KERALA STATE ELECTRICITY BOARD Vs. AUTHORITY FOR CLARIFICATION

JUDGEMENT

(1.) The Kerala State Electricity Board Limited (for short "Board") has filed this appeal challenging Annexure-C order of the authority for clarification under Sec. 94 of the Kerala Value Added Tax Act, 2003, that held the charges incurred for loading, unloading, stacking, and transportation formed part of the taxable turnover in the contract entered into between the appellant and M/s. Kothamangalam Aggregates, Kothamangalam, for the manufacture and supply of electrical poles.

(2.) Board contends that it had invited tenderers for the purchase of Prestressed concrete poles (for short "PSC poles"), and Annexure-A purchase order contains the basic price, transportation charges, taxes, and duties, and in all the invoices they are separately shown as is evident from Annexure-B and therefore, except the sale price other components do not form part of the same price and therefore, determining the taxable turn including those charges other than the basic price was illegal going by the provisions of the KVAT Act. Initially, the manufacturers filed their monthly returns showing only the price of the poles while computing the taxable turnover, which the department accepted but later on, due to the audit objection, the department sought to levy tax on the freight charges also, which led to one of the manufacturers seeking a clarification. On the basis of the above contentions, the following substantial questions of law have been framed:-

(3.) The learned Senior Counsel Sri. Raju Joseph appearing for the appellant, contended that going by the clauses in Annexure-A purchase order and Annexure B invoice, it is clear that the sale was complete at the factory gate and that the transportation, unloading stacking, etc., are not part of the sale consideration. Thus, going by 10 (e) of the Kerala Value Added Tax Rules, freight and charges for delivery are specifically excluded while determining taxable turnover, and as the invoice shows these items separately, freight and charges for delivery ought to have excluded from the taxable turnover. His further submission is that the decision of the Supreme Court in India Meters Limited v. State of Tamil Nadu [(2010) 9 SCC 423] is clearly distinguishable as the factual situation was different. It is also his argument that the terms of the agreement determine whether the sale consideration included the transportation, unloading, and other charges, and it cannot be said that in every case, transportation or freight charges will be included as the sale price.