Khodki charges treated as part of sale consideration and included in taxable turnover for sales tax purposes.

Khodki charges paid to sugarcane suppliers were treated as part of the consideration for the cane supplied because no resolution, bye-law, rule, or agreement showed that the payment was independent of the purchase contract. A payment made in lieu of goods supplied is includible in taxable turnover, regardless of how or when the seller later uses the money. On that basis, the charges were held liable to sales tax under the Karnataka Sales Tax Act, 1957.

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Issues: Whether the amount described as khodki charges paid to sugarcane suppliers formed part of the taxable turnover and was liable to sales tax under the Karnataka Sales Tax Act, 1957.

Analysis: The amount was paid to the suppliers in addition to the price of sugarcane, but there was no material to show that it was paid independently of the contract of purchase. No resolution, bye-law, rule, or agreement was produced to establish that the payment was a separate ex gratia or independent charge. On the evidence available, the amount called khodki charges was treated as having been paid in substance as part of the consideration for the sugarcane supplied. A payment made in lieu of the goods supplied is includible in taxable turnover, irrespective of the time or purpose for which the seller ultimately uses the money.

Conclusion: The khodki charges were rightly included in the taxable turnover and were liable to tax under the Karnataka Sales Tax Act, 1957.

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