MYSORE MINERALS LTD Vs. KARNATAKA APPELLATE TRIBUNAL

JUDGEMENT

(1.) ASSESSEE-PETITIONER (for short, "the assessee") has filed this petition under Section 23 (1) of the karnataka Sales Tax Act, 1957 (for short, "the Act") read with Section 8a of the Karnataka appellate Tribunal Act, 1976 on the following question : "whether the amounts charged for and collected by the assessee from customer towards royalty and loading charges form part of sale price liable to tax ?"

(2.) FACTS relevant to determine the controversy between the parties are : assessee is engaged in the mining and sale of ore and other minerals. Assessment for the period april 1, 1996 to March 31, 1997, was concluded by the assessing officer on March 12, 1999. Assessing authority included in the turnover the sum of Rs. 1,13,956 collected as royalty and remitted to the Government and the loading charges of Rs. 19,190 for the purpose of levying tax under the Act. Aggrieved against the inclusion of the aforesaid amounts in the total turnover, the assessee filed the appeal before the Joint Commissioner of Commercial Taxes (Appeals ). The first appellate authority dismissed the appeal holding that the royalty was a price paid to Mines and Geological Department of Government of Karnataka by the assessee to obtain China clay. Therefore, the royalty paid formed part of the sale price as it is a pre-sale expenditure. Loading charges incurred separately in the bills was also taken to be the pre-sale expenditure and a part of the sale price. The levy of tax on royalty and loading charges was upheld.

(3.) AGGRIEVED against the orders passed by the first appellate authority, assessee filed further appeal before the Karnataka Sales Tax Appellate Tribunal (for short, "the Tribunal" ). The tribunal concluded that the appellant had included the sale price (bills) amounts representing royalty and loading charges and realised the same from customers on the sale of clay, and therefore, such amounts would constitute part of the sale price. That royalty and loading charges form part of the pre-sale expenses. Therefore, these two amounts could not be deducted while computing the taxable turnover. Tribunal relied upon the judgment of the Supreme Court in cooch Behar Contractors' Association v. State of West of Bengal 1996 vii AD (SC )154 , (1997 )1 CALLT19 (SC ), JT1996 (8 )SC 343 , 1996 (6 )SCALE440 , (1996)10 SCC380 , [1996 ]supp6 SCR57 , [1996 ]103 STC477 (SC ) wherein it has been held that the royalty forms part of the sale price. Question regarding the expenses incurred on account of loading charges would depend on the circumstances in which the labour was employed.