neelabh Dubey, learned counsel for the appellants, led the argu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.46 (d) Freight by road on pre-paid door delivery basis = Rs. 362.05 Landed cost = Rs. 622.03 per m/t. Obviously, no tax was worked out on the freight charges , despite it was surely to form part of the landed cost . The agreement further stipulated that door delivery was to be effected and it was for the dealer to meet the task of loading, unloading, transportation and stacking at the premises of the buyer. All these activities were included in the total landed cost. Under section 28(1) of the Act, 1994, three circumstances are envisaged to facilitate reassessment and since no tax was assessed on the freight charges , it was a case of escapement of tax and hence the proceedings for reassessment are stated within the four walls of law. The intention of the contracting parties is stated as more clear from clause 15 of annexure P/4 agreement, to effect the supply on door deli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lants/suppliers and the BSP/buyer and there is no statutory liability and that the claim is highly barred by limitation as well. It is also brought to the notice of this court that, at no point of time, was there any demand from the appellants/ assessees to the respondent/BSP claiming any amount under any head as involved in the present case and hence no liability can be sought to be shifted to the shoulders of the respondent- BSP. 12. Based on the rival submissions as above, the first question to be considered is whether the freight charges stand excluded from the purview of sale price as defined under section 2(u) of the Act, 1994 for fixing the taxable turnover as defined under section 2(w) of the Act, 1994. For easy understanding, it will be appropriate to extract section 2(u) of the Act, 1994 as given below : Section 2(u). 'Sale price' means the amount payable to a dealer as valuable consideration for the sale of any goods less any sum allowed as cash discount according to ordinary trade practice but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before delivery thereof other than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the common judgment. We find it appropriate to have the same extracted for easy reference (pages 255 and 256 in 100 VST) : 8. Weighment : Weighment done at BSP weigh bridge shall be final for the purpose of payment. However in case of despatch by rail if wagons escape weighment at BSP or at both ends, RR weight shall be final for payment. 13. Price : The breakup of landed cost per tonne is as under : (a) Exmines rate per tonne inclusive of royalty and LWC : Rs. 149.04 (b) Sales/Commercial tax at 4% : Rs. 5.96 (c) Freight by road on pre-paid door delivery basis : Rs. 95.00 Landed cost per tonne : Rs. 250.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 2(u) of the Act, 1994, despite which the sale/commercial tax has been admittedly worked out and paid only on the unit price without including the said element. 15. Coming to the escalation clause (paragraph 14 of the agreement), it clearly speaks about the fact that the price of the contract shall remain firm during the pendency of the contract and no escalation would be payable on any ground whatsoever, including freight (for road supplies), however, conceding payment due to change in the statutory levies as mentioned therein. Under paragraph 17 of the agreement, the onus on the part of the dealer/supplier to transport the materials by truck from the supplier's mines to the BSP/purchaser, also arranging the loading, unloading into bunkers and proper stacking of the material in the bed is clearly stipulated, also alerting that the transportation charges would be paid only to the supplier along with the bills and never directly to the transporter. Even a cursory look at the above specific terms agreed between the parties shows that the purchaser would become the owner of the goods supplied by the dealer/supplier only on effecting the supply at the purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales tax or freight. The only relevant question to ask is as to what is the amount payable by the purchaser to the dealer as consideration for the sale and not as to what is the net consideration retainable by the dealer. 18. It is very pertinent to note that the definition of the term sale price under section 2(p) of the Rajasthan Sales tax Act, 1954 dealt with by the apex court is exactly similar, as defined under section 2(u) of the Act, 1994 involved in the present case. The illustration given by the apex court with regard to two different situations as to when the sale is complete, is quite evident from paragraphs 8 and 9 of the above judgment. We find it appropriate to extract the relevant portion of said two paragraphs for easy understanding of the case (pages 27 to 30 in 43 STC) : 8. Take for example, excise duty payable by a dealer who is a manufacturer. When he sells goods manufactured by him, he always passes on the excise duty to the purchaser. Ordinarily, it is not shown as a separate item in the bill, but it is included in the price charged by him. The 'sale price' in such a case could be the entire price inclusive of excise duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndling charges' would he payable by the purchaser not under any statutory or other liability but as part of the consideration for the sale of the goods and it would, therefore, Form part of 'sale price' within the meaning of the first part of the definition. This position is also well-settled having regard to the decisions of this court in Dyer Meakin Breweries Ltd. v. State of Kerala [1970] 26 STC 248 (SC) ; [1970] 3 SCC 253. . . . 9. We may now take another example which is very much near to the one which we have already discussed. The dealer may, instead of transporting the goods from his factory or his place of business and selling them there, enter into a contract of sale f. o. r. destination rail way 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 destination railway station at his expense. The delivery of the goods to the purchaser in such a case is complete at the destination railway station and till then the risk continues to remain with the dealer. The freight is payable by the dealer since he has to arrange for the goods to be carried by rail to the desti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a bearing in the turnover defined under section 2(w) of the Act, 1994. The submission of learned counsel for the appellant that the law declared by the apex court in Hindustan Sugar [1979] 43 STC 13 (SC) ; [1978] 4 SCC 271 was with reference to the effect of the control order issued by the Government and hence it stands on the different footing, does not have any pith or substance. It is with reference to the legal position mentioned therein, that the learned single judge (Kasturchand Bafna v. State of Chhattisgarh [2017] 100 VST 251 (Chhattisgarh)) has decided the lis involved in the present case, which according to us is correct and proper. 20. With regard to the second ground raised, i. e., as to reassessment , it is relevant to note the nature of contentions raised by the appellants/assessees in these cases. It is stated that all the materials were very much available with the adjudicating authority at the time of original assessment itself and that there was no instance of any suppression or non-disclosure of the full materials necessary for the assessment by virtue of which no reassessment proceeding could have been initiated, pursued or finalized by the adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the Division Bench of Delhi High Court in BLB Limited v. Assistant Commissioner of Income-tax [2012] 343 ITR 129 (Delhi), Telangana and Andhra Pradesh High Court in Kumar's Metallurgical Corporation Ltd. v. Joint Commissioner of Income-tax (Assessment) [2018] 406 ITR 386 (T AP) and High Court of Madhya Pradesh at Jabalpur in Orient Paper Mills Ltd. v. Commissioner of Sales Tax, M. P. [1983] 54 STC 195 (MP). 23. The point considered by the apex court in Indian Eastern Newspaper Society [1979] 119 ITR 996 (SC) ; [1979] 4 SCC 248 was whether the view expressed by an internal audit party of the Income-tax Department on a point of law be regarded as information for the purpose for initiating proceeding under section 147(b) of the Income-tax Act, 1961. The matter came up for consideration before the apex court, pursuant to a reference made by the Income-tax Appellate Tribunal directly under section 257 of the Act, 1961, as the opinion expressed on the question was divided among various High Courts. The assessee in the said case, which was a professional organization of newspapers, also owned a conference hall and rooms which were being let out on rent. In re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1956 (for short, the Act, 1956 ) rice and paddy were declared goods, being goods of special importance, and were liable to be taxed at the point of first purchase, under the relevant notification issued in this regard. The assessee claimed set off under section 15(c) of the Act, 1956 in respect of purchase tax already paid on the purchase of paddy within the State of Uttar Pradesh against the tax liability created under the Act, 1956 ; which was allowed by the assessing authority as per assessment order dated December 31, 2003. Years later, the Commissioner of Trade Tax, Uttar Pradesh issued a circular dated March 29, 2007 to the effect that section 15(c) of the Act, 1956 would not contemplate setting off the tax liability on paddy purchased within the State of Uttar Pradesh, with the tax liability on the inter-State sale of rice and that no deduction was permissible, in turn directing the assessment orders to be revived and pursued. Since the stipulated period for initiating proceedings under section 21(1) of the Act, 1948 had lapsed, sanction was sought for and obtained, followed by a notice under section 21(2) of the Act, 1948 as to why the reassessment be not effected. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of change in opinion ; adding further that the assessing officer has no power to review, though he has power to reassess. It was applying the said law, that the Division Bench of the Delhi High Court held in BLB Limited [2012] 343 ITR 129 (Delhi) (paragraph 11) that, if in the course of original assessment proceedings, the assessing officer has considered and examined a particular aspect, the said aspect cannot be made a ground to reopen and initiate reassessment proceedings ; in turn, quashing the reassessment notice issued to the assessee. Here again, it is to be noted that the question whether freight paid/agreed to be paid in the instant case would form part of the sale price was never a point considered by the assessing officer and no opinion was expressed by him ; by virtue of which, it is not a case of mere change in opinion . 26. In the case dealt with by the Division Bench of the Telangana and Andhra Pradesh High Court in Kumar's Metallurgical Corporation Ltd. [2018] 406 ITR 386 (T AP), the appellant/assessee, who was engaged in the trade of pig iron had gone for public issue in the relevant assessment year. The issue was oversubscribed and the excess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red in Orient Paper Mills Ltd. [1983] 54 STC 195 (MP). Of course, it was a case involving the very same statute, i.e., the Madhya Pradesh General Sales tax Act, 1958. The learned counsel submits that the Bench has held in paragraph (6) that the law declared by the apex court in Hindustan Sugar [1979] 43 STC 13 (SC) ; [1978] 4 SCC 271 was a case relating to sale of cement under the control order and that the Supreme Court had held in the said case that in view of the special provision contained in control order , the freight formed part of the sale price ; whereas in the case before the Madhya Pradesh High Court was not governed by any control order ; in turn answering the question that the freight charged by the assessee in the bill and actually paid by the purchaser at the destination did not form part of the sale price. But, here, it is very relevant to note that the Bench had referred to the different situations of sale and the burden to transport the materials, to infer whether the freight would form the part of the sale price. In the said context, the specific conditions as borne by the terms of contract, particularly condition Nos. (6) and (7) involved in the said case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on railway station, the delivery is complete when the goods are put on rail and the risk also passes to the purchaser thereafter, making the railway the agent of the purchaser. The freight in this class of cases is payable by the purchaser though the price agreed upon is f.o.r. destination railway station. The price of the goods receivable in such cases is thus the f.o.r. destination price less the amount of freight payable by the purchaser. Both these types of cases have been discussed in paragraphs 9 and 10 of the judgment in Hindustan Sugar Mills Ltd. v. State of Rajasthan [1979] 43 STC 13 (SC) ; AIR 1978 SC 1496. The question before us, therefore, is whether the case before us falls in the first or the second category. Having considered the terms of the contract contained in the sale note, we are of the opinion that although the price charged was f.o.r. destination railway station, the contract was not f.o.r. destination railway station. A reading of clauses (6) and (7) of the sale note which are reproduced above go to show that all risks including damages, loss, pilferage, theft, fire acci dent, etc., passed on to the buyer with the delivery of goods to the carrier and the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration before the learned single judge (Kasturchand Bafna v. State of Chhattisgarh [2017] 100 VST 251 (Chhattisgarh)) was whether the Chhattisgarh Entry Tax (Amendment) Act, 2014, which was made effective from April 1, 2014 defining to the word market value , will have prospective effect or whether such amendment could be used retrospectively to reopen assessments already made, in exercise of the power under sub-section (1) of section 22 of the Chhattisgarh Value Added tax Act, 2005. Placing reliance on the verdict passed by the apex court in Kelvinator of India Ltd. [2010] 320 ITR 561 (SC) ; [2010] 2 SCC 723 it was held that the concept of change in opinion is an inbuilt safeguard in all reassessment proceedings, otherwise power to reassess would become power to review and it would give arbitrary power to the assessing officer to open concluded assessment on mere change in opinion. There is no dispute that, there cannot be any reassessment merely on change of opinion . According to us, the said judgment does not come to the rescue of the appellants/assessees in any manner, in view of the black and white difference in the factual context. 29. Coming to the law de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence, the audit objections were well within the para meters of being construed as 'information' for the purpose of section 19 of the State Act. 28. The expression 'information' means instruction or knowledge derived from an external source concerning facts or parties or as to law relating to and/or after bearing on the assessment. We are of the clear view that on the basis of information received and if the asses sing officer is satisfied that reasonable ground exists to believe, then in that case the power of the assessing authority extends to re-opening of assessment, if for any reason, the whole or any part of the turnover of the business of the dealer has escaped assessment or has been under assessed and the assessment in such a case would be valid even if the materials, on the basis of which the earlier assessing authority passed the order and the successor assessing authority proceeded, were same. The question still is as to whether in the present case, the assessing authority was satisfied or not. However, based on the observation that the question still would be whether, in the present case, the Assessing Authority was satisfied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price (in view of the specific terms of the agreement stipulating payment of the landed cost on door delivery basis), defined under section 2(u) of the Act, 1994. The question whether freight was forming part of the sale price was never subjected, considered or any opinion was expressed in this regard by the adjudicating officer in the first round of the proceedings. This escape of assessment was found by the Audit Department, which was taken as a piece of information by the adjudicating officer, who on application of mind, held that there was reason to believe that it had escaped assessment ; in turn leading to the proceedings under section 28 of the Act, 1994. Thus, the order passed by the adjudicating officer, which has become final, based on the interference declined by the statutory authorities and affirmation of the said proceedings by the learned single judge of this court (Kasturchand Bafna v. State of Chhattisgarh [2017] 100 VST 251 (Chhattisgarh)), is perfectly within the four walls of the law and it is not assailable under any circumstances. We do not find any merit in the appeals and they are dismissed accordingly. - - TaxTMI - TMITax - CST, VAT & Sale ..... X X X X Extracts X X X X X X X X Extracts X X X X
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