Excise duty in sale turnover upheld, but unsupported turnover enhancement set aside for fresh determination.

Excise duty payable on manufacture remained part of the sale consideration and turnover under sales tax law even when the purchaser discharged it on warehouse clearance, because the point of collection did not alter the character of the levy; that part of the Tribunal's view was upheld. By contrast, the Tribunal's enhancement of turnover by Rs. 5 crores could not stand because no disclosed basis or supporting reasoning was recorded; that finding was set aside and the matter remanded for fresh determination.

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Issues: (i) Whether the excise duty paid by the purchaser on clearance from the warehouse formed part of the assessee's sale price and turnover under the sales tax law; (ii) whether the Tribunal could enhance the turnover by Rs. 5 crores without recording a basis and whether that part of the matter required reconsideration.

Issue (i): Whether the excise duty paid by the purchaser on clearance from the warehouse formed part of the assessee's sale price and turnover under the sales tax law.

Analysis: The statutory scheme under the excise law showed that excise duty is a duty on manufacture, while collection may be deferred to a later stage for administrative convenience. The Court applied the settled principle that the point of collection does not alter the character of the impost. Even where the purchaser pays the duty at the stage of clearance from its warehouse, such payment is made to discharge the manufacturer's liability and forms part of the total consideration for the sale. The authorities relied upon by the assessee were distinguished on their facts because they concerned levies for which the legal liability rested on the purchaser rather than on the manufacturer.

Conclusion: The excise duty paid by the purchaser was includible in the assessee's turnover, and this part of the Tribunal's decision was upheld, against the assessee.

Issue (ii): Whether the Tribunal could enhance the turnover by Rs. 5 crores without recording a basis and whether that part of the matter required reconsideration.

Analysis: The Tribunal did not disclose any basis for the enhancement, nor did it refer to the discrepancies in the books of account on which such enhancement was founded. In the absence of a reasoned foundation, the enhancement could not be sustained and the issue required fresh examination.

Conclusion: The enhancement of turnover by Rs. 5 crores was set aside and the matter was remanded to the Tribunal for fresh determination, in favour of the assessee.

Final Conclusion: The decision sustained inclusion of excise duty in turnover but unsettle the turnover enhancement and sent that question back for reconsideration.

Ratio Decidendi: Excise duty remains part of the manufacturer-linked sale consideration even when its payment is deferred and discharged by the purchaser, but any enhancement of turnover must rest on a disclosed and reasoned factual basis.

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