KULDEEP WINES Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) This tax revision case is filed against the order of the Sales Tax Appellate Tribunal dated 30/10/1981, affirming the assessment made by the Commercial Tax Officer rejecting the assessees claim that excise duty of Rs. 32,895 did not constitute part of the sale price and is therefore not includible in the turnover. The Tribunal also affirmed the estimate of gross profit at 35 per cent on the excise duty and the inclusion of the same in the turnover assessed finally. A few facts may be stated to appreciate the matter in dispute. The assessee is a dealer in liquors. The assessee imported liquor from Bangalore. It was purchased from Khoday Brewing and Distilling Industries, Bangalore, under a bill issued on 24/02/1977. The value of the liquor purchased was Rs. 22,880. The assessee sold the same for Rs. 25,000 to Chaman Wines, Hyderabad, under a bill issued on 2/03/1977. For the purpose of securing the release of the liquor from the bonded warehouse, the assessee was required to pay excise duty of Rs. 32,895. The assessee claimed that the above excise duty was paid by Chaman Wines to secure the release of the liquor from the warehouse. It is claimed that the assessee imported the above liquor on behalf of Chaman Wines and consequently he instructed the Chaman Wines to arrange for the payment of the excise duty. It appears, Chaman Wines issued a cheque in favour of the assessee for the sum of Rs. 32,895 which cheque was encashed by the assessee and the same was remitted into the State Bank of Hyderabad under challan No. 026265 dated 20/01/1977. It is not in dispute that the challan supported the payment of the excise duty by the assessee alone. The challan does not evidence the fact that the payment of the excise duty was in the name of Chaman Wines. After the payment of the excise duty as above, it appears, the release of the liquor was secured from the warehouse and the same was sold to Chaman Wines for the sum of Rs. 25,000. It is admitted that the sum of Rs. 25,000, being the first sale of liquor, was duty admitted by the assessee as part of its turnover for purposes of assessment. Before the Commercial Tax Officer the assessee took the plea that the excise duty of Rs. 32,895 paid could not be considered to be part of the sale price inasmuch as it was paid directly by Chaman Wines. The assessees case was that the sum in question did not come into its coffers and was not part of its circulating capital. The assessee relied on the judgment of the Supreme Court in McDowell & Company Ltd. v. Commercial Tax Officer [1977] 39 STC 151.

(2.) The Commercial Tax Officer rejected the assessees plea that the excise duty paid did not form part of the assessees turnover. The Commercial Tax Officer held that, on the admitted facts, there was no evidence to show that the assessee imported the liquor on behalf of Chaman Wines or that the excise duty was paid directly by Chaman Wines in its own name without the assessee having to do anything with the payment. The facts, that Chaman Wines issued a cheque in favour of the assessee, that the assessee encashed the cheque and realised the cash and that the amount was remitted by the assessee into the State Bank of Hyderabad in its own name and obtained the challan in support of the payment to secure the release of the liquor were, according to the Commercial Tax Officer, indicative of the real effect of the transaction. On the above facts, the Commercial Tax Officer came to the conclusion that the excise duty was paid by the assessee and that there was failure to include the same in the sale-bill issued to Chaman Wines which was clearly a device adopted by the assessee for the purpose of avoiding payment of sales tax. The Commercial Tax Officer also held that the purchase value of the liquor together with excise duty paid (Rs. 22,880 + Rs. 32,895) aggregated to Rs. 55,775. He estimated gross profit on the above purchase price at 35 per cent which worked out to Rs. 19,520 and arrived at a sum of Rs. 75,295. The Commercial Tax Officer held that the assessee was liable to pay sales tax at 25 1/4 per cent on the above mentioned turnover of Rs. 75,295 and accordingly demanded payment of the same.

(3.) The assessee appealed to the Assistant Commissioner (Appeals) who affirmed the order of the Commercial Tax Officer. On second appeal, the Sales Tax Appellate Tribunal also upheld the assessment. The Tribunal observed that the decision of this Court in M. J. Gopal, Nellore v. State of Andhra Pradesh in T.R.C. Nos. 69 and 70 of 1976 squarely applied to the facts of the assessees case and the Commercial Tax Officer was justified in making the above assessment. The Tribunal also held that the facts of McDowells case [1977] 39 STC 151 (SC) were different and that the decision of the Supreme Court is not applicable. It is against this decision of the Tribunal that the assessee came in revision to this Court.