VAT on petrol and diesel sale price upheld as a valid pricing mechanism, not a tax on commission or notional value.

The amended definition of sale price for petrol and diesel under the Haryana VAT framework was within the State's legislative competence under Entry 54 of List II. The change was treated as an adjustment to the VAT mechanism for a fixed-price supply chain, so the levy remained connected to the actual commercial sale price and not to a notional figure. Dealer commission was not taxed as a separate component, and the challenge based on evaporation loss also failed because the statutory scheme addressed shortages and input tax credit treatment.

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Issues: Whether explanation (v) to Section 2(1)(zg) of the Haryana Value Added Tax Act, 2003, deeming the sale price of petrol and diesel sold by oil companies to retail outlets to be the price at which the retail outlets sell the commodities to consumers, was beyond the legislative competence of the State and whether the amendment resulted in impermissible levy of VAT on commission, notional price, or evaporative loss related quantities.

Analysis: Entry 54 of List II of the Seventh Schedule authorises a State to impose tax on the sale or purchase of goods, subject only to the constitutional limitation concerning inter-State trade and newspapers. The amendment did not trench upon any excluded field. The changed definition of sale price merely adjusted the VAT mechanism for petrol and diesel, which are sold under a fixed price structure between oil companies, dealers, and consumers. The price is predetermined and part of the commercial arrangement, so the levy remained linked to the actual sale price and not to any artificial or notional figure. The commission payable to dealers was not taxed as a separate component; it formed part of the pre-arranged sale structure. The plea based on evaporation loss also failed because the Act, read with Schedule E, took care of shortages and preserved input tax credit treatment within the statutory scheme.

Conclusion: The amendment was within the legislative competence of the State, did not impose tax on commission or a notional price, and the challenge to its validity failed.

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