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of <h1>Insurance and carrying charges not part of sale price under Sales Tax Acts</h1> <h3>The Commissioner of Sales Tax, Maharashtra State, Bombay Versus M/s. Ravi Trading Company,</h3> The Commissioner of Sales Tax, Maharashtra State, Bombay Versus M/s. Ravi Trading Company, - [2018] 1 GSTL ( STC ) 51 (Bom), 2018 (9) G. S. T. L. 250 ... Issues Involved:1. Whether insurance charges and carrying charges form part of the sale price under the Bombay Sales Tax Act, 1959 and the Central Sales Tax Act, 1956.2. Whether the penalty deletion by the Tribunal was justified based on the Bombay High Court's decision in Indoswe Engineers (P) Ltd. v. State of Maharashtra.Issue-Wise Detailed Analysis:1. Insurance and Carrying Charges as Part of Sale Price:The primary issue was whether insurance charges and carrying charges should be included in the sale price under the Bombay Sales Tax Act, 1959 (BST Act) and the Central Sales Tax Act, 1956 (CST Act). The Court examined the definitions and relevant provisions of both Acts, particularly focusing on the interpretation of 'sale price.'The Court referred to the landmark judgment of the Supreme Court in Hindustan Sugar Mills v. State of Rajasthan, which distinguished between different types of freight charges and their inclusion in the sale price. The Apex Court in Hindustan Sugar Mills held that freight and handling charges included in the price of goods, which are payable by the purchaser to the dealer as part of the sale consideration, form part of the sale price. Conversely, if freight is paid by the purchaser as a reimbursement to the dealer, it does not form part of the sale price.Applying this principle, the Court noted that in the present case, the Tribunal found that the insurance and carrying charges were post-sale charges. The Tribunal concluded that these charges were incurred after the delivery of goods and were not part of the sale consideration. The Court agreed with this finding, emphasizing that the charges were for services rendered after the sale was complete and thus could not be included in the sale price under Section 2(29) of the BST Act.The Court further analyzed the definition of 'sale price' under Section 2(29) of the BST Act, which includes the amount payable for the sale of goods and any sum charged for anything done by the dealer at the time of or before delivery, excluding the cost of insurance for transit or installation when separately charged. The Court concluded that the insurance and carrying charges in question were not components of the sale consideration and thus did not fall within the inclusive part of the definition of 'sale price.'2. Penalty Deletion by the Tribunal:Given that the first question was answered in the affirmative, the second issue regarding the deletion of the penalty did not arise for consideration. The Tribunal's decision to delete the penalty was based on the precedent set by the Bombay High Court in Indoswe Engineers (P) Ltd. v. State of Maharashtra, which the Court did not need to address due to the resolution of the first issue.Conclusion:The Court held that the insurance charges and carrying charges did not form part of the sale price as the sale was completed at the point of spot delivery, and these charges were incurred thereafter. Consequently, the first question was answered in the affirmative, and the second question did not require consideration. The reference was disposed of accordingly.
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