BATA INDIA LIMITED Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) The applicants, Bata India Limited, are registered as dealers under the Bombay Sales Tax Act, 1959. The applicants carry on business in footwear. At the relevant time, entry 24 in Schedule A to the said Act and entry 21 in Schedule C to the said Act dealt with footwear. Under entry 24 in Schedule A footwear made by hand without using power at any stage when sold at a price not exceeding Rs. 15 per pair was exempted from tax. As the footwear sold by the applicants was not made by hand without use of power, entry 24 had no application to the case of the applicants. Entry 21 in Schedule C at the relevant time provided as follows : <FRM>JUDGEMENT_85_TLMHH0_1983Html1.htm</FRM>

(2.) The applicants had entered into an agreement on 26th August, 1977, with Messrs. K. M. Dohadwala of Bombay, wholesalers, for sale of their footwear to them. In pursuance of the said agreement the applicants sold to the said Messrs. K. N. Dohadwala one pair of Anjan shoes. The price of the said pair was Rs. 15.80, but the applicants, in pursuance of the said agreement gave a trade discount of Rs. 1.34, that being the discount at the rate of 8.5 per cent which they gave to wholesalers who purchased from them. Thus the net price charged by them to the said Messrs. K.M. Dohadwala was Rs. 14.46. In respect of the said sale, the applicants issued to the said Messrs. K. M. Dohadwala their invoice dated 7th February, 1978. In the said invoice, they charged the said Messrs. K. M. Dohadwala Re. 0.73 by way of sales tax at the rate of five paise in the rupee. The aggregate amount shown in the said invoice was Rs. 15.19. Earlier by their letter dated 18th January, 1978, the applicants had applied to the Commissioner of Sales Tax under section 52(1)(c) to determine the sale price in cases such as these upon which tax was payable by the applicants. By his order dated 16th February, 1978, the Deputy Commissioner of Sales Tax held that the sale price in the case of goods supplied by the applicants to their wholesalers was to be calculated after deducting from the gross price the amount allowed by way of trade discount and that accordingly on the above transaction the sale price would be Rs. 14.46 and not Rs. 15.80

(3.) On 18th April, 1978, the Maharashtra Sales Tax Tribunal held in the case of Messrs. Advani Brothers being Second Appeal No. 234 of 1976 that the element of sales tax whether collected separately or included in the sale price should be taken into consideration for determining the total sale price for deciding the rate of tax applicable to footwear falling under the said entry 21 of Schedule C. By a trade circular No. MIA-1078/ADM-5/71 dated 1st June, 1978, the Commissioner of Sales Tax brought the said decision of the Tribunal to the notice of the trade in general and the dealers dealing in footwear in particular. Thereafter on 28th June, 1978, the Commissioner of Sales Tax issued a notice to the applicants to show cause why he should not suo motu revise the aforesaid order of the Deputy Commissioner and hold that the sale price in respect of the aforesaid transaction was Rs. 15.19, that is, Rs. 14.46 plus the sum of Re. 0.73 collected by way of sales tax by the applicants. By his order dated 29th January, 1979, the Commissioner of Sales Tax revised the said order of the Deputy Commissioner of Sales Tax and determined the sale price in respect of the said transaction at Rs. 15.59. Against the said decision of the Commissioner, the applicants unsuccessfully went in appeal to the Tribunal. It is from the said judgment and order of the Tribunal that the present reference under section 61(1) of the said Act has been made at the instance of the applicants. In this reference the following question of law has been submitted by the Tribunal to this Court for its determination :