SUPREME COURT OF INDIA
State of Punjab
Vs.
M/s. Chhabra Rice Mills
C.A.No.14817 of 1996
(Arijit Pasayat and Tarun Chatterjee JJ.)
17.11.2005
1. The only question raised for consideration in this appeal is whether purchase tax can be charged on the element of market fee on the basis that the same does not form part of the turnover. Writ Petition filed by the respondent was allowed by the High Court and this appeal has been filed by special leave.
2. Under the Punjab General Sales Tax Act, 1948 (in short the
'Act') 'turnover' is defined in Section 2(i) to include:
"the aggregate of the amounts of sales and purchases and parts of sales
and purchases actually made by any dealer during the given period, less any sum
allowed as cash discount and trade discount according to ordinary trade
practice, but including any sum charged for anything done by the dealer in
respect of the goods at the time of, or before, delivery thereof'.
3. Interpreting this provision with reference to the Marketing Regulations,
under Punjab Agricultural Produce Markets Act, 1961 (in short 'Markets
Act') the High Court noticed that the incidence of tax in the present cases is
when the turnover exceeds the taxable quantum, the buyer has to pay market fee
as the writ petitioners are licensees within the market area; that such market
fee is not paid by them to the sellers; that, therefore, such amount of the
market fee cannot be part of the sale consideration; that the writ petitioners
were not required to show in their turnover the amount of the market fee as
part of the purchase price of such of the agricultural produce purchased by
them locally, that such market fee is not to form part of the turnover for
assessment or payment of purchase tax.
4. This Court in Anand Swarup Mahesh Kumar vs. CST had occasion to
consider whether additional tax on certain dealers levied on turnover of
purchases mentioned in Section 3-D(1) of the U.P. Krishi Utpadan Mandi
Adhiniyam, 1964 (in short "U.P. Act") collected from purchases by
commission agent can be included in the turnover of purchases. This Court
explained that there are four circumstances in which turnover could be included
and they are: (i) if the produce is sold through a commission agent, the
commission agent may realise the market fee from the purchaser and shall be
liable to pay the same to the Committee; (ii) if the produce is purchased
directly by a trader from a producer the trader shall be liable to pay the
market fee to the Committee; (iii) if the produce is purchased by a trader from
another trader, the trader selling the produce may realise it from the
purchaser and shall be liable to pay the market fee to the Committee, and (iv)
in any other case of sale of such produce, the purchaser shall be liable to pay
the market fee to the Committee.
5. Under what circumstances, the market fee is to be paid needs to be
considered and once it is held that the buyer has an obligation to pay the
market fee and it is the duty of the seller to deposit the market fee on behalf
of the buyer and, therefore, to realise it from the buyer, it is not the legal
obligation of the seller to pay market fee on such a transaction and thus the
amount of market fee cannot be treated as part of the sale consideration.
Similar is the position in the present case as per law prevailing.
6. The above position was examined by this Court in State of Punjab and others
vs. Guranditta Mal Shauti Prakash and others (relied on) and relying on
the decision in Anand Swarup's case (supra), it was held that there was no
obligation on the part of the seller to pay market fee since it is the duty of
the buyer to pay the same and the seller can realise it from the buyer. The
inevitable conclusion, therefore, is that there was no liability to pay sales
tax on the element of market fee.
7. Above being the position, the appeal fails and is dismissed but without any
order as to costs.