TaxTMI 
TaxTMI 
TaxTMI 
2014 (5) TMI 760
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.... Sales Tax Appellate Tribunal failed to follow and apply the principles stated by the Kerala High Court in the decision reported in (1994) 94 STC 396 (Deputy Commissioner of Sales Tax (Law) Board of Revenue (Taxes), Ernakulam Vs. N.Lekshmana Reddiar) and Madras High Court in (1986) 63 STC 411 (Bombay Burmah Trading Corporation Ltd. Vs. The State of Tamil Nadu). " 2. The assessment years relate to the years 1989-1990 and 1990-1991. The assessee a company engaged in retreading of tyres on a works contract basis. In respect of the works undertaken, the assessee quoted a consolidated amount, which they claimed as inclusive of tax. In the return made, since the assessee had not separately maintained accounts as regards the amount referable towa....
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....the accounts could not be a justifiable ground for granting exclusion. 4. The assessee filed an appeal before the Appellate Assistant Commissioner, wherein it failed. Hence, further appeal was filed before the Tribunal. As far as the said contention is concerned, the Tribunal once again rejected the case of the assessee. Thus, the assessee is now before us on revision. 5. Learned counsel appearing for the assessee, pointing out to the definition of "turnover" under Section 2(r) of the Tamilnadu General Sales Tax Act, 1959, submitted that the assessee had specifically mentioned about the tax portion on 70% of the agreed amount, thereby indicated that the tax collected was not part of the turnover. As such, there could be no levy of tax on ....
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....arately without including the same in the price of goods bought or sold. Thus when the assessee collected a consolidated amount inclusive of tax and the tax collected cannot, in any manner, be pointed out with precision to the price of the goods and thus the tax forms part of the price charged for, the question of invoking Explanation (1-A) does not arise. In the light of the provision that stands today and on the fact that the assessee had quoted a consolidated amount, the mere bifurcating of the same in the books of accounts would not satisfy the provisions of the Act. 8. In this context, learned Standing Counsel appearing for the Revenue placed reliance on the unreported decision made in W.P.No.37025 of 2002, dated 1.4.2004, which disti....
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....n 2(r) of the Tamil Nadu General Sales Tax Act, 1959, does not arise. 10. Further, the Assessing Officer pointed out that all that the assessee had done in this case was to show that the tax element was shown in the accounts just by way of an adjusting entry, which does not satisfy the provisions of the Act. The Appellate Authority and the Tribunal confirmed the said view of the Assessing Officer and pointed out that when the assessee had collected a consolidated amount which is inclusive of tax and the charges collected from the customers thus revealed that there was no bifurcation of labour and materials, it was but difficult to identify the tax collected by the assessee, vis-a-vis the material value. 11. Section 2(r) and Explanation (1....
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.... the turnover. In the present case, admittedly, the assessee had charged a consolidated amount for the execution of the works contract. The indivisible contract showed no bifurcation as regards labour and materials. Even in the accounts, the assessee did not have the details on the cost of the materials used to have a deduction of the labour charges from the consolidated price charged. The consolidated amount charged is stated to include the tax element. Even for claiming deduction on the labour charges, the assessee adopted the statutory percentage only. In the above circumstances, on a consolidated sum thus charged, it is difficult to accept the claim of the assessee that the adjustment entries given in the accounts have to be taken as ta....
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....g that any amount charged for and included in the sale price or the consideration would really make up for the turnover for the purpose of consideration of the tax liability under the Act. In so considering the question as to whether the tax element charged is part of the consideration or not would ultimately depend on how the parties to the transaction have dealt with what is to constitute a consideration for the sale of goods. 14. When the parties to the contract have agreed on a consolidated price inclusive of tax, it is clear that irrespective of how they make up the bill or the accounts, the entire consideration will be the turnover, and in which event, the question of application of Explanation (1-A) to Section 2(r) of the Tamil Nadu....