Gauhati High Court
Indian Oil Corporation Ltd. vs State Of Assam And Ors. on 3 May, 2001
JUDGMENT
H.K. Sema, C.J. (Acting)
1. This appeal is directed against the judgment and order dated 2.11.98 passed by the learned Single Judge in Civil Rule No. 1939 of 1996, dismissing the petition.
2. The facts leading to the filing of the present writ appeal may be briefly recited. The appellant is a limited company incorporated under the Companies Act, 1956 and a registered dealer under the Assam General Sales Tax Act. 1993 (for short, the Act). The appellant Co.,, is engaged in the business of sale and supply of petroleum products inside the State of Assam as well as outside the State. The Co.,, purchases various petroleum products from Bongaigaon Refinery & Petrochemicals Ltd. (for short, BRPL) on payment of sales tax. Prices of petroleum products are fixed by the Government of India on the basis of prices worked out on the recommendation of Oil Pricing Committee, set up by the Ministry of Petroleum, vide Resolution No. J-11011/8/72-PPD, dated 16th March, 1974. The recommendation of the Oil Pricing Committee was adopted by the Government, which requires a dealer to sell its products at the prices fixed by the Central Government, and the prices so fixed by the Central Government includes the surcharge to be collected from the buyers and deposited to the Oil Coordination Committee Pool Account. The appellant Co., had to sell its products at the prices fixed by the Central Government on the basis of the recommendation of the Oil Pricing Committee, and while fixing such prices, an amount on account of surcharge has been included, which is to be collected by the dealer as surcharge and is to be returned to the Oil Co-ordination Committee Pool Account. The appellant Co., is to sell the products at the prices fixed by the Government of India and to contribute to the Oil Coordination Committee Pool Account a fixed amount to be collected as surcharge on the direction of the Central Government and it is stated that the said amount is not intended to augment the coffers of the appellant Co., and it is earmarked for the Oil Pool Account and, therefore, the appellant Co., is entitled to retain only the basic price, the sales tax paid at the time of purchase of the products in Assam from BRPL and the profit margin is specifically fixed by the Central Government. According to the appellant Co., the surcharge collected by a dealer on behalf of the Oil Co-ordination Committee Pool Account cannot be computed to form part of the sale price so as to treat it as "first point of sale" within the meaning of section 8(1)(a) of the Act, read with Rule 12 of the Assam General Sales Tax Rules, 1993 (for short the Rules).
3. The appellant Co., has prepared a chart, which shows the purchase price and sales price of various products dealt by the appellant Co., and the amount of surcharge to be collected by the appellant Co., on behalf of the Central Government. The chart prepared and submitted by the appellant Co., is shown below, which will explain the position.
Products Purchase price EX REF price Sales price w.e.f 1.3.94 Amount to be surrendered to pool A/C Sale price upto 1.3.94 Amount to be surrendered to Pool A/C. ATP 3245.38 10886.71 7463 56 10886.71 7463 36 HSD 2552.66 6311.70 3620.20 5561.70 3123.99 MS 4263.76 15480.22 10990.56 14480.22 30155.54 FC 1967.33 5008.75 2901.24 5008.75 2901.24 SKO 2287.00 2212.54 Nil 2212.54 Nil LPG 3420.00 5860.75 680.00 5156.55 680,00 The st. Superintendent of Taxes enquired from the appellant Co.
4. The Sr. Superintendent of Taxes enquired from the appellant Co. the details about the purchase and sale price of various products dealt by the appellant Co., as he was of the view that since the resale price of the appellant Co., is more than forty per centum of the purchase price, as per the provision of Rule 12 of the Rules, the second sale is to be treated as the first sale and the appellant Co., is liable to pay taxes on the second sale treating it to be first sale in the State of Assam. It was the case of the appellant Co., that the re-sale price of the appellant Co., includes the amount collected on behalf of the Central Govt., and deposited into the Oil Co-ordination Committee Pool Account and, therefore, the sale price for the purpose of the Act should be determined after deducting the amount collected by the appellant Co., on behalf of the Central Government and deposited into the Oil Co-ordination Committee Pool Account.
5. Thereafter, by a notice dated 17.2.96 issued by the Sr. Superintendent of Taxes requiring the appellant Co., to produce accounts and records relating to purchase and sale of BRPL products from 1.7.93 to 18.2.96. Another notice dated 28.3.96 was issued to the appellant Co., to show cause as to why penal action should not be initiated against the appellant Co., under section 23(g) of the Assam General Sales Tax Act, 1993, on the ground that the appellant Co., though liable to pay tax on the sale of products purchased from BRPL being selling agent as per section 8(1) (a) of the Assam General Sales Tax Act, 1993 read with Rule 12 of the Assam General Sales Tax Rules. Being aggrieved, the appellant Co., has preferred Civil Rule No. 1939 of 1996, which was dismissed on 2.11.98. Hence, the present appeal.
6. We have heard Dr. A. K. Saraf, learned counsel for the appellant as well as Mr. G. N. Sahewalla, learned counsel for the respondents.
7. It is contended by Dr. Saraf that the total price at which the goods are to be sold by the appellant Co., was fixed by the Government of India and the appellant Co., has to collect a fixed amount as surcharge on each sale on behalf of the Central Government to be contributed to the Oil Pool Account. The said amount cannot be termed as an amount received or receivable by the appellant Co., as valuable consideration for the sale of the goods and as such, the appellant Co., is not liable to pay tax on the amount collected on behalf of the Central Government as surcharge. Alternately, it is contended that the appellant Co., already paid tax while purchasing products from BRPL and therefore, the appellant cannot be made liable to pay tax on the whole of the sale price and the tax paid at the time of purchase had to be adjusted against the total tax payable by the appellant Co., as otherwise, it will amount to double taxation and not permissible under the law.
8. In the facts and circumstances as recited above, precisely the following two questions calls for determination :-
(a) Whether the amount of surcharge collected by the appellant Co., from the consumers exceeds 40 per centum of the purchase price and the second sale is to be treated as first sale and the appellant Co., is liable to pay on the second sale treating it to be first sale in the State in terms of the provisions of section 8(1)(a) of the Assam General Sales Tax Act, 1993. read with Rule 12 of the Assam General Sales Tax Rules, 1993 ?
(b) Whether such "surcharge" is encompassed within the meaning of "sale price", as defined under sub-section 34(d) of section 2 of the Act and Explanation 1 there under ?
9. Section 8(1)(a) of the Assam General Sales tax Act, 1993, reads :-
"8. Charge of tax and rates.- (1) The tax leviable under section 7 for any year shall be charged on the taxable turnover during such year-
(a) in respect of goods specified in Schedule II, at the first point of sale within the State at the rate or rates specified in that Schedule ;
Explanation - Where a person sells a substantial part of the goods manufactured by him or imported by him to another person for sale under the brand name of such other person or for resale as distribution or selling agent or for resale after repacking or subjecting the goods to any other process not amounting to manufacture and the price charged on resale exceeds the sale price by more than such percentage as may be prescribed in respect of such goods or class of goods, the resale by such other person shall subject to rules if any, framed in this behalf, be deemed to be at the first point of sale within the state"
10. Rule 12 of the Assam General Sales Tax Rules, 1993, read :-
"12. Charge of tax and rates.- Under section 8(l}(a) where a person after purchasing goods covered by Schedule II under clause (a) of sub-section (1) of section 8 sells such goods in such manner as mentioned In the 'Explanation' to the aforesaid clause and if the price charged on such resale exceeds forty per centum of the original sale or purchase price, in respect of such goods or class of goods the resale of such goods by such person shall be deemed as first point of said within the State and the rates of tax shall be as specified in Schedule II for such items.
11. Before we proceed further, we may at this stage point out that from the chart prepared by the appellant and as referred to above, would clearly show that the resale price exceeds forty per centum of the original sale or purchase price of the goods.
12. A fascicule reading of section 8(1)(a) of the Act and Rule 12 of the Rules would clearly show that the legislature has intended to levy tax on the second sale treating the same to be the first sale if the difference of the original purchase price and the resale price is more than forty per centum. It is strenuously urged by Dr. Saraf that if the amount collected by the appellant Co., as surcharge on behalf of the Central Government to be contributed to the Oil Pool Account is excluded, the difference between the purchase price of the products of the appellant Co., and the selling price of the products will be below the prescribed forty per centum and in that view, the explanation to section 8(1)(a) of the Act will not be attracted. We are not at all impressed by this submission because the surcharge collected by the this appellant Co., on behalf of the Central Government and contributed to the Oil Pool Account, as stated, is not within the provision of the Act. An Executive Instruction on the basis of which the appellant Co., collects the surcharge on behalf of the Central Government and deposits it into the Oil Pool Account, cannot be excluded from the purview of section 8(1)(a) of the Act read with Rule 12 of the Rules, inasmuch as, the Executive Instruction cannot render the provision of the Act otios. As already stated, the price charged by the appellant Co., on resale exceeds forty per centum of the original sale or purchase price and therefore, the second sale shall be deemed to be as at the first point of sale within the State and the appellant Co., is liable to pay tax on such resale treating it to be the first point of sale.
13. This takes us to the second question formulated above, that, whether such "surcharge" is encompassed within the meaning of "sale price", as defined under sub-section 34(d) of section 2 of the Act and the explanation-1 there under ?
14. Sub-section 34{d) of section 2 of the Act defines "sale price", which reads :
"(34) "sale price" means -
.....
.....
(d) in respect of a sale under any other sub-clause of clause (33), the amount received or receivable by a dealer as valuable consideration for the sale of good including any sum charged, whether stated separately or not for anything done by the dealer in respect of the goods at the time of or before delivery thereof or undertaken to be done after the delivery whether under the contract of sale or under a separate contract but excluding -
(i) the cost of outward freight, delivery or installation or interest when such cost or interest is separately charged, subject to such conditions and restrictions as may be prescribed, and
(ii) any sum allowed as a cash discount according to ordinary trade practice :
Provided that in a case where there is no bill of sale or the sale bill is, in the opinion of the assessing authority, for an amount substantially lower than the market price of the goods, the valuable consideration receivable by the dealer shall be taken to be the market price determined in the prescribed manner.
Explanation-1 - Any tax, case or duty which is liable to be paid in respect of any goods before the buyer can obtain delivery and possession of such goods and all costs, expenses and charge incurred before the goods are put in a deliverable state, shall, notwithstanding any agreement, covenant or understanding that such tax, cess, duty costs, expenses or other charges be borne or paid by the buyer or any other person, be included in the sale price :
.....
....."
15. Dr. Ashok Saraf strenuously contended that the surcharge collected by the appellant Co., cannot be included within the meaning of "sale price", as defined under sub-section (34)(d) of section 2 of the Act. We are unable to accept this contention of Dr. Saraf. The definition of "sale price" in sub-section (34)(d) of section 2 of the Act, as quoted above, being what it is, we have no doubt in our mind that the surcharge is included within the meaning of "sale price". The words "including any sum charged", employed in the definition of "sale price", in our opinion, are adequately elastic to encompass within it "surcharge". Further, the position has been made more clear by explanation - 1 to sub-section (34){d) of section 2 of the Act. The starting words, "Any tax, cess or duty", in the explanation-1, leaves no manner of doubt that "surcharge" is included within the meaning of "sale price", as defined under subsection (34)(d) of section 2 read with explanation-l of the Act.
16. Lastly, it contended by Dr. Saraf that unless the tax paid in the first sale is adjusted in the second sale, it would amount to double taxation, which is not permissible under the Act. In our opinion, this submission has also no substance. First of all, this point has been dealt with by the learned Single Judge in paragraph 9 of the judgment arid the learned Single Judge held that value added taxation cannot be considered as double taxation.
17. Apart from that, the tax levied on surcharge is collected from the actual consumers, and not paid by the dealer, and there is no question of double taxation.
18. In view of what has been stated above, we do not find any merit in this appeal and it is accordingly dismissed. Parties are asked to bear their own costs.