TaxTMI 
TaxTMI 
2005 (1) TMI 383
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....lls of the Commercial Tax Officer, Aryapuram, Rajahmundry. 3.. The respondent purchased hard wood (raw material) from unregistered dealers through persons called agents. The hard wood is used for the manufacture of pulp. The agents are engaged in the business of purchase of raw material from the unregistered dealers and supplying the same in the factory of the respondent on contract rates which included the cost of raw materials, transportation charges and the agent's commission. The respondent filed their returns under the provisions of the Act. The Commercial Tax Officer found out that the respondent was paying sales tax under section 6-A of the Act only on the cost of raw materials purchased from the unregistered dealers leaving out the transportation charges and the commission paid to the agents which amounted to Rs. 48,50,735. 4.. The Commercial Tax Officer made an assessment including the transportation charges and the agent's commission paid in the taxable turnover under section 6-A of the Act after issuing a show cause notice. The amount of tax determined to be paid was Rs. 2,42,537. The Commercial Tax Officer held that the respondent is liable to pay tax on the total amo....
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....d in the business of purchase of raw materials from the unregistered dealers and supply- ing the same in the factory on contract rates which included the cost of raw materials, transport charges and the agent's commission. It was further submitted that the High Court is not correct in holding that the transportation charges and the agent's commission are incurred by the respondent subsequent to the purchase of raw materials and such charges do not represent the sale consideration. Learned counsel appearing for the appellant invited our attention to section 2(s) and section 6-A of the Act and also relied on the judegment of this Court in the case of E.I.D. Parry (I) Ltd. v. Assistant Commissioner of Commercial Taxes See [2000] 117 STC 457. (2000) 2 SCC 321 and in the case of D.C. Johar & Sons (P.) Ltd. v. Sales Tax Officer, Ernakulam [1971] 27 STC 120. Learned counsel appearing for the respondent reiterated the contentions urged before the lower authorities and submitted that transportation charges and commission paid to the agent would not form part of the turnover under section 6-A of the Act. He further submitted that the finding of fact has been recorded by the Tribunal on the ....
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....or buying hard wood and transporting the same to the factory premises of the respondent and that the agents were paid a total amount which included the cost of raw material, transportation charges and commission. The assessing authority is right in levying the tax on the total amount paid to the agents for purchasing hard wood from unregistered dealers. It was contended by the learned counsel for the respondent that the respondents are entitled to claim exemption on transportation charges and commission on the ground that they would not form part of the turnover under section 6-A of the Act. This contention was rejected by the assessing authority, rightly so, in our opinion, on the ground that the respondents were liable to pay tax on the total amount of purchase price of hard wood. We have already extracted the definition of "turnover" under section 2(s) of the Act. The expenses for procuring hard wood, in our opinion, would become part of the total turnover. The assessing authority dismissed the appeal on the ground that the respondent did not transport hard wood after purchase, that the agent was made responsible for transportation, etc., and that, therefore, total consideratio....
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....e tax liability. On the other hand, the contention raised on behalf of the sales tax authorities was that the act of giving planting subsidy for growing sugarcane followed by an agreement for sale of the sugarcane by the grower constituted one single transaction and the planting subsidy being an amount paid in relation to the goods purchased had been rightly regarded as a part of the price of sugarcane and included in the turnover of the appellants. As regards the transport subsidy, the contention of the appellants was that the transport charges were in fact paid by the appellants to third party lorry owners for transporting sugarcane beyond the distance of 30 km. in view of the Government's directions and that the transport charges being not the amounts charged by the growers nor being the amounts paid to them were really in the nature of the post-sale expenses and, therefore, could not have been lawfully treated as part of the price and included in the turnover of the appellants. The contention of the sales tax authority, on the other hand, was that under the agreement of sale the cane growers had to deliver the sugarcane at factory premises and the arrangements made by the appel....
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....] 27 STC 120 (SC), the appellant-company made a claim for exemption for freight and packing and delivery charges in respect of which separate bills were made out when selling the goods at Ernakulam. This Court held that the tax levied is not a tax on railway freight; it is a tax on turnover, that is, on the aggregate of sale price received by the dealer in respect of sale of goods. 16.. Earliest decisions on this point is in the case of Dyer Meakin Breweries Ltd. v. State of Kerala [1970] 26 STC 248 (SC). In this case, the appellant-company manufactured liquor at various places in U.P. and Haryana, transported the goods from its breweries and distilleries to its place of business in Ernakulam and sold them there. When selling liquor to the customers, the appellant made out separate bills for ex-factory price and for "freight and handling charges". The appellant claimed that the amount charged for "freight and handling charges" incurred by it in transporting the goods from the breweries and distilleries to the warehouse at Ernakulam had to be deducted under rule 9(f) of the Kerala General Sales Tax Rules, 1963, in determining its taxable turnover. 17.. This Court held that all the....
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....goods and, therefore, the concept of real price or actual price retainable by the dealer is irrelevant. The test is, what is the consideration passing from the purchaser to the dealer for the sale of the goods. It is immaterial to enquire as to how the amount of consideration is made up, whether it includes excise duty or sales tax or freight. The only relevant question to be considered is as to what is the amount payable by the purchaser to the dealer as consideration for the sale and not as to what is the net consideration retainable by the dealer." 19.. The decision of the Rajasthan High Court was affirmed by this Court. 20.. In a recent decision in the case of Greaves Chitram Limited v. State of Tamil Nadu [2003] 133 STC 364, the Madras High Court held that freight is includible if the contract is for delivery at buyer's place. In the above judgment, the Madras High Court held that: "Though no written contract or agreement between the parties was available, from the purchase orders and invoices, a clue could be obtained to determine the nature and character of the transaction entered into between parties. These documents reveal that the dealer agreed to effect the del....