Mandi Shulk not part of sale price or turnover; statutory market fee excluded from sales and service tax

HC held that Mandi Shulk collected by the Nigam and deposited with the Mandi Committee cannot be included in the sale price for the purpose of levy of service tax/sales tax. Relying on SC precedent in Anand Swarup Mahesh Kumar, the court reiterated that market fee payable under the relevant Adhiniyam is not part of the turnover of purchases, as it is a statutory levy collected and passed on, not consideration for sale. Consequently, inclusion of Mandi Shulk in sale price was held impermissible and the Commercial Tax Revision was allowed.

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Issues Involved:
1. Whether the 'Mandi Shulk' should be included in the sale price of the goods sold by the Nigam.
2. Interpretation of Section 17(iii)(b) of the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964.
3. Applicability of the definition of 'sale price' under Sub-Section (42) of Section 2 of the Uttarakhand VAT Act, 2005.
4. Consideration of previous judgments, including those of the Hon'ble Supreme Court and the Uttarakhand High Court.

Detailed Analysis:

Issue 1: Inclusion of 'Mandi Shulk' in the Sale Price
The primary issue revolves around whether the 'Mandi Shulk' should be included in the sale price of the goods sold by the Nigam. The revisionist-assessee argued that the 'Mandi Shulk' collected from buyers should not be part of the taxable turnover as it is collected on behalf of the Mandi Samiti and does not go to the Nigam's funds. The Assessing Authority, however, included the 'Mandi Shulk' in the taxable turnover as per Sub-Section (42) of Section 2 of the Act.

Issue 2: Interpretation of Section 17(iii)(b) of the Adhiniyam
Section 17(iii)(b) of the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964, as amended by U.P. Act No. 7 of 1978, was crucial in this case. This section stipulates that the market fee is to be realized from the purchaser and paid to the Mandi Committee. The Supreme Court, in the case of M/s. Anand Swarup Mahesh Kumar v. Commissioner of Sales Tax, held that the market fee should not be included in the sale price as it is collected statutorily on behalf of the Mandi Committee and not retained by the seller.

Issue 3: Definition of 'Sale Price' under the Uttarakhand VAT Act, 2005
The definition of 'sale price' under Sub-Section (42) of Section 2 of the Uttarakhand VAT Act, 2005, includes any sum charged for anything done by the dealer in respect of goods at the time or before delivery, including taxes and duties but excludes certain sums like cash discounts, outward freight, and separately charged taxes. The Court concluded that the 'Mandi Shulk' does not fall under the sums included in the sale price as it is a statutory fee collected on behalf of the Mandi Committee.

Issue 4: Consideration of Previous Judgments
The Court considered the unreported case of M/s. Ashok Kumar v. State of Uttarakhand, where it was held that 'Mandi Shulk' should be included in the sale price. However, the Court found this view incorrect in light of the Supreme Court's judgment in M/s. Anand Swarup Mahesh Kumar, which clearly distinguished between statutory fees collected on behalf of a third party and sums forming part of the sale price.

Conclusion:
The Court concluded that the 'Mandi Shulk' collected by the Nigam and deposited with the Mandi Committee should not be included in the sale price for the purpose of calculating value-added tax. The orders of the Assessing Authority, the First Appellate Authority, and the Tribunal were set aside. The revisionist-assessee is liable to pay value-added tax on the sale price, excluding the 'Mandi Shulk'.

Final Orders:
The Commercial Tax Revision was allowed, setting aside the orders dated 26.04.2011, 17.02.2012, and 05.07.2013. There were no orders as to cost, and all pending applications were disposed of. An urgent certified copy of the order was directed to be issued to the parties as per rules.

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