Service charges in timber sales are not taxable turnover unless they form part of sale consideration.

Charges for labour or services connected with the sale of timber, including selection, lifting, sorting, or preparation, are not part of taxable turnover unless they form part of the consideration for transfer of property in the goods. The definition of turnover must be read in the context of the sales tax scheme as a whole, so a separately shown pre-sale service charge does not automatically become sale price. On the facts discussed, lot cooly charges were not liable to sales tax merely because they were collected before delivery, though the revenue could still examine whether any excess over actual service charges formed part of the price after notice.

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Issues: Whether lot cooly charges collected from customers at the time of sale form part of the taxable turnover under the Madras General Sales Tax Act, 1959.

Analysis: The expression defining turnover must be read with the scheme of the Act, which taxes only the aggregate consideration for transfer of property in goods. Charges for labour or services rendered in connection with selection, lifting, sorting, or preparation of timber are not, by themselves, consideration for the sale. Explanation (2)(ii) to section 2(r) cannot be read in isolation; on a contextual reading, only sums charged for something done by the dealer in respect of the goods, where such sums represent part of the sale consideration, can be included in turnover. A mere pre-sale service charge shown separately in the bill does not automatically become part of the sale price.

Conclusion: Lot cooly charges, on the facts considered, do not form part of the taxable turnover and are not liable to sales tax merely because they were collected at or before delivery.

Final Conclusion: The petitions succeeded and the reassessment including the lot cooly charges was set aside, while leaving the revenue free to examine whether any amount collected in excess of actual service charges could be treated as part of the price after notice to the assessees.

Ratio Decidendi: Charges for services rendered in connection with a sale are not includible in turnover unless they constitute part of the consideration for transfer of property in the goods, and a statutory definition of turnover must be construed in the context of the taxing scheme as a whole.

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