Customer-supplied components excluded from sales tax turnover where ownership stayed with customers despite excise valuation.

Customer-supplied components retained in the customers' ownership until incorporation into the finished goods could not be included in the assessee's taxable turnover for sales tax merely because excise duty valuation took the finished product's full value into account. Sales tax is charged on the transfer of property in goods and the sale price, whereas excise duty is levied on manufacture; the distinct bases of levy required exclusion of the supplied materials from turnover. The deletion of their value from the sales tax assessment was therefore upheld in favour of the assessee.

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Issues: Whether the value of components supplied by customers could be included in the assessee's turnover for sales tax purposes merely because those components formed part of the finished goods and were taken into account for excise duty valuation.

Analysis: Sales tax is levied on the transfer of property in goods, whereas excise duty is levied on manufacture and is computed on the value of the manufactured product. Where the customers supplied the component parts and retained ownership in them until incorporation into the final product, their value did not form part of the sale price charged by the assessee. The mere fact that excise duty was assessed on the full value of the product, including such supplied components, did not justify adding that value to the taxable turnover for sales tax purposes. The distinct bases of levy under the two fiscal regimes required exclusion of the customer-supplied components from sales tax assessment.

Conclusion: The deletion of the value of customer-supplied components from taxable turnover was correct and was upheld in favour of the assessee.

Final Conclusion: The revision failed because the sales tax assessment could not be enlarged by importing the excise duty valuation basis.

Ratio Decidendi: Customer-supplied materials do not form part of taxable turnover for sales tax unless their value is included in the sale price or there is a taxable transfer of property in those materials.

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