Bombay High Court
The Additional Commissioner Of vs Sehgal Autoriders Pvt.Ltd on 11 July, 2011
Author: D. Y. Chandrachud
Bench: D.Y. Chandrachud, Anoop V. Mohta
1 stxa-5-11.sxw
dgm
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
SALES TAX APPEAL NO. 5 OF 2011
The Additional Commissioner of
Sales Tax VAT-III, Mumbai .... Appellant
vs
Sehgal Autoriders Pvt.Ltd.
ig .... Respondent
Mr. Vinay A. Sonpal, A Panel Counsel for the Appellant.
Mr. V. P. Patkar with Mr. M M. Vaidya for the respondent.
CORAM: DR. D.Y. CHANDRACHUD &
ANOOP V. MOHTA, JJ.
DATE : July 11, 2011
ORAL JUDGMENT (Per Dr. D. Y. Chandrachud,J.):
This appeal by the Revenue is directed against an order of the Maharashtra Sales Tax Tribunal dated 20 February 2010. The appeal is admitted on the following substantial questions of law:
(a) Whether the Maharashtra Sales Tribunal was correct in law in setting aside the tax on the handling charges or service charges for registration of motor cycle with ::: Downloaded on - 09/06/2013 17:28:42 :::
2 stxa-5-11.sxw consequential interest levied thereon?
(b) Whether the Maharashtra Sales Tax Tribunal was correct in holding that the amount of handling charges or service charges for registration of motor cycle is not part of `sale price' within the meaning of section 2(25) of the MVAT Act?
2With the consent of the counsel appearing on behalf of the Appellant and the Respondent, the appeal is taken up for hearing and final disposal.
3 The Respondent is a registered dealer and was assessed for financial years 2005-06, 2006-07, 2007-08 and for the period from 1 April 2008 to 31 July 2008 under the Maharashtra Value Added Tax Act, 2002. The Respondent is an authorised dealer and a selling agent of Hero Honda motors. During the course of the audit of the accounts of the Respondent, it was found that tax was not paid on the handling charges which were received by the Respondent from its customers.
The Respondent was assessed for handling charges and hence tax was levied in respect of the aforesaid period. The Appellate Authority dismissed the appeals. The Respondent moved the Tribunal in Second ::: Downloaded on - 09/06/2013 17:28:42 ::: 3 stxa-5-11.sxw Appeals which were allowed by the impugned order. The Tribunal set aside the tax levied on handling charges or service charges for the registration of motor cycles and held that these charges did not constitute a part of the sale price within the meaning of Section 2(25) of the Maharashtra Value Added Tax Act, 2002 (MVAT Act). The Tribunal accordingly remanded back the proceedings to the Appellate Authority to recompute the sales tax by excluding the sales tax which had been calculated in respect of the handling charges. The Revenue is in appeal in these proceedings.
4 Before setting out the submissions which have been urged on behalf of the Appellant, it would, at the outset, be necessary to advert to the factual material on the basis of which the Tribunal has rendered its determination. The Respondent produced before the Tribunal documents in the course of the hearing of the appeals in support of its submission that the handling charges have no concern with the sale price of the motor cycles sold. When a purchaser visits the show room of the Respondent and selects a motor cycle, the Respondent prepares an invoice and a debit note. The invoice mentions the price of the motor cycle and the amount of VAT calculated thereon. The Respondent also issues a debit note to the purchaser which includes ::: Downloaded on - 09/06/2013 17:28:42 ::: 4 stxa-5-11.sxw insurance charges, road tax, incidental and handling charges, registration fees and smart card charges. The charges other than handling charges are paid to the Regional Transport Office or, as the case may, the office of the insurer. Handling charges are retained by the Respondent. Against the payment of the consideration, the Respondent issues a sales certificate and prepares a gate pass in the name of the purchaser showing the delivery of the motor cycle. The sale certificate also mentions that delivery has been effected to the purchaser. Thereafter, an application is prepared in the prescribed form for being submitted to the registering authority to which is annexed the sale certificate and other documents required for registration. The application for registration is thereupon presented to the Regional Transport Office for registration. The contention of the Appellant is based on the provisions of Section 2(25) of the Maharashtra Value Added Tax Act, 2002 which defines the expression "sale price" as follows :
(25) "sale price" means the amount of valuable consideration paid or payable to a dealer for any sale made including any sum charged for anything done by the seller in respect of the goods at the time of or before delivery thereof, other than the cost of insurance for transit or of installation, when such cost is separately charged.::: Downloaded on - 09/06/2013 17:28:42 :::
5 stxa-5-11.sxw 5 The submission which has been urged on behalf of the Appellant is that :(i) Under the definition of the expression "sale price" in Section 2(25), any sum charged for anything done by the seller in respect of the goods at the time of or before the delivery thereof is liable to be included in the sale price; (ii) Under Section 2(25) pre delivery charges are brought within the meaning of the expression "sale price" and even if a sale has taken place, but delivery has not been taken, all pre-delivery charges would form part of the sale price;
(iii) Rule 42 of the Central Motor Vehicles Rules, 1989 contains a prohibition upon the holder of a trade certificate delivering a motor vehicle to a purchaser without registration, temporary or permanent;
(iv) In view of Rule 42, the dealer is prohibited from effecting delivery prior to the registration of the vehicle. In the face of a statutory prohibition, it is not open to the dealer to grant delivery before registration and hence the handling charges would form a component of the sale price within the meaning of Section 2(25); (v) The time when the property in the goods gets transferred is irrelevant where the statute provides for the inclusion of all charges levied, for anything done in respect of the goods prior to delivery and, therefore, even if the transfer is complete and delivery is not complete, charges levied before delivery will form part of the sale price; (vi) The incidence of ::: Downloaded on - 09/06/2013 17:28:42 ::: 6 stxa-5-11.sxw tax is different from the formulation of principles for determining the amount on which tax can be levied. Hence, the fiction enacted in defining the expression of sale price in Section 2(25) does not transgress into the area of taxing what is not a sale.
6 On the other hand, it has been urged on behalf of the Respondent that : (i) The obligation to obtain registration is always that of the purchaser of the motor vehicle; (ii) Registration is facilitated by the Respondent after the sale and the transfer of property to the purchaser is complete; (iii) After the sale is complete, the Respondent acts as an agent of the purchaser for the purposes of obtaining registration; (iv) Words and expressions which are used in the MVAT Act, 2002 and which are not defined in that legislation must be construed according to their meaning in common parlance and the provisions of another legislation cannot be applied for interpreting the language used in the former. The object of VAT legislation and legislation enacted by Parliament to regulate motor vehicles is separate and one cannot be interpreted in the light of the other.; (v) The expressions "delivery" and "deliverable state" in Sections 2(2) and 2(3) of the Sale of Goods Act, 1930 are relevant and the provisions of Section 20 of the Sale of Goods Act would show that in the case of a ::: Downloaded on - 09/06/2013 17:28:42 ::: 7 stxa-5-11.sxw contract for the sale of specific goods in a deliverable state, property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment of the price or the time of delivery of the goods, or both, is postponed.
7 By section 2(25) of the MVAT Act, 2002 the legislature has exhaustively defined what constitutes `sale price' for the purposes of the legislation. The expression is defined to mean (i) The amount of valuable consideration paid or payable to a dealer for any sale made;
and to include (ii) Any sum charged for anything done by the seller in respect of the goods at the time of or before delivery thereof; but excluding (iii) The cost of insurance for transit or of installation when such cost is separately charged. The explanation to the statutory provisions are not material for determining the present appeal.
8 Section 2(2) of the Sale of Goods Act, 1930 defines the expression "delivery" to mean a voluntary transfer of possession from one person to another. Section 2(3) provides that goods are said to be in a deliverable state when they are in such a state that the buyer would under the contract be bound to take delivery of them. Under section 4, a contract for the sale of goods is a contract whereby the ::: Downloaded on - 09/06/2013 17:28:42 ::: 8 stxa-5-11.sxw seller transfers or agrees to transfer the property in goods to the buyer for a price. The contract is called a sale. Under section 5, a contract of sale is made by an offer to buy or sell goods for a price and the acceptance of such an offer. The contract may provide for the immediate delivery of the goods or immediate payment of the price or both, or for the delivery or payment by instalments, or that the delivery or payment or both shall be postponed. Section 20 stipulates that where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment of the price or the time of delivery of the goods, or both is postponed.
9 The Tribunal in the present case relied on the provisions of Section 2(24) of MVAT Act, 2002 which defines the expression "sale"
to mean, a sale of goods made within the State for cash or deferred payment or other valuable consideration. After adverting to the documents that were produced by the Respondent, the Tribunal held that on receiving the price of a motor cycle, the Respondent transfers the property in the goods to the purchaser under the contract of sale.
The goods being specific and in a deliverable state, the Respondent is ::: Downloaded on - 09/06/2013 17:28:42 ::: 9 stxa-5-11.sxw in a position to deliver them to the purchaser. On receiving the price of the goods, the Respondent issues a gate pass in the name of the purchaser and issues a sale certificate in the prescribed statutory form showing delivery of the motor cycle. The sale, the Tribunal held, is completed both as regards the transfer of the property in the motor cycle to the purchaser as well as the delivery thereof. The sale is complete, ruled the Tribunal, before an application for registration is furnished to the registering authority. The registration being an event which takes place after the sale of the vehicle, the handling charges are collected by the Respondent for services rendered to the purchaser for the registration of the motor cycle after the sale of the vehicle.
The Tribunal, therefore, held that the handling charges are received by the Respondent for post-sale services and could not be regarded as part of the sale price under the MVAT Act, 2002. The Tribunal rejected the contention of the revenue that the registration of the motor vehicle takes place prior to its delivery and held that rule 42 of the Central Motor Vehicles Rules could not be read in isolation. Under rule 47, registration has to be effected within a period of seven days from the date of taking of the delivery of the vehicle and, as a matter of fact, the application for registration has to be accompanied by a sale certificate and by a valid insurance certificate and other ::: Downloaded on - 09/06/2013 17:28:42 ::: 10 stxa-5-11.sxw requirements. The Tribunal was of the view that the delivery of the motor cycle before registration is not prohibited by rule 47 and consequently, both rules 42 and 47 would have to be construed harmoniously.
10 The foundation of the submission which has been urged on behalf of the revenue is that under rule 42 of the Central Motor Vehicle Rules, the holder of a trade certificate is prohibited from handing over delivery prior to the registration of the vehicle. On the basis of rule 42, it was urged that when the Respondent recovers handling charges for facilitating registration of the motor vehicle, these are charges which are relatable to a service rendered prior to delivery being handed over to the purchaser. Since there is a prohibition on handing over of delivery prior to registration, the handling charges must of necessity be included in computing the sale price.
11 In order to appreciate the submissions which have been urged on behalf of the revenue, it would be necessary to refer to the scheme for registration as embodied in the Motor Vehicles Act, 1988 and the rules which have been framed thereunder. Section 39 of the Motor ::: Downloaded on - 09/06/2013 17:28:42 ::: 11 stxa-5-11.sxw Vehicles Act, 1988 provides that no person shall drive any motor vehicle and no owner of a motor vehicle shall cause or permit the vehicle to be driven in any public place or in any other place unless the vehicle is registered and the registration of the vehicle continues to be valid. Under section 40, the obligation to register a motor vehicle is on the owner of a motor vehicle. Section 41(1) prescribes that an application by or on behalf of the owner of a motor vehicle for registration shall be in such form and shall be accompanied by such documents, particulars and information and shall be made within such period as may be prescribed by the Central Government. Under sub-
section (3) of Section 41, the registration certificate has to be issued by the registering authority to the owner of a motor vehicle. Section 43 provides for the grant of temporary registration for a period not exceeding one month. Section 44 requires that the registering authority shall, before proceeding to register a motor vehicle, require a person applying for registration (or for renewal) to produce the vehicle.
12 Chapter III of the Central Motor Vehicle Rules, 1989 makes provisions for the registration of motor vehicles. Rules 33 to 46 relate to trade certificates. Rule 33 stipulates that a motor vehicle in the ::: Downloaded on - 09/06/2013 17:28:42 ::: 12 stxa-5-11.sxw possession of a dealer shall be exempted from the necessity of registration subject to the condition that he obtains a trade certificate from the registering authority having jurisdiction in the area in which he has his place of business. Rules 34 to 40 provide for an application for the grant or renewal of a trade certificate, period of validity, restriction on the use of a trade certificate and other cognate matters. Rule 41 lays down the purpose for which the holder of a trade certificate may use a vehicle in a public place. The rule provides that a holder of a trade certificate shall not use any vehicle in a public place under that certificate for any purpose other than those which are listed out in clauses (a) to (h) thereof. Among the purposes which are permissible is proceeding to and from any place for its registration and for a reasonable trial or demonstration to a prospective purchaser;
proceeding to or returning from the place where such person intends to keep it and for proceeding to or returning from the premises of the dealer or of the purchaser or of any other dealer for the purposes of delivery. Rule 42 stipulates that no holder of a trade certificate shall deliver a motor vehicle to a purchaser without registration, whether temporary or permanent. Rule 47 stipulates as follows :
47 Application for registration of motor vehicles. -
(1) An application for registration of a motor vehicle shall ::: Downloaded on - 09/06/2013 17:28:42 :::
13 stxa-5-11.sxw be made in Form 20 to the registering authority within a period of seven days from the date of taking delivery of such vehicle, excluding the period of journey and shall be accompanied by -
(a) sale certificate in Form 21;
(b) valid insurance certificate;
(c) copy of the proceedings of the State Transport Authority or Transport Commissioner or such other authorities as may be prescribed by the State Government for the purpose of approval of the design in the case of a trailer or a semi-trailer;
(d) original sale certificate from the concerned authorities in Form 21 in the case of ex-army vehicles;
(e) proof of address by way of any one of the documents referred to in rule 4;
(f) temporary registration, if any;
(g) road-worthiness certificate in Form 22 from the manufacturers, [Form 22-A from the body builders;]
(h) custom's clearance certificate in the case of imported vehicles alongwith the licence and bond, if any:
Provided that in the case of imported vehicles other than those imported under the Baggage Rules, 1998, the procedure followed by the registering authority shall be same as those procedure followed for registering of vehicles manufactured in India, and
(i) appropriate fee as specified in rule 81.
(2) In respect of vehicles temporarily registered, application under sub-rule (1) shall be made before the temporary registration expires.::: Downloaded on - 09/06/2013 17:28:42 :::
14 stxa-5-11.sxw 13 Rule 47 contemplates the making of an application for registration within seven days of the date on which delivery of a vehicle is taken. An application for registration has to be accompanied inter alia by a sale certificate in Form 21 and by a valid certificate of insurance. The form of the sale certificate inter alia requires a certification that the vehicle has been delivered by the manufacturer or, as the case may be, the dealer to the purchaser of the vehicle. Rule 47 is the rule which specifically governs applications for registration. The rule ex facie requires that delivery of the vehicle has to be effected before submitting an application.
14 The rules which have been framed under the Motor Vehicles Act constitutes subordinate legislation and have to be read in a manner consistent with the provisions of the legislation under which they have been made. Under the Act, the obligation to obtain a registration certificate is that plainly of the owner. Registration under the Motor Vehicles Act, 1988 is not an event which takes place prior to the acquisition or transfer of ownership. Section 39 imposes a bar on a person driving any motor vehicle and upon an owner from causing or permitting the vehicle to be driven in any public place or any other ::: Downloaded on - 09/06/2013 17:28:42 ::: 15 stxa-5-11.sxw place, unless the vehicle has been registered. Sections 39 and 40 postulate that it is the obligation of an owner of a vehicle to obtain registration from a registering authority. Registration under Section 41(3) is granted by the registering authority to the owner of the vehicle. The obligation to register is that of an owner. An application for registration has to be submitted by the owner or on behalf of an owner. When a dealer submits an application, he is hence acting on behalf of the owner of the vehicle. The registration certificate is issued in the name of the owner.
15 The contention of the revenue, however, is that delivery cannot be granted to the owner by the holder of a trade certificate under rule 42 unless the motor vehicle has been registered. Rule 42 however does not-as it cannot-override the obligation which Section 39 imposes on the owner of obtaining registration. Moreover rule 42 cannot be construed in isolation from the other provisions which have been made in Chapter III of the Central Motor Vehicles Rules, 1989.
Rule 41, for instance, specifies the purposes for which the holder of a trade certificate may use a vehicle in a public place. Among the purposes is for proceeding to and from any place for the registration of the vehicle. Similarly, under clause (d) of rule 41, the holder of a ::: Downloaded on - 09/06/2013 17:28:42 ::: 16 stxa-5-11.sxw trade certificate may use a vehicle in a public place for proceeding to or returning from the premises of the dealer or of the purchaser for the purpose of delivery. Rule 42 provides that no holder of a trade certificate shall deliver a motor vehicle to a purchaser without registration, whether temporary or permanent. It is evident that an application for registration is required to be made in accordance with rule 47. Rule 47, as a matter of fact, stipulates that an application for registration has to be made within a period of seven days from the date of taking delivery of the vehicle. The application has to be accompanied by a sale certificate. The statutory form for the sale certificate stipulates that delivery has been handed over to the purchaser. The Tribunal, in the present case, has found, as a matter of fact, that upon receipt of the price of the goods, the Respondent issues a gate pass in the name of the purchaser and issues a sale certificate in the prescribed form showing delivery of the motor cycle. The sale is complete and transfer of property in the motor cycle takes place to the purchaser coupled with the delivery thereof. The obligation to obtain registration is that of the purchaser. When a dealer facilitates the obtaining of a registration certificate, he acts for and on behalf of the purchaser, because the obligation under the law to obtain a registration certificate is cast upon the owner of the vehicle. The ::: Downloaded on - 09/06/2013 17:28:42 ::: 17 stxa-5-11.sxw application for the issuance of a registration certificate and the grant of a registration certificate are both post sale events. The charges that are levied by the Appellant and recovered as handling charges are in respect of a service rendered to the purchaser upon the completion of the sale of the motor cycle. Handling charges cannot be regarded as forming part of "the valuable consideration paid or payable to a dealer for any sale made.". The handling charges cannot be regarded as "any sum charged for anything done by the seller in respect of the goods at the time of or before delivery thereof.".
16 The first part of Section 2(25) brings within the purview of the expression "sale price" the consideration paid or payable to a dealer for the sale. The second part of the definition which is of an inclusive nature brings within the purview of the definition, any sum charged for anything done by the seller in respect of the goods at the time of or before the delivery of the goods (other than the cost of insurance for transit or installation when such cost is separately charged). A similar provision in Section 2(29) of the Bombay Sales Tax Act, 1959 came up for construction before a Division Bench of the Gujarat High Court in The State of Gujarat vs. Jayantilal Bhimji & Sons1. In that case, the 1 1973 (32) STC 527 ::: Downloaded on - 09/06/2013 17:28:42 ::: 18 stxa-5-11.sxw issue was whether amounts recovered by the assessee from its customers for expenses of postage, trunk-call and bank charges, by separately adding them in the bills were to be considered as `valuable consideration in respect of the transaction of sale'. The Gujarat High Court held that the amounts were charged for services rendered to the customers in general and such service charges could not be equated to consideration for the transfer of the property in the goods and could not be added to the sale price of the goods. The Court held that what is the consideration in each transaction of sale must depend upon the agreement between the parties to the transaction. The Court was of the view that the charges in question may fall under the head of service charges, but in order to come to the conclusion that they form part of the consideration, there ought to be evidence to prove that the parties had agreed to that effect. The contention of the revenue was therefore negatived.
17 In State of Madras v. Srinivasa Timber Depot and others2, a Division Bench of the Madras High Court was called upon to consider whether an amount recovered by the assessee, who was a dealer in timber as `lot cooly charges', would form part of the sale price under 2 1974 (33) STC 423 ::: Downloaded on - 09/06/2013 17:28:42 ::: 19 stxa-5-11.sxw the Tamil Nadu General Sales Tax Act, 1959. These charges were collected for the service rendered for taking out logs of timber from the place of storage in order to place them before the customer for selection and approval. On these facts, the Division Bench held that these charges were not paid exclusively for the services rendered in respect of the goods sold, but for services rendered by the workmen for the purposes of enabling the purchaser to select the goods. Hence, the charges were said to have been recovered de hors the sale. In that context, while interpreting the expression "any sums charged for anything done by the dealer in respect of the goods", the Division Bench approved the following statement of principle formulated in an earlier judgment in Srinivasa Timber Depot vs. Deputy Commercial Tax Officer3 of the Madras High Court. :
"In the explanation referred to, if understood in the context, as it should be, `any sums charged for anything done by the dealer in respect of the goods' can only relate to something done by the dealer in respect of the goods which involves transfer of property in the goods and for consideration. The further condition is that something should have been done in respect of the goods at the time of, or before the delivery of, the goods. So, what is chargeable to tax is not any sum charged at the time of, or before the delivery of, the goods, but any sum charged for transfer of property in the goods, involved in anything done by the dealer in respect of the goods at the time specified by the explanation. The explanation read in the 3 1969 (23) STC 158 ::: Downloaded on - 09/06/2013 17:28:42 :::
20 stxa-5-11.sxw abstract is, of course, of wide scope and may possibly take in any sum charged for anything done by the dealer in respect of the goods whether or not it involved also transfer of property in the goods. But, as we said, the fact that it is an explanation to the definition of `turnover' and the `turnover' is but the aggregate amount of the consideration of sales shows that it has to be read in the context and not de hors it."
In State of Tamil Nadu v. Srinivasa Timber Depot4, the Supreme Court held that the statement of principle was in accordance with law and dismissed an appeal by the State.
18 In so far as this Court is concerned, a reference may be made to the judgment of a Division Bench in Commissioner of Sales Tax v.
Premier Automobiles Ltd.5. The assessee in that case had collected service pool charges at the rate of Rs.10 per vehicle from its distributor which were not included in the turnover shown by the assessee. The purpose of the recovery of service pool charges was to maintain an expert fleet of mechanics who would be available to consumers after they had obtained cars from the distributors. A Division Bench of this Court consisting of Mr. Justice M. H. Kania and Mrs. Justice Sujata Manohar (as Their Lordships then were ) held that 4 1991 (80) STC 393 5 1985 (59) STC 147 ::: Downloaded on - 09/06/2013 17:28:42 ::: 21 stxa-5-11.sxw the service pool charges collected by the assessee from its distributors were not a part of the consideration for the vehicle sold to the distributor at all. As regards the inclusive or extended definition of the expression "sale price", the Division Bench held that the service charges in question did not fall within the extended meaning for the following reason:
"As far as the inclusive or the extensive portion of the definition of "sale price" is concerned, it has to be pointed out that the benefit of the service promotion scheme was available to the customers and to the distributors only after the cars had been delivered to the ultimate consumer or customers and hence the consideration for the benefit received under such scheme could not be in any way said to be related to or anything done in respect of the cards sold at or before the time of delivery."
19 In State of Karnataka and another v. Bangalore Soft Drinks Pvt.Ltd.6, the assessee who was a manufacturer of aerated waters collected freight charges under an agreement which provided that the goods sold were on an ex-factory basis. The assessee provided at the option of the purchaser for the transportation of the products and the freight charges were recovered separately under debit notes. A Division Bench of the Karnataka High Court held that the assessee 6 2000 (117) STC 413 ::: Downloaded on - 09/06/2013 17:28:42 ::: 22 stxa-5-11.sxw performed a dual role, one as the seller of the goods and the other as a carrier of the goods having collected freight charges separately from the buyer. The freight charges, the Court held, were recovered by the assessee in his capacity as carrier of the goods and did not form part of the sales turnover of the assessee. The real test, the Court held, was whether the property in the goods had passed to the buyer at the factory of the assessee or at the place of the buyer. The contract indicated that the property in the goods passed to the buyer at the factory of the assessee and subsequent transportation was carried out by the assessee as the transporter of the goods. This view of the Karnataka High Court was affirmed by the Supreme Court in State of Karnataka and another v. Bangalore Soft Drinks Pvt.Ltd.7. A recent judgment of the Supreme Court in contrasting facts is the decision in India Meters Limited v. State of Tamil Nadu8. In India Meters, the assessee manufactured electric meters which were supplied to Electricity Boards. The contract between the assessee and its purchaser specifically stipulated that the sale was not completed at the factory gate and the transfer of property in the goods would take place at the establishment of the buyer. In these facts, since the seller was 7 2000 (117) STC 419 8 (2010) 9 SCC 423 ::: Downloaded on - 09/06/2013 17:28:42 ::: 23 stxa-5-11.sxw under an obligation to transport the goods to the place of the buyer and transfer of property in the goods took place only at the establishment of the buyer, the Supreme Court held, that the freight charges recovered by the seller from the buyer would form part of the sales turnover.
20 In the present case, there is absolutely no reason to fault the finding of the Tribunal that the goods which form the subject matter of the contract between the Respondent and its buyer are in a specific and deliverable state. The transfer of property in the goods in pursuance of the sale contract takes place against the payment of the price of the goods. Delivery of the goods is effected by the seller to the buyer. The obligation under the law to obtain registration of the motor vehicle is cast upon the buyer. The service of facilitating the registration of the vehicle which is rendered by the seller-assessee is to the buyer and in rendering that service, the seller acts as an agent of the buyer. The handling charges which are recovered by the Respondent cannot therefore be regarded as forming part of the consideration paid or payable to the Respondent for the sale. Those charges cannot fall within the extended meaning of the expression "sale price", since they do not constitute a sum charged for anything ::: Downloaded on - 09/06/2013 17:28:42 ::: 24 stxa-5-11.sxw done by the seller in respect of the goods at the time or before the delivery thereof.
21 For these reasons, we are of the view that the decision of the Tribunal does not suffer from any error. Both the questions of law are answered in the affirmative. The Sales Tax Appeal is dismissed. In the circumstances of the case, there shall be no order as to costs.
(ANOOP V. MOHTA, J.) (DR.D.Y. CHANDRACHUD,J.)
::: Downloaded on - 09/06/2013 17:28:42 :::