TaxTMI 
TaxTMI 
2016 (9) TMI 1221
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....ribunal has rightly held that, the appellant cannot levy tax on performance test/inspection of goods as the same is not the part of sale price? (B) Whether on the facts and in the circumstances of the case, the tribunal has rightly held that, set off on packing materials under Section 44 of the Gujarat Sales Tax Rules, 1970 was incorrectly disallowed by the assessee authority and first appellate authority?" 2. Question A pertains to inclusion of inspection charges of the goods as part of the sale price and arises in the following background. The respondent-assessee is a company engaged in the business of manufacturing compressors and parts and sale thereof. The assessee also sells some of its products through export sale. For the assessm....
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....erring to a decision of Rajasthan Bench of the Tribunal in case of Commercial Taxes Officer, Special Circle III Jaipur V/s Gem Plast Pvt.Ltd., reported in 101 STC 521, held that the performance or inspection charges did not form part of the sale price and the same was therefore required to be deducted from the total sale consideration. Thereupon, the revenue has filed this appeal. 3. From the material on record, it emerges that the assessee had been awarded the works contract for supply and installation of machinery. The pre-sale inspection or performance testing though was done at the site of the factory of the assessee, it was being done at the instance of the purchaser for which the purchaser had separately paid and the inspection was b....
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....thereof other than the cost of insurance for transit or of installation when it is separately charged. In the present case, the test performed for the inspection was neither done by the assessee nor was charged by the assessee and would therefore not be included in the expression "any some charged for anything done by the dealer in respect of the goods." 4. Coming to the second question, it pertains to the assessee's claim of set off on packing materials used for delivery of the product. The Assessing Officer was of the view that whether such set off can be granted or not would depend on range of factors. Referring to the decision of the Supreme Court in the case of Rajsheel Ltd. v/s State of Andhra Pradesh, reported in 74 STC 379 such....
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....sessee had sold the packing material while selling the main product. In case of Rajsheel (supra), the constitutional validity of Section 6(C) of A.P.General Sales Tax Act, 1957 was challenged. This provision provided for a deeming fiction under which where goods packed in any materials are sold or purchased, the materials in which the goods are so packed would be deemed to have been sold or purchased along with the goods and tax would be leviable on such sale or purchase as applicable to the sale or purchase of goods themselves. In other words, cost of packing material would form part of the sale price of the goods and would be charged sales tax at the rates specified for the goods. In this background, the Supreme Court held and observed th....
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.... may consist of a sale of the product and a separate sale of the container housing the product with respective sale considerations for the product and the container separately. It may also be a case where in the case of a sale of the product and sale of the container, both sales being conceived of a integrated components of a single transaction. The question in every case will be a question of fact as to what are the nature of ingredients of the sale. In this context, it was further observed that the issue as to whether the packing material has been sold or merely transferred without consideration depends on the contract between the parties. The fact that the packing material is of insignificant value in relation to the value of the content....