1996 (6) TMI 316 - HC - VAT and Sales Tax

High Court rules market cess not part of turnover for sales tax assessment

The Andhra Pradesh High Court upheld the Tribunal's decision that the market cess collected by the assessee was not considered part of the turnover for ... - Issues:1. Whether the cess payable under the Andhra Pradesh Agricultural Produce and Live Stock Market Act by an agent or dealer forms part of the turnover assessable to sales tax.Analysis:The judgment delivered by the Andhra Pradesh High Court dealt with the issue of whether the market cess collected by an assessee from purchasers forms part of the turnover for sales tax assessment. The respondent-assessee, dealing in jaggery, had the disputed turnover for 1983-84, which included the market cess collected from purchasers. The assessing authority and appellate authority included the market cess in the turnover. However, in the second appeal before the Tribunal, the assessee contended that the market cess, being included in the bills, should be considered part of the turnover. The Tribunal disagreed, stating that the market cess was not consideration for the transfer of property and therefore not part of the turnover. The Tribunal allowed the appeal of the assessee, leading to the current challenge in the Tax Revision Cases (T.R.Cs).The definition of 'turnover' in the relevant assessment year was crucial in determining whether the market cess should be included. The Special Government Pleader argued that since the assessee collected the market cess from purchasers, it should form part of the turnover. However, the Tribunal's decision was based on the interpretation of the definition of turnover, emphasizing that the entire amount in the bill must be towards the consideration of sale or purchase of goods to be included in the turnover. The Tribunal relied on a Supreme Court judgment to support its conclusion that the market cess does not constitute turnover.The Special Government Pleader further argued that a different judgment distinguished the case at hand, stating that if charges are included in the bill of sale and recovered as part of the consideration, they should be considered part of the turnover. However, the Court clarified that simply passing on a tax to the purchaser does not automatically make it part of the consideration unless it is included in the price and realized from the purchaser. In the present case, the Tribunal found that the market cess was not collected as part of the consideration and was paid by the purchaser as a statutory obligation, not as consideration for the sale. Therefore, the market cess was not deemed part of the turnover, and the Tribunal's decision was upheld, dismissing the T.R.Cs.In conclusion, the High Court dismissed the petitions, upholding the Tribunal's decision that the market cess collected by the assessee was not part of the turnover for sales tax assessment.