STATE OF GUJARAT Vs. JAYANTILAL BHIMJI AND SONS

JUDGEMENT

(1.) The question which arises for consideration in this reference is this whether certain amounts recovered by a dealer from its customers for expenses of postage telephone call charges and bank charges by separately adding at the end of bills are to be considered as valuable consideration in respect of transaction of sales entered into between the dealer and its customers. To state briefly the facts leading to the reference are that the opponent is a dealer carrying on business of reselling food grains oil-seeds oil etc. and is also acting as a commission agent. He is registered as a dealer under the Bombay Sales Tax Act 1959 referred to as the Act). In the sale bills issued by the opponent he has separately charged the price of the goods and certain expenses like packing octroi weighment brokerage etc. which are incidental to the sale of the goods and has included the expenses of packing octroi weighment brokerage etc. in the sale price of the goods and has recovered and paid the tax thereon. The opponent also recovered certain amounts of expenses for postage call-charges and bank charges by separately adding at the end of the bill. These amounts were not included in the turnover of sales by the opponent. The Sales Tax Officer added to the turnover of sales Rs. 19 743 which equals to 75 per cent of the total of such charges; Rs. 27 378 for postage call-charges and bank charges during S. Y. 2024 and levied tax thereon. Against this assessment order there was an appeal before the Assistant Commissioner who held that such charges formed part of turnover of sales and confirmed the order passed by the Sales Tax Officer. Against this decision of the Assistant Commissioner the matter was taken in second appeal to the Tribunal and the Tribunal came to the conclusion that the amounts recovered as postal charges telephone call charges and bank charges were not included in the sales price as they were charges for services rendered by the dealer to his customers in general. Such charges could not be equated with consideration for transfer of property in goods. At the instance of the Department the Tribunal has referred the following question to us:

(2.) Now the sales tax that is charged in this State is recovered on the basis of the turnover of the sales of a dealer. Sec. 2(36) of the Act defines the expression turnover of sales and the said definition is as follows:

(3.) But these findings of the Tribunal cannot lead to the conclusion that the postal charges. telephone charges or bank charges form part of the sale price. Mere fact that these amounts are included in the bills given by the dealer to the customer cannot lead to the conclusion that they are part of the sales price If these charges form part of the sale price there is no reason why they have been separately stated. There is no material on the record to indicate that the dealer would not have sold the goods if these charges were not agreed to be paid by the vendee. The amounts are charged are for services rendered to customers in general and such service charges cannot be equated with consideration for the transfer of the property in the goods. This is the conclusion of the Tribunal and we do not think the said conclusion is in any way erroneous. The aforesaid conclusion is supported by the decision in Nemkumar Kesrimal v. Commissioner of Sales Tax Madhya Pradesh 6 S.T.C. 222. The question which arose before the Court was whether the amounts charged as Dharmada were included in the sale price. The court negatived the contention that they were included in the sate price and the reason for the said conclusion was that if the amount was price proper it would have been included in the price and not separately charged. The Court further observed that there was no further material to hold that the seller would have refused to perform the agreement if the Dharmada was not paid. The court came to the conclusion that Dharmada amounts were paid willingly by the buyer in addition and they were not included in the sale price. In Shrinivasa Timber Depot and others v. Deputy Commercial Tax Officer Choolai Division Madras 29 and others 23 S.T.C. 158 the question arose whether charges collected as lot cooly charges from the customers by the dealer formed part of the sale price. The practice of the trade was that the customer who went to the timber depot for purchase of timber took meticulous care in selecting good timber and for this specified purpose it would require some labour like lifting up logs of timber cutting them into sizes and placing them in one lot and so on. For this purpose according to the trade practice certain charges were collected under the name of lot cooly charges. The Court held that the said charges were recovered for services rendered and cannot included in the sale price.