1995 (11) TMI 110 - HC - VAT and Sales Tax

Court affirms excise duty inclusion in sale price for sales tax, clarifying taxable turnover rules

The High Court upheld the Tribunal's decision, ruling that excise duty recovered by the seller constitutes part of the sale price for levying sales tax ... Valuation (sale price) Issues:Interpretation of excise duty in relation to sales tax liability under the Madhya Pradesh General Sales Tax Act, 1958.Analysis:The judgment involves eight reference applications filed by the applicant-assessee under Section 44(2) of the Madhya Pradesh General Sales Tax Act, 1958, seeking direction to the Tribunal to refer a common question of law. The question pertains to whether excise duty recovered by the assessee from the purchaser should be considered as part of the sale price for the purpose of levying sales tax.The applicant, a dealer of soft drinks, was assessed under the State Act and Central Sales Tax Act for different years. The assessing authority included excise duty and auxiliary duty in the taxable turnover, which was contested by the applicant through appeals and applications. The Tribunal rejected the applications citing precedents from the High Court and Supreme Court, indicating that the excise duty formed part of the sale price.The Tribunal's decision was based on the definitions of 'sale price,' 'turnover,' and 'sale' under the State and Central Acts. The provisions did not explicitly exclude the duties in question, leading to the conclusion that excise duty recovered by the seller constituted part of the sale price and was includible in the taxable turnover.The judgment also referenced Section 64A of the Sale of Goods Act, 1930, which allows for adjustments in contract prices due to changes in taxes. However, this provision was deemed inapplicable in the present case. The decision highlighted previous rulings that supported the inclusion of excise duties in the sale price unless authorized to pass on to buyers.Moreover, the judgment referenced a US Supreme Court case to emphasize that taxability was not shown to be excessive in this scenario. The applicant conceded that the issue had been settled by a recent Supreme Court decision, rendering the question of law moot for reference.Ultimately, the High Court upheld the Tribunal's decision, concluding that there was no referable question in the applications. The applications were rejected with no order as to costs, except for a specified counsel fee for each side.In conclusion, the judgment clarifies the treatment of excise duty in determining sales tax liability under the relevant Acts, emphasizing the inclusion of such duties in the sale price unless expressly excluded or authorized for pass-through to buyers.