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Chandra Mohan Ramkanai Vs. Assistant Commissioner of Commercial Taxes and ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtKolkata High Court
Decided On
Case NumberAppeal from Original Order Nos. 780 and 784 of 1975
Judge
Reported in[1976]37STC614(Cal)
AppellantChandra Mohan Ramkanai
RespondentAssistant Commissioner of Commercial Taxes and ors.
Appellant AdvocateD.N. Das and ;Archana Sengupta, Advs.
Respondent AdvocateSamarendra Nath Dutt, Adv.
DispositionAppeal dismissed
Cases ReferredTungabhadra Industries Ltd. v. Commercial Tax Officer
Excerpt:
- .....this, the said firm also contended that in terms of section 2(h) of the said act, which defines 'sale price' as:'sale price' means the amount payable to a dealer as valuable consideration for--(i) the sale of any goods, less any sum allowed as cash 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, other than the cost of freight or delivery or the cost of installation when such cost is separately charged ; or...,the delivery charges were not taxable and as such the assessment which was made on that basis was incorrect. such objections of the said firm were of course overruled by the appellate authority.5. after the said determination, the said firm obtained the.....
Judgment:

M.N. Roy, J.

1. This appeal under Clause 15 of the Letters Patent is directed against the judgment and order dated 27th September, 1974, made in Civil Rule No. 396(W) of 1967, by M.M. Dutt, J., whereby the rule has been discharged.

2. Chandra Mohan Ramkanai is a partnership firm (hereinafter referred to as the said firm) ; at all material times it carried on business mainly as textile dealers and partly on other items. There is also no dispute that the said firm is a registered dealer, having the Registration No. RJ/2307A.

3. Pursuant to a tender for the supply of paddy straw to the Government Dairy Farm at Haringhata, the said firm, whose tender was accepted, had supplied about 50,000 quintals of paddy straw by installments during the year in question. The price of the said paddy straw was worth about Rs. 4,30,000 and from the bills as produced in the proceeding, it appears that they included a sum of Rs. 4,07,346.03 as delivery charges and carrying costs.

4. Thereafter, a notice in form VI was issued by the Commercial Tax Officer concerned under the provisions of the Bengal Finance (Sales Tax) Act, 1941 (hereinafter referred to as the said Act), for final examination of the books of account of the said firm. It is also an undisputed fact that on or about 5th January, 1967, a notice in form VII of the said Act was issued raising a demand of Rs. 19,825.48 as tax due and Rs. 1,000 as penalty from the said firm on the basis of an assessment, which was made by the Commercial Tax Officer concerned, by his order dated 29th December, 1966. Thereafter, the said firm took an appeal and contended that the findings made by the assessing officer were irregular as they were mainly based upon extraneous considerations and upon materials collected behind the back of the said firm and without giving them the reasonable opportunities of rebutting them. It was also contended that in terms of item 6 of Schedule I of Section 6 of the said Act, which is to the effect that 'vegetables, green or dried (commonly known as sabji, tarkari or sak) except when sold in sealed containers', paddy straw should have been deemed to be 'vegetable' and, as such, the same was exempted from any levy. Apart from this, the said firm also contended that in terms of Section 2(h) of the said Act, which defines 'sale price' as:

'Sale price' means the amount payable to a dealer as valuable consideration for--

(i) the sale of any goods, less any sum allowed as cash 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, other than the cost of freight or delivery or the cost of installation when such cost is separately charged ; or...,the delivery charges were not taxable and as such the assessment which was made on that basis was incorrect. Such objections of the said firm were of course overruled by the appellate authority.

5. After the said determination, the said firm obtained the connected rules and the contentions which were raised before the appellate authority were also urged once more before this Court. In their turn, the respondents submitted that the price quoted was inclusive of delivery charges and the said tender form would leave no scope for the supplier to bill for delivery charges separately. It was further contended by the respondents that whatever amount the said firm received from the Haringhata Dairy Farm was in payment of the 'sale price' of straw and the latter had not paid anything to the dealer separately for carrying costs and delivery charges. They also contended that the inclusion of the delivery charges and carrying costs for Rs. 4,07,346.03 should not have been included as delivery charges and carrying costs in the bills in terms of the tender in question. They further submitted that on the said firm's own admission, the delivery charges and carrying costs had not been shown in the original bills. It was also contended by the respondents that on enquiry from the Haringhata Dairy Farm it transpired that the original bills submitted to them by the said firm did not mention delivery charges and carrying costs as stipulated in the tender in question. They further denied the submissions of the said firm that paddy straw would come within the purview of the definition 'vegetable' and, as such, would be exempted from tax, in terms of the item in the schedule as referred to above.

6. Before the learned Judge in the trial court it was argued firstly, that straw is an exempted article under Section 6 of the said Act and, as such, assessment as made was void, since the same is vegetable. Secondly, it was argued that, in any event, the definition of 'sale price' under Section 2(h) of the Act having been enlarged to include even delivery charges, is ultra vires item 54 of List II of Schedule VII of the Constitution of India and, thirdly, the assessment was made against the principles of natural justice, as documents and records obtained without notice or opportunity to the said firm have been taken into consideration. Apart from these, the said firm also contended that rules 44 and 47 of the Rules framed by this Court for furnishing of security as a condition precedent for obtaining interim orders in revenue matters are ultra vires under Article 226 of the Constitution. The points, as mentioned hereinbefore, have, of course, been negatived by the learned Judge in the trial court and answered against the said firm.

7. In this appeal before us, Mr. Das has not, of course, argued the point regarding ultra vires. But he has argued that (1) since straw is a 'cereal' so the same is totally exempted under Section 6 read with item 6 of Schedule I of the said Act, as cereal has not been defined in the said Act or is covered by the description in the schedule and, alternatively, since straw is vegetable, the same should be exempted from the levy of tax under the said Act, (2) sales tax was not leviable on the delivery charges as 'sale price' under Section 2(h) of the Act is wide enough to include the same, and (3) the determination as made by the Commercial Tax Officer concerned was in violation of the principles of natural justice inasmuch as some evidence secured behind the back of the said firm and without notice to them, has been used while making the determination.

8. In support of his contentions, Mr. Das submitted that since the word 'cereal' means kinds of edible grain or a plant (as a grass), yielding farinaceous grain suitable for food or the plant that produce it, so paddy straw should come within such definition and, as such, the same should be exempted from the imposition of tax under the said Act. In the alternative, Mr. Das argued, paddy straw being vegetable, the assessment as made was improper, in view of the exemption under Section 6 read with item 6 of Schedule I of the said Act. The type of vegetables, which are contemplated for exemption, are specific and distinctive, being vegetables, green or dried, commonly known as subji, tarkari and sak in item 6 of the schedule under Section 6 of the said Act and, as such, would not include paddy straw, since the same would not come under the definition or description of 'vegetables', which, as observed by the Supreme Court in the case of Motipur Zamindary Co. (Private) Ltd. v. State of Bihar [1962] 13 S.T.C 1 (S.C.), has to be understood in a taxing statute as in common parlance, certain class of vegetables, which are grown in kitchen-garden or in a farm and are used for the table. Apart from the above case, the Supreme Court had occasion to deal with the meaning of 'vegetables' earlier in the case of Ramavatar Budhaiprasad v. Assistant Sales Tax Officer, Akola [1961] 12 S.T.C. 286 (S.C.), and it has been observed there that the word 'vegetables' must be construed neither in a technical sense nor from the botanical point of view; it should be understood as in common parlance. It has also been observed that a word, which is not defined in the Act, but which is a word of everyday use, must be construed in its popular sense.

9. The definition as in the case of Motipur Zamindary Co. (Private) Ltd. v. State of Bihar [1962] 13 S.T.C. 1 (S.C.), in fact, has been taken from this decision of the Supreme Court. Such view has also been accepted in the case of Mangulu Sahu Ramahari Sahu v. Sales Tax Officer, Ganjam A.I.R. 1974 S.C. 390. Since paddy straw cannot be used and is not used for the table, the other argument of Mr. Das that paddy straw being a cereal, which is not defined in the said Act, also loses its force and, as such, we hold that there is no substance in the first branch of the submission of Mr. Das. We also hold that paddy straw is neither cereal nor vegetable.

10. In support of his second branch of the submissions, Mr. Das, after relying on the definition of 'sale price' in Section 2(h) of the said Act, contended that such definition would include delivery charges or freight costs. He has argued that the said firm separately charged for the delivery costs for the supply of paddy straw made to the Haringhata Dairy Farm and the necessary books of account were duly produced before the Commercial Tax Officer concerned. It appears from the records in annexures A and B to the petition, that the price of paddy straw was charged at Rs. 10.85 per quintal and, at the bottom of the bill, the amount on account of the delivery charges have been shown. From the bills in question, it thus appears to us that the said firm did not separately charge for the delivery charges but the same was included in the 'sale price'. This fact was, however, detected by the authorities concerned on inspection of the records from the Haringhata Dairy Farm, which has been alleged to be violative of the principles of natural justice as the firm has contended that such information was received behind their back and without any opportunities to them. However, on the basis of the definition of 'sale price' in Section 2(h) of the Act, according to us, there is no room for doubt that the same would not include the delivery charges or freight costs as claimed by the said firm.

11. In support of the third branch of his submissions, Mr. Das contended that the admitted facts that the Commercial Tax Officer concerned made an enquiry in the office of the Deputy Commissioner, Directorate of Dairy Department, Haringhata Farm, and secured the information that the contract in the instant case was for supply of paddy straw at Rs. 11.50 or at Rs. 10.85 per quintal and that it was mentioned in the purchase order that the price was inclusive of sales tax and used those documents or records in making the assessment without any opportunity to the said firm to rebut or refute and contradict them, would mean and constitute violation of principles of natural justice and, as such, the assessment as made should not be allowed to be given effect to. This argument of Mr. Das is of little substance since it has been admitted by the said firm that in the bills, which were submitted to the Haringhata Dairy Farm, the delivery costs were not separately charged or shown and, furthermore, when there is no denial of the fact that the purchase order of the said firm included delivery charges in the sale price and the more so when Clause (d) of the tender notice makes it clear 'that the tender must indicate clearly whether the price quoted is inclusive of sales tax or not. The price quoted, however, must include delivery charges at the place given in the tender notice'. In view of the above, it is abundantly clear that the price, in the instant case, must include the delivery charges and the appellant was not entitled to bill separately for the delivery costs. The view, which we have taken, also finds support from the determination of the Supreme Court in the case of Tungabhadra Industries Ltd. v. Commercial Tax Officer [1960] 11 S.T.C. 827 (S.C.), wherein it has been observed that in order to enable a dealer to claim the deduction, the freight should be charged for separately and not included in the price of goods sold.

12. In view of the above, we hold that the submissions of Mr. Das are of no substance. This appeal, therefore, fails and is dismissed. The judgment and order of the learned Judge in the trial court is affirmed.

13. It may be recorded that no point other than the points as mentioned above was urged by Mr. Das.

14. Since the facts and points of law involved in F.M. A. No. 780 of 1975, which is directed against the judgment and order dated 3rd October, 1974, made in Civil Rule No. 1481(W) of 1969, by Banerjee, J., are similar to that of F.M. A. No. 784 of 1975 and, in fact, the same has been made on the basis of the determinations made by M.M. Dutt, J., the judgment and order proposed by us in this appeal would govern the other case, viz., F.M. A. No. 780 of 1975.

Thus F.M. A. No. 780 of 1975 also fails and is dismissed.

There will be no order as to costs in both these appeals.

Anil K. Sen, J.

I agree


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