2014 (3) TMI 443 - HC - VAT and Sales Tax

Court decision on Rectified Spirit & Denatured Spirit exemption, export duty, and export pass fee taxability.

The Commissioner, Trade Tax Versus DCM. Sri Ram Ind. Ltd.

The Commissioner, Trade Tax Versus DCM. Sri Ram Ind. Ltd. - TMI Issues:1. Exemption of inter-State sales of Rectified Spirit and Denatured Spirit along with export duty2. Taxability of export pass fee in the taxable turnover of the AssesseeAnalysis:Issue 1 - Exemption of inter-State sales of Rectified Spirit and Denatured Spirit along with export duty:The first question of law revolved around the justification of the Tribunal in exempting inter-State sales of Rectified Spirit and Denatured Spirit along with export duty. The judgment referred to a Division Bench ruling that clarified the taxability of alcohol under the United Provinces Sales of (Motor Spirit, Diesel Oil and Alcohol) Taxation Act, 1939, and the Central Sales Tax Act, 1956. The Division Bench's decision highlighted that the central sales tax on inter-State sale of alcohol was not exempted despite general exemptions under relevant acts. Consequently, the Court answered Question No. 1 against the Assessee and in favor of Revenue based on the established legal principles.Issue 2 - Taxability of export pass fee in the taxable turnover of the Assessee:The second issue concerned the inclusion of the export pass fee payable by an Ex. U.P. purchaser on the purchase of Denatured Spirit from a Distillery in the taxable turnover of the Assessee. The judgment cited a Division Bench ruling and an earlier Single Judge judgment to address this matter. The Court emphasized that the liability for the payment of the export pass fee rested with the purchaser and not the distillery. It was clarified that the amount of the export pass fee paid by the purchaser should not be considered as part of the turnover of the selling company. The Court further reiterated that the export pass fee was not a liability of the dealer and should not be included in the turnover. Consequently, Question No. 2 was answered in favor of the Assessee and against Revenue, leading to the partial allowance of the Revision and remand of the matter to the Tribunal for further proceedings in accordance with the legal principles established.In conclusion, the judgment addressed the issues of exemption of inter-State sales of Rectified Spirit and Denatured Spirit along with export duty, as well as the taxability of the export pass fee in the taxable turnover of the Assessee. The legal analysis provided clarity on the application of relevant laws and established precedents, resulting in a balanced decision that upheld the legal principles while ensuring fair treatment for the parties involved.