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Monday, February 26, 2018

corporate laws - tax laws- Rajasthan Sales Tax Act, 1994, - when sale price reduced - assessee is entitled for refund of excess sale tax paid = refund of the sales tax paid on the excess sale amount i.e. Rs.37/­. The case of the assessee was that he had paid tax on the provisional price of Rs.682/­ per cylinder. After the price had been reduced to Rs.645/­, he was only entitled to Rs.645/­. The oil companies had taken refund of the amount of Rs.37/­ and, therefore the tax paid on the excess amount be refunded to him. The assessee also urged that this amount of Rs.37 should not be counted in its total turnover. = though the assessee may have received Rs.682/­ per cylinder, it was under a legal obligation only to receive that price which was fixed by the MoP & NG. This price could have been higher than Rs.682/­ per cylinder, in which event the assessee would have had to collect and deposit with the Rajasthan Sales Tax Department sales tax on the excess amount. However, since the price of the cylinder has been reduced, the assessee cannot charge more than the price fixed, is bound to refund the excess amount collected and is therefore legally entitled to get refund of the tax paid on the excess amount. - In view of the above discussion, we allow the appeals, set aside the judgment of the High Court and direct that the assessee shall be refunded the amount of sales tax paid on the excess amount. The order of the Deputy Commissioner is restored. The assessee shall be entitled to interest at the rate of 9% per annum on the amount payable to it from the date of the order of the Deputy Commissioner till payment of the amount.

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‘REPORTABLE’
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(S). 2431   OF 2018
(@SLP (C) NO(S).23659 OF 2015)
M/s. Universal Cylinders Limited        …. Appellant(s)
Versus
The Commercial Taxes Officer      … Respondent(s)
With
CIVIL APPEAL NO(S). 2432  OF 2018
(@SLP (C) NO(S).23664 OF 2015)
CIVIL APPEAL NO(S). 2433  OF 2018
(@SLP (C) NO(S).23667 OF 2015)
CIVIL APPEAL NO(S). 2434  OF 2018
(@SLP (C) NO(S).23668 OF 2015)
J U D G M E N T
Deepak Gupta J.
1. Leave granted.
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2. Since a common question of law arises in these appeals,
they are being disposed of by this common judgment.  Briefly
stated the facts are that the appellant­assessee manufactures
cylinders for storage of Liquefied Petroleum Gas (LPG). At the
relevant   time,   the   entire   production   was   for   supply   to
Government   owned   companies   viz.   M/s.   Indian   Oil
Corporation Ltd.(for short ‘the IOC’), M/s Bharat Petroleum
Corporation Ltd., and  M/s Hindustan Petroleum Corporation
Ltd..   It is not disputed that the cost of the cylinders was
determined by the Ministry of Petroleum and Natural Gas (for
short ‘the MoP & NG’) under the pricing policy. 
3. On 04.05.2000, the IOC placed an order for supply of
73380 numbers of 14.2 Kg. LPG cylinders which was to be
made by 31.08.2000.  Clause 3 of the supply order reads as
follows:
  “You   can   charge   a   provisional   price   of   Rs.
682.00 for 14.2 Kg cylinders.  Pricing formula is
under review by the Government and the final
prices applicable after 01.07.99 will be only as
per approval of MOP & NG.”
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4.  The   appellant­assessee   supplied   the   cylinders   and
charged   the   amount   of   Rs.   682/­   per   cylinder   and   also
charged sales tax on the same in accordance with law. Similar
supply orders were placed by the other companies also.
5. On 31.10.2000, the IOC sent a letter to the appellant
that after review of the prices, the price of 14.2 Kg. cylinders
has been again provisionally revised to Rs.645/­ with effect
from 01.07.1999.  Relevant portion of the letter reads thus :­
“Pending finalization of the report and the short
time   available   to   recover   the   cost   due   to   the
proposed cylinder tender, Industry has decided
to revise the provisional basic price of 14.2 Kg
cylinder   to   Rs.   645/­   with   effect   from
01.07.1999.   Accordingly we will be recovering
the differential amounts from your bills.   Final
adjustments   would   be   made   later   on   after
finalization of the cylinder price.”
6.  Thereafter,   the   oil   companies   deducted/adjusted   the
excess   payment   of   Rs.37/­   and   proportionate   sales   tax
thereon from the payments due to the assessee.   Thereafter
the assessee approached the Assessing Authority for refund of
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the sales tax paid on the excess sale amount i.e. Rs.37/­.  The
case   of   the   assessee   was   that   he   had   paid   tax   on   the
provisional price of Rs.682/­ per cylinder.  After the price had
been reduced to Rs.645/­, he was only entitled to Rs.645/­.
The oil companies had taken refund of the amount of Rs.37/­
and, therefore the tax paid on the excess amount be refunded
to him. The assessee also urged that this amount of Rs.37
should not be counted in its total turnover.  
7. The Assessing Officer rejected the claim of the assessee
on the ground that there is no provision under the Act for
reducing or refunding the amount of tax once the amount of
tax has been paid.  It was also observed that the arrangement
of the assessee with the oil companies was in the nature of a
private agreement and the sales tax department had nothing
to do with this.  The appeals filed by the assessee against the
assessment order before the Deputy Commissioner of Appeals
were   partly   allowed.     Thereafter,   the   Respondent­Revenue
approached the Tax Board, which allowed the appeals of the
Revenue.   Being aggrieved, the assessee approached the High
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Court   by   filing   revision   petitions,   which   were   dismissed.
Hence, the present appeals. 
8. To appreciate the rival contentions of the parties, we
may make reference to Section 2(39) of the Rajasthan Sales
Tax Act, 1994, which defines ‘sale price’ as under:
  “2(39) “sale price” means the amount paid or
payable to a dealer as consideration for the sale
less  any sum allowed  by way  of  any  kind  of
discount   or   rebate   according   to   the   practice
normally prevailing in the trade, but inclusive of
any   sum   charged   for   anything   done   by   the
dealer in respect of the goods at the time of or
before the delivery thereof.”
9. Reference   may   also   be   made   to   Section   2(44)   of   the
Rajasthan Sales Tax Act, 1994 which defines ‘turnover’ as
under:
“2(44)   “turnover”   means   the   aggregate   amount
received  or receivable by a dealer for sales as
referred to in clause (38) including the purchase
price of the goods which are subject to purchase
tax under section 11 of the Act;
Explanation   :   Tax   charged   or   collected   and
shown   separately   in   the   sale   bill/cash
memorandum or in the accounts shall not form
part of turnover.”
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10. The   High   Court   held   that   since   the   words   ‘paid’,
‘payable’, ‘amount received’ and ‘or receivable’ have been used
in the aforesaid two sections, the assessee was entitled to
receive the amount of Rs.682/­ per cylinder and if he has
given any discount, he cannot claim refund of the same and
the price of the cylinder cannot be said to be Rs.645/­ per
cylinder.     The   High   Court   also   held   that   the   goods   were
delivered   at   Rs.682/­   per   cylinder   and   this   amount   was
collected and therefore, no amount should be refunded. 
11. We have heard learned counsel for the parties and a
number of decisions have been cited. 
12. In  IFB   Industries   Limited  v.  State   of   Kerala1
,  the
issue was with regard to the definition of ‘turnover’. This
court held that to take the benefit of trade discount and to
make it eligible for exemption, all that the assessee is required
to   prove   was   that   the   purchaser   had   paid   only   the   sum
originally charged less the discount and that this should be a
regular practice in the trade. 
1
 (2012) 4 SCC 618
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13. Reliance has also been placed on the judgment of the
Gujarat High Court in ONGC   v. State of Gujarat2
, wherein
in similar circumstances, it was held that the discount does
not form part of the sale price.  A similar view was taken by
the Madhya Pradesh High Court in Gail India Ltd. v. State
of   M.P.3
.     The  facts  of   this   case   were  that   the  petitioner
company   GAIL,   a   Public   Sector   Undertaking,   was   doing
business of supply of various petroleum products including
LPG.     The   price   of   LPG   and   kerosene   was   regulated   and
controlled by the Public Planning and Analysis Cell (PPAC).
The assessee supplied LPG to the oil companies on the basis
of provisional price and final bill  invoice was issued after the
price was settled by the PPAC and credit note or debit note
was issued.   The High Court after referring to the judgment
of this Court in IFB Industries Ltd. (supra), held that both
the provisional price and the final price are controlled by the
PPAC.  The change in sale price is due to the direction by the
PPAC and is not within the control of the assessee.  It  held
2
 2014 SCC Online Guj 15385 (Tax Appeal No. 50 of 2014)
3
 (2014) 72, VST 161
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that even though the credit note may have been issued on the
basis   of   the   provisional   price,   the   price   to   be   taken   into
consideration for calculating the turnover and the sale price
must be the actual price received by the assessee.
14. Learned counsel for the respondent has relied upon a
judgment of this Court in the case of MRF Ltd. v. Collector
of Central Excise, Madras4
. We are of the opinion that this
judgment has no relevance to this case since it is a judgment
arising out of the Excise Act where the tax is attracted the
moment the goods are removed from the    factory gate.
15.   In  our  view, a  bare  reading  of  Section  2(39)  of  the
Rajasthan Sales Tax Act, which defines “sale price” clearly
indicates that it is the price which is either paid or payable to
a dealer as consideration for the sale.   The definition itself
makes it clear that any sum by way of any discount or rebate
according to the practice normally prevailing in the trade shall
be deducted and shall not be included in the sale price.  The
4
 (1997) 5 SCC 104. 
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definition of ‘turnover’ means the aggregate amount received
or receivable by a dealer. 
16.  In the instant case, when the orders were placed with the
assessee, the price was not finalized by the MoP & NG.  There
was a clear cut stipulation in the purchase order that the
price of Rs.682/­ is only a provisional price subject to review
and it was clearly understood by the parties that the final
price applicable after 01.07.1999 will be the price as approved
by the MoP & NG.  Therefore, though the assessee may have
received Rs.682/­ per cylinder, it was under a legal obligation
only to receive that price which was fixed by the MoP & NG.
This price could have been higher than Rs.682/­ per cylinder,
in which event the assessee would have had to collect and
deposit with the Rajasthan Sales Tax Department sales tax on
the excess amount.  However, since the price of the cylinder
has been reduced, the assessee cannot charge more than the
price fixed, is bound to refund the excess amount collected
and is therefore legally entitled to get refund of the tax paid
on the excess amount.  
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17. We may also note that it is undisputed that the assessee
had to refund the amount of Rs.37/­ per cylinder to the oil
companies.   Therefore, what it has actually received is only
Rs.645/­ per cylinder.  What was legally receivable by it was
the amount to be finally fixed by the MoP & NG i.e. Rs. 645/­
per cylinder.  In the supply order only a provisional price was
fixed.  We have also taken into consideration the fact that the
price fixation is not in the hands of the assessee.   It is not
even in the hands of the oil companies.  The price is fixed by
the   MoP   &   NG   and   in   such   an   eventuality,   the   amount
actually payable is the amount to be fixed by the MoP & NG
and that is also the amount which the assessee is legally
entitled to receive.  
18. In view of the above discussion, we allow the appeals, set
aside the judgment of the High Court and direct that the
assessee shall be refunded the amount of sales tax paid on
the excess amount.  The order of the Deputy Commissioner is
restored.  The assessee shall be entitled to interest at the rate
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of 9% per annum on the amount payable to it from the date of
the order of the Deputy Commissioner till payment of the
amount.
19. Pending   applications,   if   any,   shall   also   stand
disposed of.
………………………..J.
(Madan B. Lokur)
…………………………J.
(Deepak Gupta)
New Delhi
February  23, 2018

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