Uttarakhand High Court
M/S D. D. Motors vs The Commissioner on 6 September, 2024
2024:UHC:6525-DB
Reserved on:15.07.2024
Delivered on:06.09.2024
IN THE HIGH COURT OF UTTARAKHAND
AT NAINITAL
HON'BLE THE CHIEF JUSTICE MS. RITU BAHRI
AND
HON'BLE SRI JUSTICE RAKESH THAPLIYAL
COMMERCIAL TAX REVISION No.25 OF 2014
M/s D. D. Motors ...Revisionist
Versus
The Commissioner, Commercial Tax, Uttarakhand,
Dehradun
With
COMMERCIAL TAX REVISION No.01 OF 2020
M/s D. D. Motors ...Revisionist
Versus
The Commissioner, Commercial Tax, Uttarakhand,
Dehradun
...Respondents
Counsel for the revisionist : Mr. Surendra Kumar Posti, learned
senior counsel, assisted by Mr.
Ashutosh Posti, learned counsel.
Counsel for the State : Ms. Puja Banga, learned Brief Holder.
JUDGMENT :
(per Ms. Ritu Bahri, C.J.)
The appellant M/s D.D. Motors has come up in
the revision challenging the consolidated order passed
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by the Commercial Tax Tribunal dated 25.08.2014,
whereby in an appeal for the assessment year 2005-
2006 to 2010-2011, the Tribunal has held that the
logistics charges, charged by the dealer/assessee, which
includes the service tax charged by the dealer on the
logistic charge will form the frieght price and will be
included in the taxable turn over, and in this backdrop,
has affirmed the assessment order.
2. The revisionist is an assessee and even the
authorized dealer of the Maruti Udyog Limited, and he
had sold different cars of maruti limited from his show-
room at Dehradun.
3. For the assessment year 2005-2006 to 2010-
2011, are the regular assessment of the assessee was
completed and he paid the tax. Subsequent to passing of
the original assessment order, the assessee received a
notice under section 29 (4) of the UK VAT Act, 2005,
calling upon the revisionist to show-cause why tax
should not be imposed on the logistic charges, charged
separately by the revisionist/dealer in the sale invoices.
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4. The case set up by the revisionist before the
Authorities was that the freight from "Gurgaon to
Dehradun" had been included in the sale price of the car.
However, on account of the geographical situation of the
Dehradun town, the cars had to be unloaded at
Biharigarh, which is outside the boundary of the
Dehradun, and every car thereafter was brought to
Dehradun by road individually. For this exercise, an
extra service provided by the dealer was separately
charged from the customer and service tax was paid on
that logistic charge. However, vide order dated
31.07.2013, Annexure no.1, the freight charges which
were paid by the customers in the process of taking car
from Biharigarh to Dehradun were added in the turnover
and were taxed.
5. An appeal was filed taking the grounds for the
assessment year 2005-2006 to 2010-2011. The
Appellate Authority vide order dated 26.03.2014,
Annexure no.3, held that the logistic charges, which was
charged by the assessee separately in his sale invoice
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and deleted the tax levied on the logistic charges by the
Assessing Authority.
6. The Commissioner Commercial Tax,
Uttarakhand, filed the second appeal, before the
Commercial Tax Tribunal, Dehradun, and the
Commercial Tax Tribunal had consolidated all the
appeals and decided by the common judgment dated
25.08.2014, Annexure no.5, and restored the order
passed by the Assessing Authority. The Tribunal
proceeded that the original assessment order of the
assessee under Section 25 (6) of the VAT Act, was
completed. However, the survey was conducted by the
SIB, Branch of Department dated 07.09.2010, whereby
the SIB reported that the assessee for each relevant
assessment year had charged a separate amount, apart
from the sale price in sale invoices as logistic charges,
and has not paid tax on that amount. By referring to the
definition of the "sale price" as defined under Section
2(42) of the VAT Act, and the word "turnover of sales"
under Section 2(50) of the VAT Act and the word
"incidence of tax" under Section 3 of the VAT Act, the
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Tribunal held that the expenses incurred by the dealer
after the sale of the car will not form part of the
turnover, but the expenses incurred by the dealer on
predelivery of goods will be included in the sale price,
whether separately charged.
7. On the above backdrop, now the present
revisions have been filed against the order of the
Tribunal, learned counsel for the revisionist, has referred
to the few sale invoices Annexure no.7, which the
manufacturer had issued to the dealer/revisionist, when
price of the car is fixed by the manufacturer. The car
was sold on the price fixed by the manufacturer and
charged the VAT on that price.
8. The sale invoices issued by the revisionist are
Annexure no.8, which shows the sale price as that
reflected in the sale invoice Annexure no.7. As per the
manufacturer the sale price included the freight charges
up to Dehradun. However, on account of hilly areas, the
cars had to be unloaded at Biharigarh, outside the
boundary of the Dehradun, and then every car was
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brought to Dehradun by road individually. The
money paid for this travelling was not part of the sale
invoice Annexure no.7. Hence, for all intentions and
purposes, the learned counsel for the revisionist has
argued that the revisionist/assessee could not charged
more than the sale invoice Annexure no.7 and even the
sale invoices issued by the revisionist/dealer is Annexure
no.8. Once as per the manufacturer, the sale invoices
Annexure no.7, included the freight charges from
"Gurgaon to Dehradun" the revisionist was only bound to
pay the tax on the turnover as per the sale price as
reflected in Annexure nos.7 and 8 of the revision.
9. Learned counsel for the revisionist has
referred to a judgment of Division Bench of Uttarakhand
High Court as reported in 2010 (2) U.D. 420, "Sanjay
Agarwal Vs. The Commissioner of Trade Tax,
Uttarakhand" where there was a separate agreement
between the manufacturer and the dealer, which
provided that freight charges and trade tax were
required to be charged separately in the bills, price of
goods were charged separately and freight charges and
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trade tax were charged separately, and hence the
Assessing Authority committed an error in including the
freight charges and trade tax in the turn over.
10. A perusal of this judgment shows with regard
to the freight charges in paragraphs 6, 7, 12 and 13, as
observed as under:-
"6. The only question which arises for consideration
in this revision is with regard to the tax liability on
a dealer with regard to freight charges and Trade
Tax. The revisionist has relied upon the definition
of Section 2 Explanation II(i) of U.P. Trade Tax Act,
1948 which defines turnover as under:-
"[(i) the amount for which goods are
sold or purchased shall include the price
of the packing material in which they are
packed and any sums charged for
anything done by the dealer in respect
of the goods sold at time of or before
the delivery thereof, other than cost of
freight or delivery or cost of installation
or the amount realised as [trade tax on
sale or purchase of goods], when such
cost or amount is separately charged];"
7. The aforesaid provision clearly indicates that if
freight and Trade Tax is charged separately and is
also realised separately then the amount, so
realised, cannot be treated as part of the turnover.
The tax liability with regard to freight charges and
Trade Tax can only be fixed on a categorical finding
being given, namely, that the freight charges and
Trade Tax has not been realised separately and
that it was inclusive of the price of the goods sold.
It was, therefore, incumbent upon the Assessing
authority to examine all the bills and give a specific
and categorical finding as to how much of the
amount as freight charges was realised separately
and how much was it realised inclusively.
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12. In State of Karnataka vs. Banglore Soft Drinks
(P) Ltd., 2000(10) S.C.C. 531, the Supreme Court
also held that where freight charges was collected
separately, the same was not includible in the
taxable turnover of the seller.
13. In the light of the aforesaid, the Court is of the
opinion that in view of the evidence filed by the
revisionist, the assessee was entitled for exemption
of freight and Trade Tax in its turnover and the
Assessing Authority committed a manifest error in
including the Trade Tax and freight charges in the
turnover of the revisionist. In view of the aforesaid,
the impugned orders, namely, the Assessment
Order, the Appellate Order as well as the Second
Appellate order cannot be sustained and are
quashed. The revision is allowed. The Assessing
Authority is directed to pass a consequential
assessment order giving exemption to the assessee
with regard to freight and trade tax for the
assessment years in question.
11. Learned State Counsel has referred to the
judgment of the Hon'ble Supreme Court in the case of
"M/s India Meters Ltd. vs. State of Tamil Nadu",
Civil Appeal No.1032-33 of 2003, decided on
07.09.2010. In the facts of that case, the assessee had
not included freight charges in its taxable turnover.
However, it had collected freight charges and insurance
charges separately, but the same had not been shown in
the monthly returns. The assessee was liable to pay
freight charges, as sale would include deliver in the
premises of the buyer, and for the final delivery of the
goods, he had to incur freight charges. Since this freight
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charges were paid before the delivery of goods, they
were to be regarded as amount paid by the seller on
behalf of the buyer.
12. The facts of the above said case are not
applicable to the facts of the present case, as in the
present case, as per the sale invoices placed on record
by the revisionist as Annexure No.7 at Page No.112 to
the Revision, the sale price includes at Sl. No.13
"transportation charges". Annexure No.7 at Page
No.112, is the original invoice for the buyer, which
includes transportation charges. Annexure-8 is the retail
invoice of the D.D. Motors, which includes loading/
unloading charges. Hence, for all intents and purposes,
the sale price included transportation, loading/ unloading
charges. Hence, the amount of sale price included
transportation, loading/ unloading charges, and these
charges were also part of the turnover of the revisionist.
13. On similar facts, the judgment of the Hon'ble
Supreme Court in the case of "Bihar State Electricity
Board and another vs. Usha Martin Industries and
another", (1997) 5 SCC 289, referred to by the State,
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will not be applicable to the facts of the present case, as
even in that case, the Supreme Court while considering
the Electricity (Supply) Act, 1948, held that the entire
price inclusive of excise duty would constitute sale price
for supply of energy and even if, excise duty on
electricity is abolished, the Board was not liable to
reduce the uniform tariff. The electricity tariff was fixed
by the Electricity Board and the State Government, and
it was a policy decision, and High Court could not decide
the proper price and direct the Board to ensure the tariff
accordingly.
14. The Hon'ble Supreme Court was examining
the issue of abolition of excise duty. However, in the
present case, as per the invoices (Annexures-7 and 8),
transportation, loading/ unloading charges are already
part of the invoices for buyer.
15. The Full Bench of this Court in Commercial Tax
Revision No.44 of 2022, decided on 11.07.2023,
"Prabhagiya Vipnan Prabandhak Uttarakhand
Forest Development Ramnagar vs. Commissioner,
Commercial Tax Uttarakhand, Dehradun", was
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examining the issue of interpretation of sale prices in the
Uttarakhand Value Added Tax Act, 2005, which was
amended by Act No.05 of 2008, and definition of 'Sale
Price' has been included under Section 2 sub-section 42
of the Act. The Full Bench was examining the issue of
collection of market fees by the dealer, and held that
market fees had to be part of turnover for the purpose
of levy of tax. The Full Bench further observed that in
the definition of 'Sale Price', it has been specifically
mentioned that cash discount, commission or trade
discount, cost of outward freight or delivery or the cost
of installation in case where such cost is separately
charges and the amount of tax under the Act, if
separately charged by the dealer, shall not include in the
'sale price'. However, in the facts of the present case,
even this judgment will not be applicable, as
transportation, loading/ unloading charges are already
part of the sale price.
16. In the facts of the present case, the complete
freight charges were part of the sale invoice, as per
Annexures-7 and 8, and delivery of goods was made
near Dehradun. However, the car had to be unloaded at
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Biharigarh, outside the boundary of Dehradun. Hence,
outside the boundary of Dehradun, the goods had to be
delivered, and the revisionist had paid the entire sale
price, including, transportation, loading/ unloading
charges. The cars were unloaded at Bihargarh because
being a hilly area. From Biharigarh, the cars were taken
by the revisionist individually, and hence, the money
spent on transportation from Biharigarh could not be
made part of the sale price, and turnover of the
respective years, since this price was never the part of
sale invoices (Annexures-7 and 8), and hence, the
amount paid by the revisionist for unloading the cars at
Biharigarh could not be made part of the sale price and
turnover. There was no separate agreement for
transportation of goods, and freight charges were part of
the original invoices (Annexures-7 and 8). The Division
Bench of this Court in the case of "Sanjay Agarwal vs.
The Commissioner of Trade Tax, Uttarakhand",
reported in 2010 (2) SCC 420, was examining the case
where freight charges and trade charges were charged
separately, and price of goods was charged separately,
and the Division Bench held that the Assessing Authority
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had committed an error in including the Trade Tax and
freight charges in the turnover of the revisionist.
17. Since the revisionist had already paid the
freight, loading/ unloading charges as per Annexures-7
and 8, the charges paid for transportation, loading/
unloading the cars cannot be made part of the sale price
and turnover.
18. Accordingly, the present Commercial Tax
Revisions are allowed, and the order passed by the
Commercial Tax Tribunal dated 05.08.2014 for the
assessment year 2005-06 to the assessment year 2010-
11, is set-aside, and the logistic charges charged by the
assessee from Biharigarh to Dehradun taking the cars
individually, after unloading the same, could not be
made part of the turnover, and it could not be taxed.
19. Pending application, if any, also stands
disposed of.
______________
RITU BAHRI, C.J.
___________________
RAKESH THAPLIYAL, J.
NR/ Digitally signed by NITESH
NITESH
RAWAT
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Date: 2024.09.21 12:01:20 +05'30'
