NATIONAL CO-OPERATIVE CONSUMERS FEDERATION OF INDIA LIMITED Vs. STATE OF MAHARASHTRA MAHARASHTRA STATE BOMBAY

JUDGEMENT

(1.) BOTH these references arise out of a common order of the Tribunal. The disputes relate to assessment for the period July 1, 1972 to June 30, 1973, both under the Bombay Sales Tax Act, 1959 and the Central Sales Tax Act, 1956. Two questions have been referred. On pertains to the determination of the sale price under the Bombay Sales Tax Act, 1959 ("bombay Act" or "act")and the other under the Central Sales Tax Act, 1956 ("central Act" ). The questions are as follows :

(2.) WHETHER, on the facts and in the circumstances of the case, the Tribunal was justified in law in including the sum of Rs. 20,928 in the turnover of sales on the ground that it constitutes part of the sale price within the meaning of section 2 (h) of the Central Sales Tax Act, 1956 ? "2. The controversy pertains to the includibility of the amounts mentioned in the questions, which had been collected by the assessee in addition to the price of the goods, as "state federation commission" at the rate of one and one half per cent of the sale price of the goods in the "sale price" of those goods. According to the assessee it does not form part of the sale price within the meaning of section 2 (29) of the Bombay Act and section 2 (h) of the Central Act. The sales Tax Officer treated it as a part of the sale price and included the amount collected by the assessee on that account in its turnover under both the Acts. The appeals of the assessee against the above action of the Sales Tax Officer were rejected both by the Assistant Commissioner of sales Tax and the Maharashtra Sales Tax Tribunal. Hence this reference at the instance of the assessee.

(3.) THE material facts, relevant for the determination of the controversy, are as follows : the assessee, National Co-operative Consumers Federation of India Limited, is a co-operative society (hereinafter referred to as "the assessee") sponsored by the Government of India. The assessee-society lifts confiscated goods from Central Excise and New Customs House and distributes the same to the State Federations or their constituents throughout India. With a view to keep the prices under control and with a view to encourage co-operative movement in India, the assessee-society is also allowed to import dry fruits, textiles and other goods and to distribute the same to the State Federations or their constituents. Normally, the State Federations themselves supply these goods to the wholesale consume societies, department stores, etc. , in their respective States. With a view to maintain price stabilisation at the State level, the State federations charge from their constituents, i. e. , the wholesale consumer societies, department stores, etc. , in the State a commission known as State Federation commission, which is calculated at one and one half per cent of the sale price for the services rendered by it. Sometimes, the assessee-society distributes the goods directly to the wholesale consumer societies, etc. , as per instructions of the respective State Federations and in such cases it includes in its invoices the amount payable by such purchasers to the State Federations a State Federation commission in addition to the price of the goods. The amounts so received by the assessee for and on behalf of the State Federations are credited by it to the accounts of the respective State federations and remitted to them at the end of the year. For the period July 1, 1972 to June 30, 1973, the assessee had included in its invoices in respect of sales falling under the Bombay Act a sum of Rs. 1,08,320 as State Federation commission. The Sales Tax Officer, while assessing the assessee under the Bombay Act, had that this amount formed part of the sale price of the goods supplied by the assessee to the wholesale consumer societies, etc. , and included the same in its taxable turnover. Similarly, in respect of inter-State sales effected by it, for the same period, the assessee had included a sum of Rs. 20,928 in its invoices as State Federation commission. The sales Tax Officer in his assessment of the assessee for the said period under the Central Sales tax Act, 1956, included the said amount of Rs. 20,928 in the taxable turnover of the assessee for the very same reason that it formed part of the sale price of the goods supplied by the assessee. The assessee's contention before the Sales Tax Officer was that the amount of State Federation commission was not includible in its taxable turnover as it did not form part of the sale price. It was contended by the assessee that the said amount of State Federation commission was payable to the respective State Federations by the wholesale consumer societies or department stores to whom the goods were supplied by the assessee at the instance of the respective State federations. It was also contended that the said amount was not payable to the assessee. It was collected by the assessee for and on behalf of the respective State Federations merely for convenience of collection. It was for that reason that the said amount was credited to their accounts forthwith and remitted to them thereafter. It was argued that the amount of commission was not recovered by the assessee on its own account. It was contended that the assessee had acted only as a clearing house for the purpose of collecting the said amount for and on behalf of the State Federations. The Sales Tax Officer, however, did not accept any of these contentions of the assessee and held that the amounts in question formed part of the sale price and were, therefore, includible in the taxable turnover of the assessee. The assessee appealed to the assistant Commissioner of Sales Tax (Appeals), who dismissed the appeals and confirmed the orders of the Sales Tax Officer. Further appeals of the assessee were also dismissed by the maharashtra Sales Tax Tribunal ("the Tribunal" ). Aggrieved by the order of the Tribunal, the assessee applied for reference to this Court under section 61 (1) of the Act. The Tribunal has accordingly referred the questions set out above to us for opinion.