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2007 DIGILAW 122 (GAU)

Dunlop India Limited v. State of Tripura

2007-02-07

HRISHIKESH ROY

body2007
JUDGMENT H. Roy, J. 1. Heard Mr. S.C. Saha, the learned Counsel for the petitioner and also Mr. A. Ghosh, the learned Counsel representing the respondents. 2. The petitioner company, which is a dealer registered under the Tripura Sales Tax Act, 1976 (hereinafter referred to as 'the Act') has filed separate writ petitions relating to different assessment years challenging the consolidated order of assessment dated 14.03.1995. The appellate order dated 19.09.1996 and the 2nd appellate order dated 11.06.1997 of the Tripura Sales Tax Tribunal upholding the said assessment order for the period 1988-89 to 1993-94 (six years) is also under challenge. The issue that needs to be decided by this Court is whether the impugned orders of assessment, whereby handling charge has been added to the tax liability of the dealer is sustainable in law? 3. Appearing for the assessee, it has been submitted by Mr. S.C. Saha, the learned Counsel that the dealer, in respect of the concerned years of assessment, has submitted his returns on time and it was incumbent on the Assessing Authority to make the assessment under the provisions of Section9 of the Act at the close of the year of business and the Assessing Authority having made the assessment several years after the closure of business, was incompetent in law to make such belated assessment. Mr. Saha has further argued that the dealer, for the concerned period, had charged the sale price of the goods and in addition to the said sale price, a handling charge @ 10% has also been charged from the purchasers. But the said handling charge is levied in order to reach the goods to the purchasers and is not a part of the consideration or the sale price for the goods sold. On the basis of such contention, it is argued that the adding of handling charge to the sale price for the purpose of assessment is not authorized by law. The imposition of penalty under the provisions of Section 13(1)(d) of the Act has been assailed by Mr. Saha by stating that such imposition can be made by the authority only after making an assessment and determining tax liability of the dealer and penalty cannot be imposed simultaneously at the time of assessment of a dealer. The imposition of penalty under the provisions of Section 13(1)(d) of the Act has been assailed by Mr. Saha by stating that such imposition can be made by the authority only after making an assessment and determining tax liability of the dealer and penalty cannot be imposed simultaneously at the time of assessment of a dealer. The levy of interest is also challenged on the ground that the authorities for their own fault did not make the assessment within a reasonable time after closure of the business of a year as required by Section 9 of the Act and accordingly, interest liability should not have been fastened on the assessee. 4. In order to appreciate the submissions advanced, it would be necessary to refer to Section 2(h) of the Act, which defines 'Sale Price'. 2 (h) "sale price" used in relation to a dealer means the amount of the money consideration for the sale on taxable goods manufactured, made or processed by him in Tripura or brought by him into Tripura from any place outside Tripura for the purpose of sale in Tripura, less any sum allowed as cash discount according to the trade practice, but includes any sum charged for containers or other materials for the packing of such taxable goods; [Provided that 'sale price' as defined in this clause does not include the sale referred to in Section 3A:] From the above definition given in the Act, it appears that 'sale price' means the money consideration for the sale on taxable goods received from a purchaser and only component that has been excluded from the purview of the 'sale price' is cash discount, which may be offered by the seller in course of normal trade practice. Having regard to the definition as noted above of 'sale price', it can be seen that handling charge has not been specifically excluded from 'sale price' and from the definition it would appear that the entire money consideration, which may be received for sale of goods, is to be taken as 'sale price' for the purpose of assessment. 5. In support of the Revenue, Mr. A. Ghosh, the learned Counsel has made submission defending the inclusion of handling charge in the sale price for the purpose of assessment under the Act. 5. In support of the Revenue, Mr. A. Ghosh, the learned Counsel has made submission defending the inclusion of handling charge in the sale price for the purpose of assessment under the Act. It is submitted that the assessment has been made by taking note of the fact that the dealer charged a uniform handling charge at 10% of the price of the goods from every customer but no tax in respect of the amount charged as handling charge has been deposited by the dealer. It is further submitted that handling charge is very much a component of the money consideration received by the dealer and accordingly, there is no infirmity in the orders of assessment as well as in the orders upholding the said assessment order. 6. Mr. Saha, the learned Counsel for the assessee has cited the decision of the Supreme Court reported in 1988 SCC 409 (Bharat Steel Tubes Ltd. v. State of Haryana) in support of his submission that the authorities were required to complete the assessment within a reasonable period and in this case, the belated assessment has vitiated the impugned order of assessment. The Supreme Court in the case cited held that in the absence of any prescribed period of limitation given under the statute for making the assessment, the assessment has to be completed within a reasonable period and what such reasonable period would be, would depend upon the facts of each case. In the instant case, the Assessing Authority did not make the assessment immediately after the closure of business for the concerned year but made the order of assessment by clubbing together assessment for six years covering the period from 1988 to 1994. It is seen from the Act that no specific period is prescribed for making assessment and in the facts of the instant case, although the assessments were done on 20.02.1995, the said assessments cannot be said to be beyond a reasonable period, particularly in respect of the later years for which the assessments have been made. However, as it is a consolidated assessment process covering a period of six years, the Court is not inclined to interfere with the order of assessment on the ground of unreasonable delay in making such assessment. 7. However, as it is a consolidated assessment process covering a period of six years, the Court is not inclined to interfere with the order of assessment on the ground of unreasonable delay in making such assessment. 7. In support of the main contention regarding adding of handling charge for the purpose of assessment, the following decisions have been cited on behalf of the assessee. (i) 1969 (24) STC 487 (Hyderabad Asbestos Cement Products Ltd. v. State of Andhra Pradesh); (ii) 1993 (90) STC 36 (Deputy Commissioner of Sales Tax (Law) v. K.P. Moideenkutty (Deed). In support of the Revenue, the following decisions have been cited in support of the decision to include handling charge in the sale price for the purpose of assessment of sales tax for the goods sold by the Dealer. (a) 1979 (43) STC 13 (Hindustan Sugar Mills Ltd. v. State of Rajasthan) (b) 1970 (26) STC 248 (Dyer Meakin Breweries Ltd. v. State of Kerala) (c) 1971(27) STC 120 (D.C. Johar & Sons (P) Ltd. v. Sales Tax Officer, Ernakulam) In so far as the decisions of the Supreme Court in Hyderabad Asbestos Cement Products Ltd. and Deputy Commissioner of Sales Tax (Law) (supra) are concerned, it can be seen that the said two decisions relate to cost incurred for freight or transport of the goods sold to the purchasers. In the said decisions, the Railway freight was borne by the purchasers and the dealer received only the actual price of the goods sold minus the freight charge. In the context of the said factual situation, the Supreme Court held that the amount spent for freight cannot be added to the price of the goods sold for the purpose of assessment. The three decisions cited on behalf of the Revenue, namely Hindustan Sugar Mills Ltd., Dyer Meakin Breweries Ltd. and D.C. Johar & Sons (P) Ltd. (supra) are direct cases relating to 'handling charge'. The Supreme Court in these three cases held that handling charge is a component of the sale price in respect of the sold goods and since the dealer recovered the handling charge from the purchasers, it was appropriate to hold that handling charge would definitely form a part of the money consideration, making the same liable to assessment of tax under the Sales Tax Act. In the instant case, it is found that handling charge at a uniform rate of 10% has been received by the selling dealer from the purchasers in addition to the sale price and the purchasers have had to pay the handling charge in respect of the goods purchased as a part of the consideration to the selling dealer. In such factual situation, this Court is of the view that the decisions cited on behalf of the assessee have no application and the decisions of the Supreme Court cited on behalf of the Revenue squarely apply to the facts of the instant case. Accordingly it is held that the addition of handling charge while assessing the liability of the dealer under the Act is justified and proper. 8. As regards the challenge made to imposition of penalty under the provisions of Section 13(1)(d)of the Act, it can be seen from the provisions of Section 13(1) of the Act that penalty can be imposed for evasion of tax if in course of any proceeding under the Act a satisfaction is reached that a dealer has evaded in any way the liability to pay tax. In the instant case, the Assessing Authority in course of the assessment proceeding has found that the dealer has tried to evade tax and on the basis of such finding has imposed penalty on the dealer. The said decision appears to be in consonance with the provisions of Section 13(1)(d) of the Act and no infirmity can be seen in the said decision of the Revenue Authorities. 9. It can also been seen that since May, 1993 onwards the dealer itself has added handling charge as a part of the consideration while submitting its returns for the purpose of assessment to sales tax under the Act and it thus appear that the dealer was conscious of its liability to pay tax on the component of handling charge also. But despite such knowledge and awareness, the dealer did not pay any tax on the amount realised as handling charge, which has been charged from the purchasers and on this ground also the contention raised against imposition of penalty is rejected. Having taken the said view, the decisions cited on behalf of the assessee, namely 7970 (26) STC 211 (Hindustan Steel Ltd. v. The State of Orissa) and 7977 (3) STC 308 (Jiten and Co. Having taken the said view, the decisions cited on behalf of the assessee, namely 7970 (26) STC 211 (Hindustan Steel Ltd. v. The State of Orissa) and 7977 (3) STC 308 (Jiten and Co. v. The Sales Tax Officer Ward No. 10, Delhi) that no penalty is liable to be imposed against the assessee are held to be not applicable in the facts of the instant case. 10. In so far as the fastening of interest liability on the assessee, it can be seen that the Assessing Authority passed a common assessment order for six years covering the period from 1988 to 1994. The authorities did have a responsibility under the Act to complete the assessment within a reasonable time and when belated assessment is made, charging of interest against the assessee on the basis of such belated assessment may not be justified in a given case. However, it can be seen in the present case that the Revenue Authorities did not impose any liability on account of interest in respect of the period from 1991 to 1994. Thus the Assessing Authority itself took a decision not to fasten the assessee with liability on account of interest in respect of earliest three of the six years for which assessment was made in such view of the matter, the said decision appears to be a reasonable decision and no interference is called for with regard to the order of interest imposed in the order of assessment. 11. As this Court has upheld the order of assessment dated 20.02.1995 and has rejected the challenge made by the assessee against the said order of assessment, the orders passed by the First Appellate Authority on 19.09.1996 and the Second Appellate Authority on 11.06.1997, upholding the said assessment order are declared to have been correctly passed. Accordingly, writ petitions are held to be without any merit and the same are dismissed. No cost.