STATE OF GUJARAT Vs. JAYANTILAL BHIMJI AND SONS
HIGH COURT OF GUJARAT
STATE OF GUJARAT
Referred Judgements :-
NEMKUMAR KESRIMAL V. COMMISSIONER OF SALES TAX MADHYA PRADESH
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A.D.DESAI, B.K.MEHTA -
(1.)The question which arises for consideration in this reference is this whether certain amounts recovered by a dealer from its customers for expenses of postage telephone call charges and bank charges by separately adding at the end of bills are to be considered as valuable consideration in respect of transaction of sales entered into between the dealer and its customers. To state briefly the facts leading to the reference are that the opponent is a dealer carrying on business of reselling food grains oil-seeds oil etc. and is also acting as a commission agent. He is registered as a dealer under the Bombay Sales Tax Act 1959 referred to as the Act). In the sale bills issued by the opponent he has separately charged the price of the goods and certain expenses like packing octroi weighment brokerage etc. which are incidental to the sale of the goods and has included the expenses of packing octroi weighment brokerage etc. in the sale price of the goods and has recovered and paid the tax thereon. The opponent also recovered certain amounts of expenses for postage call-charges and bank charges by separately adding at the end of the bill. These amounts were not included in the turnover of sales by the opponent. The Sales Tax Officer added to the turnover of sales Rs. 19 743 which equals to 75 per cent of the total of such charges; Rs. 27 378 for postage call-charges and bank charges during S. Y. 2024 and levied tax thereon. Against this assessment order there was an appeal before the Assistant Commissioner who held that such charges formed part of turnover of sales and confirmed the order passed by the Sales Tax Officer. Against this decision of the Assistant Commissioner the matter was taken in second appeal to the Tribunal and the Tribunal came to the conclusion that the amounts recovered as postal charges telephone call charges and bank charges were not included in the sales price as they were charges for services rendered by the dealer to his customers in general. Such charges could not be equated with consideration for transfer of property in goods. At the instance of the Department the Tribunal has referred the following question to us:
"Whether on the facts and in the circumstances of the case on correct interpretation of clause (29) of sec. 2 of the Bombay Sales Tax Act 1959 postage trunk-call charges and bank charges included in sale bills she had not be added to the turnover of sales of the opponent affected during Samvat year 2024 ?
(2.)Now the sales tax that is charged in this State is recovered on the basis of the turnover of the sales of a dealer. Sec. 2(36) of the Act defines the expression turnover of sales and the said definition is as follows:
"2(36) : turnover of sales means the aggregate of the amounts of sale price received and 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 a purchaser in respect of any goods purchased and returned by the purchaser within the prescribed Period".
The turnover is thus aggregate of the amounts of the sale price. The expression sale price is defined in sec 2(29) of the Act and the same is as follows:
"2(29) sale price means the amount of valuable consideration paid or payable to a dealer for any sale made including any sum charged for anything done by the dealer in respect of the goods at the time of or before delivery thereof other than the cost of insurance for transit or of installation when such cost is separately charged".
The definition of the sale price given in the Act can be divided into three parts. namely (1) amount of valuable consideration paid or payable to a dealer for any sale made; (2) including ally sum charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof and (3) other than the costs of insurance for transit or of installation when such costs is separately charged. The definition thus given is exhaustive one because it defines what the sale price is includes certain charges as sale price and also provides for exclusion of certain charges from it. In the present case there is no dispute that the amount recovered as postal charges telephone call charges and bank charges do not fall in the second part of the definition that is the inclusive part of the definition. What is contended is that the amount recovered as postal charges telephone call charges and bank charges are included with in the first part of the definition and particularly within the words - valuable consideration. The word valuable in the expression valuable consideration means consideration paid or payable in money. The words consideration means the amount agreed between the vendor and the vendee to be paid or payable for the transfer of properly in the goods from the vendor to the vendee. Thus what is the consideration in each transaction of the sale must depend upon agreement between the parties to transaction of sale. Again what is the consideration of a transaction of sale must depend upon the facts of the each case. To this extent there is no dispute and both the learned advocates agree to the said proposition of law. The argument of the learned Government Pleader is typical-and is always advanced on behalf of the revenue-namely that the postal charges telephone call charges and bank charge were charged alongwith the price of the goods and therefore must definitely form part of the sale price. It was also contended that these amounts do not form part of and deduction allowable by rule 46(1) of the Bombay Sales Tax Rules and therefore must form part of the sale price. It was further argued by the learned Government Pleader that the course of the conduct of the dealer in the present case also points out that these amounts were recovered by him as the sale price. He submitted that the findings of the Tribunal are (1) that these charges are added to the invoices or bills irrespective of whether they are incurred or not by a particular vendee (2) that the amounts recovered as bank charges are not what had really been expended for the purpose but something more than that (3) that the postal charges are recovered at uniform rate of 50 paise and (4) that these amounts are not taken from the persons to whom the goods are not sold. He contended that these findings clearly point out that these amounts were recovered by the purchaser as consideration for the transfer of property in the goods to the vendee. As already pointed out earlier whether these charges form part of the sale price or not must depend upon the agreement between the parties. The question is whether there is any agreement between the parties to treat these charges as consideration. Admittedly there is no direct evidence on the point and therefore what is relied upon are the circumstances appearing from the record of the case. It is necessary to notice how the bills are prepared in the present case. The bills first mention the commodities sold with the weight thereof and the rate at which each commodity mentioned therein is sold. Then the total of all the prices at which the commodities are sold is stated. The sale tax paid by the dealer is then mentioned. What is the amount in respect of the postal charges telephone call charges an(i the bank charges is then stated. Then the total of all these items is made out. There is no dispute that postal charges are recovered at uniform rate. The amounts of telephone call charges and bank charges are recovered at varying rates. It is clear from the bills that the amount recovered as postal charges bank charges telephone call charges are stated separately. It was argued by Mr. Desai that these charges were added in the invoices irrespective whether they were incurred into by a particular dealer or not. He contended that this was the finding of the Tribunal. If we go to the judgment of the Tribunal we find that that is not the finding. The Tribunal has observed in its judgment that the bills were produced before them in which no telephone charges were added when the sale price was received by T. T. and in certain cases bank charges included in the bills were refunded. Thus the aforesaid circumstance on which Mr. Desai relied cannot be relied upon for the determination of the question whether telephone charges and bank charges formed part of the sale price. The Tribunal has stated the bank charges are little bit more than what really expended for. It is also found by the Tribunal that postal charges have been collected at uniform rates and these amounts are not taken from those to whom the goods are not sold.
(3.)But these findings of the Tribunal cannot lead to the conclusion that the postal charges. telephone charges or bank charges form part of the sale price. Mere fact that these amounts are included in the bills given by the dealer to the customer cannot lead to the conclusion that they are part of the sales price If these charges form part of the sale price there is no reason why they have been separately stated. There is no material on the record to indicate that the dealer would not have sold the goods if these charges were not agreed to be paid by the vendee. The amounts are charged are for services rendered to customers in general and such service charges cannot be equated with consideration for the transfer of the property in the goods. This is the conclusion of the Tribunal and we do not think the said conclusion is in any way erroneous. The aforesaid conclusion is supported by the decision in Nemkumar Kesrimal v. Commissioner of Sales Tax Madhya Pradesh 6 S.T.C. 222. The question which arose before the Court was whether the amounts charged as Dharmada were included in the sale price. The court negatived the contention that they were included in the sate price and the reason for the said conclusion was that if the amount was price proper it would have been included in the price and not separately charged. The Court further observed that there was no further material to hold that the seller would have refused to perform the agreement if the Dharmada was not paid. The court came to the conclusion that Dharmada amounts were paid willingly by the buyer in addition and they were not included in the sale price. In Shrinivasa Timber Depot and others v. Deputy Commercial Tax Officer Choolai Division Madras 29 and others 23 S.T.C. 158 the question arose whether charges collected as lot cooly charges from the customers by the dealer formed part of the sale price. The practice of the trade was that the customer who went to the timber depot for purchase of timber took meticulous care in selecting good timber and for this specified purpose it would require some labour like lifting up logs of timber cutting them into sizes and placing them in one lot and so on. For this purpose according to the trade practice certain charges were collected under the name of lot cooly charges. The Court held that the said charges were recovered for services rendered and cannot included in the sale price.
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