The State Legislature has the power to define "purchase price" for the purpose of levying sales tax, and the inclusion of transport costs and forwarding and handling charges in the definition is within the ambit of the legislative entry.

U. L. BHAT, C.J. - Petitioner is a company incorporated under the Indian Companies Act, 1956. Petitioner owns a sugar factory in Mandsaur district. Sugarcane is purchased from cultivators. Petitioner is a registered dealer under the M.P. General Sales Tax Act, 1958 (hereinafter referred to as "the Act" for short). Purchase of sugarcane is taxable under section 7 of the Act on the basis of "purchase price". "Purchase price" is defined in section 2(kk) of the Act. Petitioner's contention is that clauses (ii) and (iv) of section 2(kk) of the Act are ultra vires. On behalf of the respondents, return has been filed.

2. The only contention urged by the learned counsel for the petitioner is based on the ground of lack of legislative competence in the State Legislature to incorporate the subject-matter of the impugned clauses in the definition of "purchase price" and treating the same as part of "purchase price".

Section 4 of the Act deals with incidence of taxation. Every dealer whose turnover during the year exceeds the limits specified in sub-section (5) of section 4 shall be liable to pay tax under the Act on his taxable turnover in respect of sales or supplies of goods effected in Madhya Pradesh. Section 6 deals with levy of sales tax. Section 7 deals with levy of purchase tax. Every dealer who in the course of his business, purchases any goods specified in Schedule II from a registered dealer in circumstances in which no tax under sub-section (1) of section 6 is payable by that registered dealer on the sale price of goods or from any other person, shall be liable to pay tax on the purchase price of goods, if after such purchase, the goods are not sold either within the State or in the course of inter-State trade or commerce, but are sold or disposed of otherwise or used or consumed in the manufacture or processing of other goods or used or consumed otherwise. Sugarcane is included in Schedule II. Petitioner, a registered dealer, purchases sugarcane from cultivators who are not required to pay sales tax on the sale price of sugarcane. The petitioner consumes sugarcane in the manufacture of sugar. Petitioner is liable to pay purchase tax on the purchase price of the sugarcane so purchased.

4. Section 2(o) of the Act defines "sale price" as meaning the amount payable to a dealer as valuable consideration for the sale of any goods less any sum allowed as cash discount according to ordinary trade practice, but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before delivery thereof other than the cost of freight or delivery or the cost of installation when such cost is separately charged.

5. "Purchase price" is defined in section 2(kk) as follows :

"(kk) 'Purchase price' shall comprise of -

(i) the amount payable by a dealer as valuable consideration for the purchase of goods 'simpliciter' :

Provided that where goods are purchased together with the packing material or container, then notwithstanding anything contained in this Act, the purchase price of such goods shall be inclusive of the price or cost or value of such packing material or container, whether such price or cost or value is paid separately or not, as if such packing material or container were the parts of the goods purchased;

(ii) transport costs, if any;

(iii) trade commission, if any, by whatever name called;

(iv) forwarding and handling charges, if any;

(v) insurance charges, if any;

(vi) local taxes, if any;

(vii) excise duty, if any, leviable under the Central Excises and Salt Act, 1944 (No. 1 of 1944);

(viii) cost of packing, if any; and

(ix) any other charges or costs other than those specified above, if incurred or paid in respect of goods so purchased.

Explanation - For the purpose of this clause 'transport cost' includes such expenses as are incurred by the dealer on transportation of goods after taking delivery from the seller."

Essentially "purchase price" consists of the amount payable by a deal