Sales tax valuation excludes buyer-supplied mould amortisation where no deeming provision permits notional addition.

The Supreme Court distinguished excise valuation from sales tax turnover and held that the notional amortised cost of moulds and toolings supplied free by the buyer could not be added to the sale price of auto components under the U.P. Trade Tax Act, 1948. Excise law permits inclusion of the apportioned value of buyer-supplied tools, dies and moulds under Section 4 of the Central Excise Act, 1944 read with Rule 6 of the Central Excise Valuation Rules, 2000, but the trade tax regime taxes the agreed consideration for transfer of goods and contains no similar deeming provision. Because the assessee did not incur that cost, the amortisation amount was not part of sale price under Section 3 of the 1948 Act.

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Issues: Whether the amortisation cost of moulds and toolings supplied free of cost by the buyer/customer was includible in the sale price of auto components under the U.P. Trade Tax Act, 1948 by borrowing the valuation concept under the Central Excise Act, 1944 and the Central Excise Valuation Rules, 2000.

Analysis: The Court distinguished the scheme of excise duty from sales tax. Excise is a levy on manufacture and its measure is the value of excisable goods, determined under Section 4 of the Central Excise Act, 1944 read with Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, which specifically permits notional addition of the apportioned value of tools, dies and moulds supplied by the buyer. By contrast, the U.P. Trade Tax Act, 1948 taxes turnover of sales and focuses on the agreed consideration for transfer of property in goods. Since the Act contains no corresponding deeming provision authorising inclusion of notional amortised cost, the excise valuation principle could not be bodily lifted into the sales tax regime. The moulds were manufactured at the buyer's cost, and the appellant had not incurred that cost in its own hands; therefore, such notional amortisation could not be treated as part of the sale price under Section 3 of the 1948 Act.

Conclusion: The amortisation cost of moulds was not includible in the sale price of the auto components under the U.P. Trade Tax Act, 1948, and the assessee's contention succeeded.

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