Turnover inclusion of reimbursed insurance charges excluded where amounts were mere buyer-side reimbursement, not sale consideration.

Rejection of the dealer's books of account was unjustified where the sole basis was an alleged omission to carry Form XXXI, especially after the related penalty had already been set aside as an accidental lapse and not a tax-evasion device; the turnover enhancement was therefore deleted. Insurance charges recovered from buyers for goods despatched to customers were also not includible in turnover because insurance was optional, arranged at the buyer's or stockist's instance and account, and the dealer merely recovered amounts spent on the buyer's behalf. As those sums were reimbursement rather than sale consideration, they could not be treated as part of turnover. The revision succeeded and the additions were removed.

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Issues: (i) whether the rejection of the dealer's books of account and the consequent enhancement of turnover were justified on the basis of non-carrying of Form XXXI; (ii) whether insurance charges recovered from buyers for goods despatched to customers were includible in turnover.

Issue (i): whether the rejection of the dealer's books of account and the consequent enhancement of turnover were justified on the basis of non-carrying of Form XXXI.

Analysis: The rejection of books rested entirely on the alleged default relating to one truck carrying goods without Form XXXI at the check post, for which penalty had been levied. The earlier order setting aside the penalty had already held the lapse to be accidental and not a device to evade tax. Once the very foundation for doubting the genuineness of the accounts disappeared, there was no basis to reject the books or to enhance the returned turnover.

Conclusion: The rejection of the books of account and the enhancement of turnover were not justified and were set aside in favour of the assessee.

Issue (ii): whether insurance charges recovered from buyers for goods despatched to customers were includible in turnover.

Analysis: The agreement and price-list terms showed that insurance was optional and was to be arranged at the buyer's or stockist's instance and account. The dealer only arranged insurance on behalf of the buyer and recovered the amount spent for that purpose. Such recovery was not part of the consideration for the sale and could not be equated with sale price or treated as part of turnover.

Conclusion: The insurance charges were not liable to be included in turnover and were excluded in favour of the assessee.

Final Conclusion: The revision succeeded, the additions to turnover were deleted, and the assessee was awarded costs.

Ratio Decidendi: Amounts recovered merely as reimbursement of expenses incurred on behalf of the buyer, where the buyer has the option to arrange such expenditure and the amount is not part of the sale consideration, do not form part of turnover.

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