2010 (6) TMI 739 - HC - VAT and Sales Tax

Tribunal decision on insurance charges upheld under Central Sales Tax Act

Commissioner of Sales Tax, Maharashtra State, Mumbai Versus Kolsite Industries

Commissioner of Sales Tax, Maharashtra State, Mumbai Versus Kolsite Industries - [2013] 61 VST 23 (Bom) Issues Involved:1. Interpretation of 'sale price' under the Central Sales Tax Act, 1956 concerning insurance charges.2. Tribunal's deviation from its previous decision without referring the issue to a Larger Bench.Issue-wise Detailed Analysis:1. Interpretation of 'sale price' under the Central Sales Tax Act, 1956 concerning insurance charges:The primary question was whether insurance charges form part of the 'sale price' under section 2(h) of the Central Sales Tax Act, 1956. The Tribunal had previously ruled that insurance charges should not be included in the sale price if the parties did not intend it to be so. The Revenue argued that the definition of 'sale price' under section 2(h) includes any sum charged for anything done by the dealer in respect of the goods at the time of or before delivery, excluding only the cost of freight or delivery and installation, if separately charged. Therefore, insurance charges should be included in the sale price as they are incurred before delivery.The respondent countered that the agreements, quotations, invoices, and marine cover notes clearly indicated that insurance charges were to be borne by the buyer separately and were not included in the sale price. The Tribunal, upon reviewing these documents, concluded that the insurance charges were explicitly excluded from the sale price and were to be paid independently by the buyer. The Tribunal's decision was supported by the Bombay High Court's judgment in Commissioner of Sales Tax, Maharashtra State, Bombay v. Ballarpur Industries Ltd., which distinguished between different types of contracts concerning the inclusion of freight and insurance charges in the sale price.The court upheld the Tribunal's view, noting that the documentary evidence clearly showed that the insurance charges were not intended to be part of the sale price. The agreements specified that the quoted price was exclusive of packing, carriage, freight, and insurance charges, and the delivery was to be taken ex-works, meaning the risk transferred to the buyer at the seller's premises.2. Tribunal's deviation from its previous decision without referring the issue to a Larger Bench:The second issue was whether the Tribunal was justified in taking a different stand from its previous decision without referring the matter to a Larger Bench. The Tribunal had previously included insurance charges in the sale price due to the lack of documentary evidence. However, in the present case, ample documentary evidence was provided, leading the Tribunal to a different conclusion.The Revenue argued that the Tribunal should have referred the matter to a Larger Bench, as the previous decision was based on the statutory definition of 'sale price' and not on the lack of documentary evidence. The respondent contended that the Tribunal was justified in taking a different view based on the new evidence presented.The court agreed with the respondent, stating that the Tribunal, based on the new documentary evidence, was entitled to take a different view from its earlier decision. The Tribunal's conclusion that the insurance charges were not part of the sale price was based on a thorough examination of the agreements, quotations, invoices, and marine cover notes, which clearly indicated that the insurance charges were to be borne separately by the buyer.Conclusion:The court concluded that the Tribunal was correct in its interpretation that insurance charges were not part of the 'sale price' and should be borne separately by the buyer. The Tribunal was also justified in taking a different view from its previous decision based on the new documentary evidence. The court answered the questions in favor of the respondent and against the Revenue, upholding the Tribunal's decision.