IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH.
G.S.T.R. No. 16 of 1991
Date of Decision: October 9, 2009
M/s Food Corporation of India, Amritsar
...Petitioner
Versus
The State of Punjab
...Respondent
CORAM: HON'BLE MR. JUSTICE M.M. KUMAR
HON'BLE MR. JUSTICE JASWANT SINGH
Present: Mr. Sandeep Goyal, Advocate,
for the petitioner.
Ms. Sudeepti Sharma, DAG, Punjab,
for the respondent.
1. To be referred to the Reporters or not?
2. Whether the judgment should be reported in
the Digest?
M.M. KUMAR, J.
The Food Corporation of India had filed STC No. 4 of
1987 before this Court for issuance of direction to the Sales Tax
Tribunal, Punjab (for brevity, ‘the Tribunal’) to refer to this Court
two questions of law claimed to have emerged out of the order of the
Tribunal dated 22.11.1984 in respect of assessment year 1975-76.
Accordingly, this Court passed order dated 27.9.1988 directing the
Tribunal to refer the following two questions of law for
determination:
G.S.T.R. No. 16 of 1991 2
“1) Whether in facts and circumstances of the case, the
expenses incurred by the state or Agencies of the
food corporation of India after acquiring or
purchasing the goods before delivery to the
petitioner-dealer could form part of gross turnover
and be subject to tax?
2) Whether in the facts and circumstances of the case,
could the market fee be included in the purchase
turnover in view of 46 STC 447?”
2. The matter came up for consideration before a Division
Bench of which one of us (M.M. Kumar, J.) was a member. The
Bench proceeded to answer second question but did not answer the
first question by recording the fact that it did not emerge from the
order dated 22.11.1984 passed by the Tribunal. The Bench has also
recorded the statement of the counsel for both the parties accepting
the aforesaid factual position. Accordingly the first question was
returned unanswered. However, the Food Corporation of India
challenged order dated 8.2.2007 passed by this Court before Hon’ble
the Supreme Court to the extent that the first question was returned
unanswered. Hon’ble the Supreme Court in Civil Appeal No. 5712 of
2009, while affirming the view expressed by this Court on the second
question, held that the first question should have also been answered
by this Court. Accordingly, the view expressed with regard to first
question was set aside and the matter has been remitted back for
decision afresh on the first question after taking into account the
G.S.T.R. No. 16 of 1991 3
factual basis provided by the Assessing Authority, Appellate
Authority and the orders of the Tribunal.
3. Few facts necessary for answering question No. 1 may
first be noticed. The Food Corporation of India, which is a registered
dealer filed its quarterly returns claiming deductions in respect of tax
free goods and sales made to the registered dealers. The Assessing
Authority was not satisfied with the returns filed. In pursuance to the
statutory notice, the accounts were produced by the Food Corporation
of India and after examination the same were rejected. An additional
demand was created vide order dated 20.1.1983. Before the
Assessing Authority the dispute had arisen as to whether the expenses
incurred like service charges, market fees, commission and labour
charges, were to form part and parcel of the bill and, therefore, is part
of consideration. The answer given by the Assessing Authority was
in the affirmative by holding that these expenses include market fee,
dammi and labour charges, which form part and parcel of the bill and,
hence, are the part of consideration. Likewise, the expenses incurred
on bardana were also held as part of the consideration by the
Assessing Authority by holding that there was an implied contract for
the sale of bardana along with rice. The price of gunny bags at the
rate of Rs. 4/- per bag was calculated and assessment was framed at
the rate of 6% and accordingly demand was raised. The order of the
Assessing Authority was affirmed on appeal filed under Section 20(1)
of the Punjab General Sales Tax Act, 1948 (for brevity, ‘the Act’).
The issue was raised and the plea of the review was accepted.
Accordingly, it was held that the market fee, dammi and other service
G.S.T.R. No. 16 of 1991 4
charges before delivery would form part of consideration. The order
the Appellate Authority on further appeal filed by the Food
Corporation of India was affirmed by the Tribunal, vide its order
dated 22.11.1984.
4. Mr. Sandeep Goyal, learned counsel for the Food
Corporation of India has at the outset conceded that the aforesaid
question has been raised before this Court in the case of M/s Food
Corporation of India, Ferozepur v. State of Punjab (G.S.T.R. No.
14 of 1990, decided on 19.3.2009) and has been answered against the
Food Corporation of India by the Division Bench of which one of us
(M.M. Kumar, J.) was a member. A perusal of the Division Bench
judgment rendered in G.S.T.R. No. 14 of 1990 (supra) would show
that this Court has considered the definition of expression ‘turn over’
as defined in Section 2(i) of the Act and it was concluded that any
sum charged for anything done by the dealer in respect of the goods
at the time of or before delivery thereof would be included in the
expression ‘turn over’. In para 12, the Division Bench has reached
the following conclusion:-
“12. A close scrutiny of the aforesaid provision
shows that emphasis has been made to include any sum
charged for anything done by the dealer in respect of the
goods at the time of or before delivery thereof. It follows
that after the agricultural produce has been purchased by
the dealer in inter se bidding then for taking its delivery
it has to incur certain expenditure, which are either on or
before the delivery. The provision is illustrative with
G.S.T.R. No. 16 of 1991 5regard to the aggregate of the amounts of purchases and
parts of purchases actually made by any dealer.
Therefore, it would include the price of bag, labour
charges, stitching charges, price of jute thread, dammi
and carriage etc. In that regard, the contention of the
learned State counsel deserves to be accepted that there
is no delivery taken before weighment, which is not
possible without packing the agricultural produce in a
gunny bag. We also find substance in the contention of
the learned counsel that even stitching and labour
incurred for all these activities have to be included for
effective delivery of the goods, which would include
carriage also. Therefore, question No. 1 deserves to be
answered in favour of the revenue and against the dealer-
FCI.”
5. In view of the above, question No. (1) has to be answered
against the Food Corporation of India and in favour of the revenue.
The reference stands disposed of accordingly.
(M.M. KUMAR)
JUDGE
(JASWANT SINGH)
October 9, 2009 JUDGE
Pkapoor