IMPORTANT POINT
Freight and logistic charges, when separately charged, cannot be included in the taxable turnover under the Uttarakhand VAT Act.

JUDGMENT :

(per Ms. Ritu Bahri, C.J.)

The appellant M/s D.D. Motors has come up in the revision challenging the consolidated order passed by the Commercial Tax Tribunal dated 25.08.2014, whereby in an appeal for the assessment year 2005-2006 to 2010-2011, the Tribunal has held that the logistics charges, charged by the dealer/assessee, which includes the service tax charged by the dealer on the logistic charge will form the freight price and will be included in the taxable turn over, and in this backdrop, has affirmed the assessment order.

2. The revisionist is an assessee and even the authorized dealer of the Maruti Udyog Limited, and he had sold different cars of maruti limited from his show-room at Dehradun.

3. For the assessment year 2005-2006 to 2010-2011, are the regular assessment of the assessee was completed and he paid the tax. Subsequent to passing of the original assessment order, the assessee received a notice under section 29 (4) of the UK VAT Act, 2005, calling upon the revisionist to show-cause why tax should not be imposed on the logistic charges, charged separately by the revisionist/dealer in the sale invoices.

4. The case set up by the revisionist before the Authorities was that the freight from “Gurgaon to Dehradun” had been included in the sale price of the car. However, on account of the geographical situation of the Dehradun town, the cars had to be unloaded at Biharigarh, which is outside the boundary of the Dehradun, and every car thereafter was brought to Dehradun by road individually. For this exercise, an extra service provided by the dealer was separately charged from the customer and service tax was paid on that logistic charge. However, vide order dated 31.07.2013, Annexure no.1, the freight charges which were paid by the customers in the process of taking car from Biharigarh to Dehradun were added in the turnover and were taxed.

5. An appeal was filed taking the grounds for the assessment year 2005-2006 to 2010-2011. The Appellate Authority vide order dated 26.03.2014, Annexure no.3, held that the logistic charges, which was charged by the assessee separately in his sale invoice and deleted the tax levied on the logistic charges by the Assessing Authority.

6. The Commissioner Commercial Tax, Uttarakhand, filed the second appeal, before the Commercial Tax Tribunal, Dehradun, and the Commercial Tax Tribunal had consolidated all the appeals and decided by the common judgment dated 25.08.2014, Annexure no.5, and restored the order passed by the Assessing Authority. The Tribunal proceeded that the original assessment order of the assessee under Section 25 (6) of the VAT Act, was completed. However, the survey was conducted by the SIB, Branch of Department dated 07.09.2010, whereby the SIB reported that the assessee for each relevant assessment year had charged a separate amount, apart from the sale price in sale invoices as logistic charges, and has not paid tax on that amount. By referring to the definition of the “sale price” as defined under Section 2(42) of the VAT Act, and the word “turnover of sales” under Section 2(50) of the VAT Act and the word “incidence of tax” under Section 3 of the VAT Act, the Tribunal held that the expenses incurred by the dealer after the sale of the car will not form part of the turnover, but the expenses incurred by the dealer on predelivery of goods will be included in the sale price, whether separately charged.

7. On the above backdrop, now the present revisions have been filed against the order of the Tribunal, learned counsel for the revisionist, has referred to the few sale invoices Annexure no.7, which the manufacturer had issued to the dealer/revisionist, when price of the car is fixed by the manufacturer. The car was sold on the price fixed by the manufacturer and charged the VAT on that price.

8. The sale invoices issued by the revisionist are Annexure no.8, which shows the sale price as that reflected in the sale invoice Annexure no.7. As per the manufacturer the