1978 (3) TMI 186 - HC - VAT and Sales Tax

Inclusion of Khodki Charges in Taxable Turnover Upheld Under Karnataka Sales Tax Act

Hiranyakeshi Sahakari Sakkare Karkhane Niyamit Versus The State of Karnataka

The Karnataka High Court upheld the inclusion of khodki charges paid by an assessee to sugarcane suppliers in the taxable turnover under the Karnataka ... - Issues:1. Whether khodki charges paid by the assessee to sugarcane suppliers are includible in the taxable turnover under the Karnataka Sales Tax Act, 1957.Analysis:The petitions before the Karnataka High Court involved a dispute regarding the inclusion of khodki charges paid by the assessee to sugarcane suppliers in the taxable turnover under the Karnataka Sales Tax Act, 1957. The petitioner, who owned a factory manufacturing sugar from sugarcane purchased from its members, contended that the khodki charges should not be considered part of the taxable turnover. The Karnataka Sales Tax Appellate Tribunal had rejected the petitioner's claim, leading to the filing of these petitions.The Court examined the relevant provisions of the Karnataka Sales Tax Act, specifically the definitions of 'turnover,' 'total turnover,' and 'taxable turnover.' It noted that the Act required the petitioner to pay tax on the purchase turnover of sugarcane as the last dealer in the State liable to tax. The key issue was whether the khodki charges were paid independently of the sugarcane purchase contract or formed part of the consideration for the sugarcane supplied. The petitioner failed to provide evidence such as resolutions, bylaws, or agreements showing that the khodki charges were distinct from the purchase price of sugarcane.The Court emphasized that the timing of payment or the specific use of the amount by the supplier was irrelevant as long as the payment was made in connection with the sugarcane supply. It concluded that the khodki charges were indeed part of the price paid by the petitioner to the suppliers and correctly included in the taxable turnover under the Act. The Court relied on a previous decision involving different charges, where a similar principle was applied to include certain charges in the taxable turnover.In light of the above analysis, the Court dismissed the petitions, upholding the decision of the Tribunal to include the khodki charges in the taxable turnover. The petitioner's failure to demonstrate the independent nature of the khodki charges led to the rejection of their claim. The judgment serves as a reminder of the importance of providing clear evidence to support assertions in tax matters and highlights the broad interpretation of turnover under the Karnataka Sales Tax Act.