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1995 Supreme(Mad) 536
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE ABDUL HADI AND THE HONOURABLE MR. JUSTICE VENKATACHALAM
State of Tamil Nadu - Appellant
Versus
Cauvery Cotton Trading Company - Respondents
Tax Case No. 70 of 1989 (Revision No. 40 of 1989)
Decided On : 10 July 1995
Baling charges incurred by a cotton seller are includible in the "turnover" under the Central Sales Tax Act and hence chargeable to tax.
Headnote:
CENTRAL SALES TAX ACT - SALE PRICE - BALING CHARGES - INCLUSION IN TURNOVER - PENALTY UNDER SECTION 12(5)(III) AND 12(5)(II) OF THE ACT - INTERPRETATION.
Fact of the Case:
The assessee, a cotton seller, incurred baling charges while selling cotton. The issue arose whether these charges were includible in the "turnover" under the Central Sales Tax Act and hence chargeable to tax. The Tribunal held that the charges were not chargeable to tax, reversing the concurrent decisions of the assessing officer and the Appellate Assistant Commissioner.
Finding of the Court:
The Court held that the baling charges were includible in the "turnover" under the Central Sales Tax Act and hence chargeable to tax. The Court also upheld the penalty levied under section 12(5)(iii) of the Act but deleted the penalty levied under section 12(5)(ii) of the Act.
Issues: 1. Whether the baling charges incurred by the assessee were includible in the "turnover" under the Central Sales Tax Act and hence chargeable to tax? 2. Whether the penalty levied under section 12(5)(iii) and 12(5)(ii) of the Act was justified?
Ratio Decidendi: 1. The Court held that the baling charges were includible in the "turnover" under the Central Sales Tax Act and hence chargeable to tax, relying on the definition of "sale price" under section 2(h) of the Act. The Court observed that the charges were part of the consideration payable by the purchaser for the sale of the goods and hence formed part of the "sale price". 2. The Court upheld the penalty levied under section 12(5)(iii) of the Act, holding that the assessee was not acting bona fide in not including the baling charges in its revised return. However, the Court deleted the penalty levied under section 12(5)(ii) of the Act, relying on the decision in State of Tamil Nadu v. Dunlop India Ltd., which held that the levy of penalty under section 12(5)(ii) was not called for in the absence of any time-limit prescribed for filing the revised return.
Final Decision: The Court partly allowed the tax case (revision), setting aside the Tribunal's decision on the issue of taxability of the baling charges and the penalty levied under section 12(5)(iii) of the Act. The Court upheld the Tribunal's decision on the issue of the penalty levied under section 12(5)(ii) of the Act.
ABDUL HADI, J.
The Revenue has filed this tax case (revision) under section38 of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as "the Act"), against the order of the Tribunal below in M.T.A. No. 952 of 1986, which reversed the concurrent decision of the assessing officer and the Appellate Assistant Commissioner in relation to a turnover of Rs. 1, 00, 000 representing the baling charges incurred by the assessee while selling cotton and deleted the penalty levied both under section 12(5)(iii) and 12(5)(ii) of the Act. The relevant assessment year is 1984-85.
2. The first of the two questions involved in this revision relates to the abovesaid turnover of Rs. 1, 00, 000 in relation to the baling charges incurred by the assessee while selling cotton. According to the assessee, the said charges are not includible in the "turnover" under section 2(j) of the Central Sales Tax Act read with section2(h) of the said Act, which defines the term "sale price" and hence not chargeable to Central sales tax.
3. As already indicated while the first two authorities have held that those charges are includible in the turnover and chargeable to tax, the Tribunal has decided differently, holding that those charges are not chargeable to Central sales tax. The reasoning of the Tribunal can be seen from the following passage in the order of the Tribunal :
"According to the appellants, the said charges have been charged for separately in the sale bill and there is no proof that the baling charges have been incurred prior to the completion of sale. But the specific plea of the Revenue is that baling charges are pre-sale charges. As correctly argued by the learned counsel for the appellants that there is no proof on the side of the Revenue to the point that the baling charges have been incurred prior to the completion of sale. Furthermore, we are able to see from the bills that baling charges have been charged separately. There is proof on the side of the appellants to the point that baling charges are in the nature of labour charges for baling the cotton. Therefore, we are of the view that baling charges cannot be assessed to tax and as such same is deleted from the taxable turnover." *
4. The argument of the Additional Government Pleader (Taxes), representing the Revenue, is that the abovesaid baling charges are part of the sale price, coming within the very first part of definition of the term "sale price" under section2(h) of the Act. She also contends that even if the said baling charges come within the latter part of the definition of the term "sale price" which is an inclusive clause therein, the said baling charges are assessable to tax under the Act since those baling charges would not come under the second division of the abovesaid latter part of the definition and which is actually an exclusive clause carved out, from the abovesaid inclusive. Further according to her, the said baling charges are only pre-sale charges or in other words, the said charges have been incurred prior to the completion of the sale and hence cannot be exempted from tax. According to her, simply because those baling charges are billed separately, they cannot be exempted from tax. She also points out that the Tribunal erred in observing that there is no proof on the side of the Revenue to show that the said charges have been incurred prior to the completion of the sale. In this regard, she points out that the onus is not on the Revenue, but is only on the assessee to prove that the said charges have been incurred not prior to the completion of sale, but only subsequently. She also points out that the Tribunal erred in holding without any evidence that there is proof on the side of the assessee that the said baling charges are in the nature of labour charges for baling the cotton. She relied on the decisions in Hindustan Sugar Mills Ltd. v. State of Rajasthan, Ramco Cement Distribution Co. Pvt. Ltd. v. State of Tamil Nadu, Commissioner of Sal
