Full Judgment Text
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CASE NO.:
Appeal (civil) 14790-14803 of 1996
PETITIONER:
State of Punjab & Ors.
RESPONDENT:
M/s Guranditta Mal Shauti Prakash Etc.
DATE OF JUDGMENT: 05/05/2004
BENCH:
CJI & G.P. MATHUR.
JUDGMENT:
JUDGMENT
(with Civil Appeals Nos. 14736/1996, 14810-14816/1996)
RAJENDRA BABU, CJI. :
In this case the question raised for consideration
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 petitions filed by Respondents in the High
Court have ended in their favour. Hence these appeals
by special leave.
Under the Punjab General Sales Tax Act ’turnover’
is defined to include "the aggregate of the amounts of
sales and purchase 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 does
not include any sum charged for anything done by the
dealer in respect of the goods at the time or or before
delivery thereof".
Interpreting this provision with reference to the
Marketing Regulations, 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 appellants 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 appellants 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.
This Court in Anand Swarup Mahesh Kumar
vs. The Commissioner of Sales Tax, 1980 Vol. 46
Sales Tax Cases 477, had occasion to consider whether
additional tax on certain dealers levied on turnover of
purchases mentioned in Section 3-D(I) of the U.P.
Krishi Utpadan Mandi Adhiniyam, 1964 collected from
purchases by common agent can be included in the
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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 if 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.
The Punjab Act, it is submitted, is different from
the Act that was considered by this Court in Anand
Swarup Mahesh Kumar case and the High Court had
not properly examined the scope of the Agricultural
Produce Market Committee Act.
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. It cannot be seriously disputed that this
was the position in law in the State of Punjab.
If the law was not clear, it is open to the State to
amend the law either with reference to the Agricultural
Produce Market Committee Act or the Sales Tax Act
because this Court in Anand Swarup Mahesh Kumar
case has explained under what circumstances the
liability to pay market fee becomes part of the
turnover. When the finding of the High Court is that on
examining the enactment in question, there is no
obligation on the part of the seller to pay the market
fee since it is the duty of the buyer to pay the same
and seller can realise it from the buyer, the conclusion
thereof that there was no liability to pay sales tax on
the element of market fee is justified.
Therefore, we find no merit in these appeals and
the same shall stand dismissed.