Sale price exclusion for post-delivery service pool charges under the Central Sales Tax Act, 1956

Service pool charges recovered from distributors were held not to form part of the sale price under the Central Sales Tax Act, 1956. The charges were contributions to a sales and service promotion pool, accepted under the scheme and collected as a mode of funding it, rather than consideration for the cars sold. Because the benefit of the scheme arose only after delivery of the vehicles to ultimate customers, the inclusive limb of the definition of sale price did not apply. An amount collected for a post-delivery service or promotion scheme, and not for anything done in respect of the goods at or before delivery, is outside sale price and turnover.

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Issues: Whether service pool charges recovered from distributors formed part of the sale price under section 2(h) of the Central Sales Tax Act, 1956.

Analysis: The charges were collected as contributions towards a sales and service promotion pool, not as consideration for the cars sold. The distributors had accepted the scheme, the amount was a mode of collecting their contribution to the pool, and the benefit of the scheme was available after delivery of the vehicles to the ultimate customers. The inclusive part of the definition of sale price was therefore inapplicable, because the amount was not charged for anything done by the dealer in respect of the goods at or before delivery. Authorities dealing with service charges in different factual settings did not alter that position.

Conclusion: The service pool charges did not form part of the sale price and were not includible in turnover under the Central Sales Tax Act, 1956.

Ratio Decidendi: An amount collected from a buyer as a contribution to a post-delivery service or promotion scheme, and not as consideration for the goods sold or for anything done in respect of the goods at or before delivery, does not fall within the definition of sale price.

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