2013 (2) TMI 645 - HC - VAT and Sales Tax

Court rules optional service charges not taxable, dismissing revision petition

The court upheld the decision that optional service charges are not part of the taxable sale price, dismissing the revision petition in favor of the ... Optional service charges at ₹ 200 per refrigerator - whether would not form part of taxable sale price in the hands of respondent-assessee? - Held that:- Charge levied by the assessee at the time of the sale was not universal but optional. Following this finding the legal consequences would be inexorable and entail exclusion of such charges from the ambit of sale price of the goods sold exigible to tax in view of the judgments of this court in the case of Commercial Taxes Officer v. Godrej G.E. Appliances Limited [2011 (3) TMI 1548 - RAJASTHAN HIGH COURT] as also Commercial Taxes Officer v. Weston Electroniks Ltd. [1991 (11) TMI 225 - RAJASTHAN HIGH COURT] 87 STC 522 (Raj). W.P.dismissed. Issues:1. Whether the optional service charge is part of sale or notRs.2. Whether the order of assessing authority for levying tax and interest is correct or notRs.3. Whether the order passed by the DC (Appeals) Jaipur for upholding the order of ACTO is correct or notRs.4. Whether the judgment passed by the Tax Board, Ajmer is legal oneRs.Analysis:Issue 1:The case involved a dispute regarding the inclusion of 'optional service charges' in the taxable sale price. The respondent company charged &8377;200 per refrigerator as optional service charges for aftersale services. The assessing officer contended that this amount should be added to the sale value for sales tax. However, the Tax Board, considering precedents and the voluntary nature of the charges, held that the optional service charge does not form part of the turnover. The court referred to previous judgments emphasizing that if the warranty charges were optional and separately charged, they would not form part of the sale price. The court dismissed the revision petition, stating that the issue had been conclusively settled in favor of the respondent.Issue 2:The assessing authority had levied sales tax, interest, and penalty on the respondent based on the inclusion of optional service charges in the turnover. The DC (Appeals) upheld the sales tax and interest but deleted the penalty. The Tax Board, following precedents and considering the optional nature of the charges, allowed the appeal of the company. The court, in line with previous decisions and the voluntary aspect of the charges, found no merit in the revision petition, leading to its dismissal.Issue 3:The order of the DC (Appeals) Jaipur was challenged in the appeal before the Tax Board, which ultimately accepted the company's appeal. The court noted that the Tax Board had decided in favor of the respondent in similar cases with identical legal questions involved. The court found the Tax Board's orders to be sound judgments on facts and law. Considering the settled issue and legal positions accepted by the Department in connected appeals, the court dismissed the revision petition.Issue 4:The petitioner challenged the legality of the judgment passed by the Tax Board, Ajmer. However, the court, relying on previous judgments and the settled nature of the issue, found no substantial questions of law arising in the case. Consequently, the court dismissed the petition, concluding that the issue had already been settled and decided, rendering the petition without force.