- (1.) THE appellant, the Food Corporation of India, appeals against the judgment dated March 30, 1984, of the High Court of Kerala dismissing its tax revision petitions.
(2.) ON November 29, 1969, the appellant entered into an agreement with the Government of Kerala for the distribution of certain articles and commodities covered by the Kerala Rationing Order, 1966. Under the agreement the appellant was required to collect administrative surcharge and the price equalisation charge from the retailers due by them to the Government in accordance with the rates fixed by the Government from time to time. For the assessment years 1969-70 to 1972-73, the appellant was assessed to sales tax under the Kerala General Sales Tax Act, 1963, on turnover which included the amount of the administrative surcharge and price equalisation charge collected by the appellant from the retailers. The appellant contended in appeal before the Appellate Tribunal that the amounts recovered by way of administrative surcharge and price equalisation charge could not be included in the taxable turnover because that was not part of the price of the goods supplied by it. The contention was rejected by the Appellate Tribunal. The revision petitions filed by the appellant thereafter were dismissed by the High Court of kerala. In this appeal the only question is whether the administrative surcharge and price equalisation charge could be legitimately included in the turnover of the appellant assessable to tax under the kerala General Sales Tax Act, 1963. It is plain from the provisions of the agreement between the appellant and the Government of Kerala that the administrative surcharge and price equalisation charge were the liabilities of the retailers to the Government and that when the agreement provided for their collection by the appellant from the retailers, the appellant functioned merely as a collecting agent on behalf of the Government. In other words, the appellant functioned as a conduit pipe through which collections of administrative surcharge and price equalisation charge passed from the retailers to the Government. The two items were never part of the price. The price in fact was specifically determined under a separate provision of the agreement. Accordingly we hold that the assessing authority, the Appellate Tribunal and the High Court erred in including that turnover in the assessment of the appellant. It may be mentioned that subsequently the State Government itself issued a notification dated May 2, 1978, exempting from sales tax the turnover relating to the administrative surcharge and price equalisation charge in the assessment proceedings of the appellant. Our attention has been drawn to the decision in Thannirangad Service Co-operative Society Ltd. v. State of Kerala [1980] 46 STC 464 (Ker) referred to in the order made by the Appellate Tribunal. We are not satisfied that the decision lays down the correct position in law.
(3.) THE appeals are allowed and the orders of the High Court and the Appellate Tribunal are set aside in respect of the administrative surcharge and the price equalisation charge included in the assessments of the appellant for the assessment years 1969-70 to 1972-73. The tax paid by the appellant in respect of these two items shall be refunded by the respondents expeditiously. There is no order as to costs.;