Charges for services to be rendered under the agreement of sale fall within the scope of consideration for the sale, unless there is an independent contract to pay for services.

1. The revision petitioner is a firm of timber dealers. They purchase logs of timber and sell timber as well as sawn timber and scantling. For the year 1974-75 they were assessed to tax on the turnover. Prior to assessment a dispute arose in regard to two items. Logs of timber purchased by the assessee were being sawn in the premises of the seller since there is a saw mill also there and according to the assessee, besides the value of the timber sawing charges are also paid. The assessee purchases logs and sells such logs to customers some of whom may require the service of sawing. Whether the turnover of timber must include such sawing charges also was the main question. Such charges, as seen from the bills, came to a sum of Rs 33, 529.80. The assessing authority issued a pre-assessment notice proposing to tax sawing charges shown in the bill also as part of the turnover. The other claim concerned the purchase tax leviable on the purchases of timber by the assessee, corresponding to sales of scantlings and sawn timber. The logs used for that purpose would be treated as consumed and therefore in respect of purchases of logs tax under S.SA would be leviable. There is a dispute as to the quantum of purchases which had to be treated as taxable under S.SA. According to the Department, in the absence of any evidence showing sales of timber as such, the entire purchase turnover of Rs. 54,269.40 was to be treated as taxable under S.SA. According to the assessee as clarified before the Appellate Authority by a statement filed by him such turnover was only a sum of Rs. 3, 950.60, for it was urged before the Appellate Authority that only timber worth Rs. 3,950.60 had been sawn and sold us scantlings. To the pre-assessment notice the assessee filed a reply. He contended specifically that sawing charges were realised under separate contracts subsequent to the sales of logs and therefore they were not part of the turnover. The assessee disputed liability to tax under S.SA on the entire turnover of purchase of logs.

2. The assessing authority did not accept the contention of the assessee that sawing charges should not be included in the turnover. Of course the plea of the assessee that sawing work was done under contracts entered into subsequent to the sales was not discredited by the assessing authority nor was the truth of such a case disputed. On the other hand the assessing authority seems to think that even if that be so. since the work of sawing had necessarily to be done before delivery, going by Explanation f2) to the definition of turnover in the Kerala General Sales Tax Act such charges also would fall within the scope of 'turnover'. On the question of turnover taxable under S 5A the assessing authority took the view that the entire turnover of purchases was assessable. The appellate authority accepted the case of the assessee. He found that the sawing of timber bad nothing to do with the turnover of the assessee and thus the whole of the sawing charges had to be excluded. He also accepted the statement of the assessee as to the quantum of timber used for converting into scantlings and sawn timber sold as such and on that basis reduced the turnover liable to tax under S.SA to the sum of Rs.3,950.60. The Appellate Tribunal before whom the matter was taken up in revision by the Department accepted the contention of the Department. Adopting the reasoning of the Sales Tax Officer it found that the sawing work was done on the logs before delivery and for that reason the charges of sawing would fall within the definition of turnover. On the question of the turnover liable to be taxed under S.SA it found that there was some confusion and therefore the matter called for examination afresh. That was directed to be done. These two matters are covered by two of the questions raised in this revision The third question concerns an addition of 5% by way of estimate on account of the fact that such estimate had to be resorted to in vi