Gauhati High Court
Page No.# 1/2 vs The State Of Assam And 3 Ors on 31 July, 2025
Page No.# 1/21
GAHC010125572017
2025:GAU-AS:10822
THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Case No. : WP(C)/1861/2017
ANAMIKA MOTORS
GAR ALI ROAD, SHANKARPUR JORHAT- 785014, ASSAM A PARTNERSHIP
FIRM REGISTERED UNDER THE INDIAN PARTNERSHIP ACT, 1932 AND
HAVING ITS PRINCIPLE PLACE OF BUSINESS AT JORHAT, ASSAM AND IN
THE PRESENT PROCEEDINGS REP. BY SRI RAJENDAR KUMAR GOYAL,
THE MANAGING PARTNER OF THE PETITIONER FIRM.
VERSUS
THE STATE OF ASSAM and 3 ORS.
REP. BY THE COMMISSIONER AND SECRETARY TO THE GOVT. OF ASSAM,
DEPARTMENT OF FINANCE AND TAXATION, DISPUR, GUWAHATI- 781006.
2:THE COMMISSIONER OF TAXES
KAR BHAWAN DISPUR GUWAHATI- 781006.
3:THE SUPERINTENDENT OF TAXES JORHAT UNIT JORHAT
4:THE UNION OF INDIA
REP. BY THE SECRETARY TOT HE GOVT. OF INDIA
MINISTRY OF FINANCE NORTH BLOCK
CABINET SECRETARIAT RAISINA HILLS NEW DELHI - 11000
Advocate for the Petitioner : MR.S P SHARMA, DR.ASHOK SARAF,MR.P BARUAH,MR.P
DAS,MR.Z ISLAM
Advocate for the Respondent : ASSTT.S.G.I., SC, FINANCE & TAXATION
Linked Case : WP(C)/1860/2017
ANAMIKA MOTORS
GAR ALI ROAD
SHANKARPUR JORHAT- 785014
ASSAM A PARTNERSHIP FIRM REGISTERED UNDER THE INDIAN
PARTNERSHIP ACT
Page No.# 2/21
1932 AND HAVING ITS PRINCIPLE PLACE OF BUSINESS AT JORHAT
ASSAM AND IN THE PRESENT PROCEEDINGS REP. BY SRI RAJENDAR
KUMAR GOYAL THE MANAGING PARTNER OF THE PETITIONER FIRM.
VERSUS
THE STATE OF ASSAM and 3 ORS.
REP. BY THE COMMISSIONER AND SECRETARY TO THE GOVT. OF ASSAM
DEPARTMENT OF FINANCE AND TAXATION
DISPUR GUWAHATI - 781006.
2:THE COMMISSIONER OF TAXES KAR BHAWAN DISPUR GUWAHATI -
781006.
3:THE SUPERINTENDENT OF TAXES JORHAT UNIT JORHAT
4:THE UNION OF INDIA
REP. BY THE SECRETARY TO THE GOVT. OF INDIA
MINISTRY OF FINANCE NORTH BLOCK
CABINET SECRETARIAT RAISINA HILL NEW DELHI- 110001.
------------
Advocate for : MR.S P SHARMA
Advocate for : appearing for THE STATE OF ASSAM and 3 ORS.
Linked Case : WP(C)/1854/2017
ANAMIKA MOTORSJORHAT- 785014
ASSAM A PARTNERSHIP ACT
1932 AND HAVING ITS PRINCIPLE PLACE OF BUSINESS AT JORHAT
ASSAM AND IN THE PRESENT PROCEEDINGS REP. BY BY SRI RAJENDAR
KUMAR GOYAL
THE MANAGING PARTNER OF THE PETITIONER FIRM.
VERSUS
THE STATE OF ASSAM and 3 ORS.
REP. BY THE COMMISSIONER AND SECRETARY TO THE GOVT. OF ASSAM
DEPARTMENT OF FINANCE AND TAXATION DISPUR GUWAHATI – 781006.
2:THE COMMISSIONER OF TAXES KAR BHAWAN DISPUR GUWAHATI –
781006
3:THE SUPERINTENDENT OF TAXES JORHAT UNIT JORHAT
4:THE UNION OF INDIA
REP. BY THE SECRETARY TO THE GOVT. OF INDIA
MINISTRY OF FINANCE NORTH BLOCK CABINET SECRETARIAT
RAISINA HILL NEW DELHI- 110001
Page No.# 3/21
————
Advocate for : MR.P BARUAH
Advocate for : ASSTT.S.G.I. appearing for THE STATE OF ASSAM and 3 ORS.
Linked Case : WP(C)/1853/2017
ANAMIKA MOTORSGAR ALI ROAD SHANKARPUR JORHAT- 785014
ASSAM A PARTNERSHIP ACT
1932 AND HAVING ITS PRINCIPLE PLACE OF BUSINESS AT JORHAT
ASSAM AND IN THE PRESENT PROCEEDINGS REP. BY BY SRI RAJENDAR
KUMAR GOYAL THE MANAGING PARTNER OF THE PETITIONER FIRM.
VERSUS
THE STATE OF ASSAM and 3 ORS.
REP. BY THE COMMISSIONER AND SECRETARY TO THE GOVT. OF ASSAM
DEPARTMENT OF FINANCE AND TAXATION
DISPUR GUWAHATI – 781006.
2:THE COMISSIONER OF TAXES KAR BHAWAN DISPUR GUWAHATI – 781006.
3:THE SUPERINTENDENT OF TAXES JORHAT UNIT JORHAT.
4:UNION OF INDIA REP. BY THE SECRETARY TO THE GOVT. OF INDIA
MINISTRY OF FINANCE NORTH BLOCK CABINET SECRETARIAT
RAISINA HILL NEW DELHI- 110001.
————
Advocate for : MR.Z ISLAM
Advocate for : appearing for THE STATE OF ASSAM and 3 ORS.
:::BEFORE:::
HON’BLE MR. JUSTICE N. UNNI KRISHNAN NAIR
Date of hearing : 31-07-2025
Date of Judgment: 31-07-2025Judgment & Order(Oral)
Heard Dr. Ashok Saraf, learned senior counsel, assisted by Mr. P. Baruah,
learned counsel, appearing on behalf of the petitioner, in all these 4(four) writ
petitions. Also heard Mr. B. Choudhury, learned standing counsel, Finance &
Taxation Department, appearing on behalf of respondents No. 1, 2 & 3.
Page No.# 4/21
2. The petitioner, herein, by way of instituting the writ petitions being
WP(c)1853/2017, WP(c)1854/2017, WP(c)1860/2017, and WP(c)1861/2017,
has assailed the assessment order, all dated 15-12-2016, passed by the
Superintendent of Taxes, Jorhat, under Section 36 of the Assam Value Added
Tax, 2003, for the assessment years i.e. 2011-2012; 2012-2013; 2013-2014;
and 2014-2015, and the subsequent notice of demand, all dated 16-12-2016,
whereby, the value added tax (VAT) has been levied upon the petitioner,
herein, for handling/logistic charges, charged by it, on the ground that such
charge being taxable under the provisions of the Finance Act, 1994, and the
service tax payable having been paid, the said charges could not have been
brought within the ambit of “sale price” as defined under the provisions of
Section 2(44) of the Assam Value Added Tax, 2003.
3. As the above-noted 4(four) writ petitions involve the same facts and the
question of law emerging being also the same; they were heard analogously
and are disposed of by this common judgment & order.
4. For the sake of convenience, the facts, as set-out by the petitioner in
WP(c)1853/2017, is being considered.
5. As projected in the said writ petition, the petitioner, herein, is engaged in
the sale and service of vehicles. In the course of its business of selling vehicles
to its customers; the petitioner, herein, charged certain amounts on account of
handling/logistic charges, viz. delivery ceremony, waxing/ polishing of the
vehicle after delivery, fuel given to the customer after delivery, driver costs for
dropping the vehicle at customer’s home, home visit by sales personnel for
post-sales follow-up, home visit by service advisor post-sales and other
handling costs, etc..
Page No.# 5/21
6. It is further projected in the above-noted writ petition that the charges
so levied on the customer, were all on account of service rendered by the
petitioner, after the sale of the vehicle, is completed and accordingly, the same
cannot be said to be a part of the sale price of the vehicle, in question.
7. The Superintendent of Taxes, Jorhat, i.e. respondent No. 3, issued a
show cause notice, dated 14-07-2016, directing the petitioner, herein, to show
cause for assessment under Section 34 and for imposition of penalty under
section 90 of the Assam Value Added Tax, 2003, for the assessment year
2011-2012. In the said notice, it was highlighted that as per the clarification
received from the District Transport Officer, Jorhat; the petitioner was not
empowered to collect any additional charges other than the fees and road tax
applicable under the provisions of the Motor Vehicles Act, 1988, and the rules
framed thereunder. It was further projected that insurance and road tax
should be the only legitimate charges which are permissible to be charged by
the petitioner, herein, from its customers. The Respondent No. 3, herein,
accordingly, drew satisfaction that the petitioner had delivered the vehicles to
its customers by issuing invoices and sale certificates without charging Value
Added Tax(VAT) on the full amount of consideration and therefore, evaded
taxes. It may be mentioned here that similar notices, all dated 14-07-2016,
were issued to the petitioner, herein, for the assessment years 2012-2013,
2013-2014 and 2014-2015.
8. The petitioner, on receipt of such show cause notice, dated 14-07-2016,
submitted its reply and therein, highlighted that during the year 2011-2012, it
had charged certain amounts as logistic/handling charges from its customers
and had also set-out the services rendered by it against the said charges so
levied. It was contended by the petitioner, herein, in the said reply that the
Page No.# 6/21
charges so levied were on account of the services rendered by it after the sale
of the vehicles was completed. It was further brought on record that the
service tax being leviable for the handling/ logistic charges and the same
being already paid; no Value Added Tax(VAT) would be permissible to be
levied on the same component. The petitioner, herein, further clarified that it
had not charged anything for providing services of registration and/or
insurance and the handling/logistic charges were charged for providing extra
services and accordingly, requested the respondent No. 3, herein, to drop the
proceedings sought to be initiated against the petitioner in terms of the show
cause notices issued in the matter.
9. The Respondent No. 3, thereafter, vide notice, dated 03-10-2016, issued
a further show cause to the petitioner intimating that the petitioner shall now
be assessed under the provisions of Section 36 of the Assam Value Added Tax,
2003, for the year 2011-2012 instead of Section 34, thereof, as had been so
informed in terms of the earlier show cause notice. The petitioner was also
directed to show cause as to why penalty under the provisions of Section 90 of
the Assam Value Added Tax, 2003, should not be imposed upon it for evading
taxes payable under the said Act of 2003, as intimated by the earlier show
cause notices. Similar show cause notices, all dated 03-10-2016, were also
issued to the petitioner for the assessment years 2012-2013, 2013-2014 and
2014-2015, respectively.
10. The petitioner, herein, submitted its reply to all the show cause notices
as issued to it and therein, highlighted that the handling/logistic charges
charged by it, did not form part of the sale price of the vehicle, in question,
and further the said amount collected by it, was liable to service tax and due
service tax has already been paid by it. The petitioner further contended that
Page No.# 7/21
the service tax having been paid; the said charges levied by it, cannot be
brought within the purview of the Assam Value Added Tax, 2003, and no Value
Added Tax(VAT) was leviable, thereon. With regard to the penalty under the
provisions of Section 90 of the said Act of 2003, the petitioner had clarified
that the same is not applicable in the case of the petitioner, herein, as there
was no mens rea on the part of the petitioner, inasmuch as, the petitioner
bonafidely acted on the basis of the binding decisions of the Hon’ble Supreme
Court as well as various judicial pronouncements of the High Courts of the
country, that once service tax is liable on a particular consideration, no Value
Added Tax(VAT) can be levied on the same. The petitioner, herein, has further
submitted that there being no mens rea on the part of the petitioner, in the
matter; penalty was not permissible to be imposed upon it.
11. The respondent No. 3, herein, on receipt of such a reply from the
petitioner, proceeded to complete the assessment of the petitioner vide
separate orders, dated 15-12-2016, under the provisions of Section 36 of the
Assam Value Added Tax, 2003, for the year 2011-12, 2012-2013, 2013-2014,
and 2014-2015. In the assessment orders, no penalty, however, came to be
imposed upon the petitioner, herein. In terms of the said assessment orders,
notice of demand for the assessment years involved, all dated 16-12-2016,
came to be issued to the petitioner, herein.
12. Being aggrieved by the assessment orders, all dated 03-10-2016, as well
as the notices of demand issued in pursuance thereof, all dated 16-12-2016;
the petitioner, herein, has instituted the present proceedings before this Court.
13. Dr. Saraf, learned senior counsel, appearing for the petitioner, after
briefly highlighting the nature of the services rendered by a dealer during and
Page No.# 8/21
after the process of a sale of a vehicle, has submitted that the
handling/logistic charges charged by the petitioner, herein, from its customers,
were so charged separately and the same was so done after the sale of the
vehicle, was complete. The learned senior counsel has further submitted that
most of the services rendered by the petitioner, herein, for which,
handling/logistic charges were so received; were based on the request made
by the petitioner for carrying-out certain works after the sale of vehicle was so
completed.
14. Dr. Saraf, learned senior counsel, has, at the outset, highlighted that the
vehicle, in question, was in a deliverable state and no addition, thereto, was
so mandated before completion of the sale involved. The learned senior
counsel has further submitted that on receipt of the sale price of the vehicle,
the property in the goods, is transferred to the customer under contract of
sale. On receiving the price of the goods, the petitioner issues a gate pass
under the name of the customer who is the purchaser and also issues a sale
certificate in the prescribed statutory form showing delivery of the vehicle. The
learned senior counsel has further contended that the sale, as such, is
completed both as regards the transfer of the property of the vehicle to the
purchaser as well as the delivery, thereof. The handling/logistic charges,
charged by the petitioner, are on account of post-sale services rendered by the
petitioner and the same would be taxable under the Finance Act, 1994.
15. Dr. Saraf, learned senior counsel, has further submitted that the due
amount of service tax as assessed, being paid by the petitioner, herein, there
was no occasion for the State Respondents to impose Value Added Tax(VAT)
on the same transaction, by construing the same, to be also a part of the sale
consideration received by the petitioner for the sale of the vehicle, in question.
Page No.# 9/21
The learned senior counsel, by referring to the provisions of the Assam Value
Added Tax, 2003, has submitted that the definition of “sale price” as set-out in
the provisions of Section 2(44) of the Assam Value Added Tax, 2003, defines
the same as the amount of valuable consideration paid or payable to a dealer
for any sale made including any sum charged for anything done by the dealer
in respect of goods at the time of or before delivery of the goods. The learned
senior counsel has further submitted that the handling/logistic charges levied
by the petitioner, herein, is not a valuable consideration paid or payable for
the sale of the vehicle, in-as-much as, such charges are charged for the
services rendered by the petitioner after completion of the sale and
accordingly, it cannot be considered as sale price for the vehicle. The learned
senior counsel has reiterated that the vehicles are in specific and deliverable
state and transfer of property in goods in pursuance of the sale contract takes
place against the payment of the price of the goods i.e. the vehicles, herein.
16. Dr. Saraf, learned senior counsel, has further submitted that the
handling/logistic charges collected by the petitioner, herein, would not be
permissible to be considered as valuable consideration paid or payable to a
dealer for any sale made. Further the said charges also cannot be regarded as
any sum charged for anything done by the dealer in respect of the goods at
the time or before the delivery, thereof. The learned senior counsel has
submitted that the handling/logistic charges would not come within the ambit
of the extended meaning of the expression “sale price” since the same does
not contribute a sum charged for anything done by the petitioner in respect of
the goods at the time or before delivery, thereof; the same being a post
delivery service rendered by the petitioner, herein, the same would only be
taxable under the Finance Act, 1994, and the service tax having been paid by
the petitioner; the steps taken by the State Respondents in imposing the
Value Added Tax(VAT), on such circumstances, would be clearly impermissible
Page No.# 10/21
and the assessments made and the notices of demand issued in consequence,
thereof; would mandate an interference from this Court.
17. Dr. Saraf, learned senior counsel, has further submitted that it is a
settled position of law that either a transaction is chargeable to Value Added
Tax(VAT), or, it shall be chargeable to service tax. The learned senior counsel
has submitted that the same transaction cannot be made chargeable to both
the taxes, as both taxes are mutually exclusive.
18. Dr. Saraf, learned senior counsel, in support of his submissions, has
placed reliance on the following decisions:
(i). The decision of the Hon’ble Supreme Court in the case of Imagic
Creative(P) Ltd. v. Commissioner of Commercial Taxes & anr., reported
in (2008) 2 SCC 614;
(ii). The decision of the Delhi High Court in the case of Commissioner,
VAT, Trade and Taxes Department v. International Travel House Ltd.
reported in 2009 SCC OnLine Del 2749;
(iii). The decision of the Tripura High Court in the case of Oil Field
Instrumentation (India) Ltd. v. The State of Tripura & Ors., reported in
2014 SCC OnLine Tri 749;
(iv). The decision of the Madras High Court in the case of Srinivasa
Timber Depot & Ors. v. Deputy Commercial Tax Officer, Choolai
Division, Madras -29 & Ors., reported in 1968 SCC OnLine Mad 215; and
(v). The decision of the Bombay High Court in the case of Additional
Commissioner of Sales Tax, VAT III, Mumbai Vs. Sehgal Autoriders Pvt.
Ltd. reported in 2011 SCC OnLine Bom 872.
Page No.# 11/21
19. Dr. Saraf, learned senior counsel for the petitioner, in the above
premises, has prayed that the impugned assessment orders, all dated 15-12-
2016, and the notices of demand, all dated 16-12-2016, issued by the
Superintendent of Taxes i.e. respondent No. 3, to the petitioner, herein, for the
assessment years 2011-2012, 2012-2013, 2013-2014 and 2014-2015, would
mandate an interference by this Court.
20. Per contra, Mr. Choudhury, learned standing counsel, Finance & Taxation,
at the outset, by referring to the definition of “sale price” as set-out in the
provisions of Section 2(44) of the Assam Value Added Tax, 2003, has
submitted that the same having included within its ambit, any sum charged
for anything done by the dealer in respect of the goods at the time of, or,
before the delivery of the goods, the handling/logistic charges, charged by the
petitioner being definitely not charged as the cost of freight, or, delivery, or,
cost of installation, in cases where such cost is separately charged; the said
charge is deemed to be included in the sale price of the vehicle, in question.
The amount being paid by the customer during the process of the sale of the
vehicle, in question, and not being a charge so levied after the sale/delivery of
the vehicle, in question, was complete; the said charges would form the part
of the sale price and accordingly, Value Added Tax(VAT) would also be leviable,
thereon.
21. Mr. Choudhury, learned standing counsel, has submitted that the
petitioner, herein, has artificially culled-out a part of the sale transaction as a
service which, admittedly, in the facts of the matter involved, would not be
permissible. The said aspect of the matter coming to the notice of the
Department concerned and clarification, thereon, being received from the
District Transport Officer, Jorhat, which had brought to the forefront that a car
Page No.# 12/21
dealer was not permitted to collect any additional charges other than the fees
and road tax applicable under the provisions of the Motor Vehicle Act, 1988,
and the rules framed thereunder; the charges levied by the petitioner, herein,
as handling/logistic charges, are, in fact, considerations so charged towards
the sale of the vehicle, in question and accordingly, the petitioner, herein, is
liable to pay Value Added Tax(VAT) thereon, also.
22. In the above premises, Mr. Choudhury, learned standing counsel, Finance
& Taxation, has further submitted that the assessment orders passed in the
matter for the financial years involved as well as the notices of demand made;
would not mandate an interference from this Court.
23. I have heard the learned counsels appearing for the parties and also
perused the materials available on record.
24. The rival contentions of the parties to the proceedings, have brought to
the forefront an issue as to whether the handling/logistic charges, charged by
the petitioner, herein, would amount to be a sum charged at the time, or,
before the delivery of the vehicle and would be, therefore, included in the
meaning of the term “sale price” as set-out in Section 2(44) of the Assam
Value Added Tax, 2003, and thereby, rendering the same, liable to Value
Added Tax(VAT). The petitioner has projected that in course of its business of
selling vehicles to its customers, it charges certain amount on account of
handling/logistic charges. Such charges were on account of delivery ceremony,
waxing/polishing of the vehicle after delivery, fuel given to the customer after
delivery, driver cost for dropping the vehicle at the customer’s home, home
visit by sales personnel for post-sales follow up, home visit by service advisor
post-sales and other handling costs. It is further projected that a lump-sum
Page No.# 13/21
amount on account of the same, is charged by the petitioner, herein, from its
customers for the said service rendered. The projection of the petitioner is
further to the extent that the said charges are so levied by it after the sale of
the vehicle, in question, is complete. Accordingly, it is projected that the same
cannot be construed to be inclusive in the sale price of the vehicle sold.
25. The Assam Value Added Tax, 2003, was enacted w.e.f. 01-05-2005, to
provide for imposition and collection of tax on sale and purchases of good in
the State of Assam and for matters connected therewith and incidental
thereto. The power of the State Legislature to impose a tax on the sale and
purchase of goods was derived from Entry 54 of List II of the Seventh
Schedule to the Constitution of India. Section 10 of the Assam Value Added
Tax, 2003, mandates that every dealer who is liable to pay tax for any year
under Section 7 of the Act, shall pay output tax on the taxable turnover for
such year. The term “taxable turnover” has been defined by Section 2(54) of
the Act of 2003 as under:
“(54) “taxable turnover” means the turnover on which a dealer is liable to pay tax as
determined after making such deductions from his gross turnover and in such manner as
may be prescribed.”
The term “gross turnover” has been defined by Section 2(23) of the Act,
as under:
“(23) “gross turnover” means, –
(i) for the purpose of levy of tax, the aggregate of the amount of sale price received or
receivable by a dealer whether as principal, agent or in any other capacity in respect of
sale of all taxable and tax-free goods, at all places of business in the State, during any
prescribed period, including sale price in respect of sales in the course of inter-state trade
or commerce or sales outside the State or sales in the course of import into or export out of
the territory of India.
Explanation.- The amount received by a dealer on account of price variation or price
escalation in respect of sale or supply of goods shall be deemed to form part of Gross
Turnover of the financial year during which it is actually received;
(ii) for the purpose of levy of tax, the aggregate of the amounts of purchase price paid and
payable by a dealer in respect of all purchases of goods made by him during any
prescribed period.”
Page No.# 14/21
As such, the aggregate amount of sale price received, or, receivable by a
dealer, is termed as gross turnover.
26. The term “sale price” has been defined by Section 2(44) of the Assam
Value Added Tax, 2003, as under:
“(44) “sale price” means the amount of valuable consideration paid or payable to a dealer
for any sale made including any sum charged for anything done by the dealer in respect of
goods at the time of or before delivery of the goods other than the cost of freight or
delivery or the cost of installation in cases where such cost is separately charged.”
27. A consideration of the definition of the term “sale price” brings to the
forefront that it means the amount of valuable consideration paid, or, payable
to a dealer for any sale made including any sum charged for anything done by
the dealer in respect of the goods at the time of, or, before delivery of the
goods. The vehicles, involved in the matter, were in specific and deliverable
state and could be delivered to the customer, as such. The transfer of the
property in the goods in pursuance of the sale contract, took place against the
payment of the price of the goods i.e. the vehicle, herein, and the delivery of
the goods, was affected by the petitioner to its customer. The services now
rendered by the petitioner which is charged under the heading
“handling/logistic charges” also includes services rendered by the petitioner at
the specific request of the customer after the vehicle, in question, was
transferred to the customer and it had become the property of the buyer.
28. The first part of section 2(44) of the definition while defining the “sale
price” brings within its purview, the consideration paid, or, payable to a dealer
for the sale. The second part of the definition which is of an inclusive nature
brings within its purview, any sum charged for anything done by the seller in
respect of the goods at the time of, or, before the delivery of the goods other
than the cost of freight, or, delivery of cost of installation but the delivery, or,
Page No.# 15/21
the cost of installation, in case, where such cost is separately charged. In the
case on hand, the transfer of the property in goods in pursuance of the sale
contract, has taken place on payment of the price of the vehicle which is
already fixed; the handling/logistic charges being a charge for the service
rendered after completion of the sale of the vehicle, in question, in the
considered view of this Court; it cannot be held to be forming part of the
consideration paid, or, payable to the petitioner for sale of the vehicle.
29. This Court notes that the various services provided by the petitioner,
herein, to the customer under the heading “handling/logistic charges” also has
an element of a request being made, in this connection, by the customer
concerned, which would be permissible to be so executed only after the
transfer of the vehicle to the customer, had occasioned. Accordingly, the
handling/logistic charges, charged, in the considered view of this Court; would
not come within the ambit of the extended meaning of the expression “sale
price” under section 2(44) of the Assam Value Added Tax, 2003.
30. In the case of Imagic Creative(P) Ltd.(supra); the Hon’ble Supreme
Court held that payment of service tax as well as Value Added Tax(VAT) are
mutually exclusive and they should held to be applicable with regard to the
respective parameters of service tax and the sales tax, as envisaged in a
composite contract as contra-distinguished from an individual contract. The
Hon’ble Supreme Court held that it is difficult to hold that in a case of this
nature, sales tax would be payable on the value of the entire contract,
irrespective of the element of service provided. Relevant paragraphs of the
said judgment, is reproduced, hereinbelow:
“27. What, however, did not fall for consideration in any of the aforementioned decisions
is the concept of works contract involving both service as also supply of goods constituting
a sale. Both, in Tata Consultancy [(2005) 1 SCC 308] as also in Associated Cement
Companies [(2001) 4 SCC 593] what was in issue was the value of the goods and only for
Page No.# 16/21the said purpose, this Court went by the definition thereof both under the Customs Act as
also the Sales Tax Act to hold that the same must have the attributes of its utility,
capability of being bought and sold and capability of being transmitted, transferred,
delivered, stored and possessed. As a software was found to be having the said attributes,
they were held to be goods.
28. We have, however, a different problem at hand. The appellant admittedly is a service
provider. When it provides for service, it is assessable to a tax known as service tax. Such
tax is leviable by reason of a parliamentary statute. In the matter of interpretation of a
taxing statute, as also other statutes where the applicability of Article 246 of the
Constitution of India, read with the Seventh Schedule thereof is in question, the Court may
have to take recourse to various theories including “aspect theory”, as was noticed by this
Court in Federation of Hotel & Restaurant Assn. of India v. Union of India [(1989) 3 SCC
634].
29. If the submission of Mr Hegde is accepted in its entirety, whereas on the one hand, the
Central Government would be deprived of obtaining any tax whatsoever under the Finance
Act, 1994, it is possible to arrive at a conclusion that no tax at all would be payable as the
tax has been held to be an indivisible one. A distinction must be borne in mind between an
indivisible contract and a composite contract. If in a contract, an element to provide
service is contained, the purport and object for which the Constitution had to be amended
and Clause (29-A) had to be inserted in Article 366, must be kept in mind.
30. We have noticed hereinbefore that a legal fiction is created by reason of the said
provision. Such a legal fiction, as is well known, should be applied only to the extent for
which it was enacted. It, although must be given its full effect but the same would not
mean that it should be applied beyond a point which was not contemplated by the
legislature or which would lead to an anomaly or absurdity.
31. The court, while interpreting a statute, must bear in mind that the legislature was
supposed to know law and the legislation enacted is a reasonable one. The court must also
bear in mind that where the application of a parliamentary and a legislative Act comes up
for consideration; endeavours shall be made to see that provisions of both the Acts are
made applicable.
32. Payments of service tax as also VAT are mutually exclusive. Therefore, they should be
held to be applicable having regard to the respective parameters of service tax and the
sales tax as envisaged in a as contract composite contradistinguished from an indivisible
contract. It may consist of different elements providing for attracting different nature of
levy. It is, therefore, difficult to hold that in a case of this nature, sales tax would be
payable on the value of the entire contract, irrespective of the element of service provided.
The approach of the assessing authority, to us, thus, appears to be correct.”
31. The Delhi High Court in the case of International Travel House Ltd.
(supra), at paragraph No. 10, held, as under:
“10. Where the sale is distinctly discernible in the transaction, i.e., the contracts are by
intention of the parties severable so that there are separate values with respect to goods
and services, only then can one not deny the legislative competence of the State to levy
sales tax on the value of the goods. This, however does not allow the State to entrench
Page No.# 17/21upon the Union List and tax services by including the cost of such services in the value of
goods. Even in the composite contracts, which are by legal fiction deemed to be divisible
under article 366(29A), the value of goods involved in the execution of the whole
transaction cannot be assessed to sale.”
32. The High Court of Tripura in the case of Oil Field Instrumentation(India)
Ltd.(supra), held that no person can be directed to pay both sales tax and
service tax on the same transaction. Paragraph Nos. 29 and 30, thereof, is
extracted hereinbelow:
“29. The first condition of the rate schedule shows that service tax is to be paid by the
bidder but the bidder can claim it from the ONGC. It is not disputed that service tax has
been paid on all the payments made. It is urged by Dr. Saraf, learned Sr. counsel for the
State that only element ‘E’ is a service and the rest is only hiring charges. We are unable to
agree with this submission. Under element ‘A’ the mobilization charges include the charges
for crew, expertise, consultancy, maintenance, spares and all taxes excepts service tax.
There are elements of service and not only transfer in the right to use goods. Similar
language is employed in Elements ‘B’, ‘C’, ‘D’ and ‘F’. Under element ‘G’ service tax if payable
has to be in addition to the contractor. As pointed above, service tax is actually being
paid.
30. As has been held by the Apex Court either a transaction shall be exigible to sales
tax/VAT or it shall be exigible to service tax. Both the taxes are mutually exclusive.
Whereas sales tax and value added tax can be levied on sales and deemed sales only by
the State, it is only the Central Government which can levy service tax. No person can be
directed to pay both sales tax and service tax on the same transaction. The intention of
the parties is clearly to treat the agreement as a service agreement and not a transfer of
right to use of goods. We are also clearly of the view that it is impossible from the terms of
the contract to divide the contract into two portions and since the petitioners have paid
service tax they cannot be also asked to pay value added tax. As held by the Delhi High
Court in Commissioner, VAT, Trade and Taxes Department Vs. International Travel House
Ltd. (supra), if there is a conflict between the Central law and the State Act then the
Central law must prevail. The Petitioner or the ONGC cannot be burdened with two
different taxes for the same transaction.”
33. In the case of Srinivasa Timber Depot(supra), a Division Bench of the
Madras High Court was called upon to consider whether an amount recovered
by the assessee, who was a dealer in timber as “lot coolly charges”, would
form part of the sale price under the Tamil Nadu General Sales Tax Act, 1959.
These charges were collected for the service rendered for taking out logs of
timber from the place of storage in order to place them before the customer
for selection and approval. On these facts, the Division Bench held that these
charges were not paid exclusively for the services rendered in respect of the
Page No.# 18/21
goods sold, but for services rendered by the workmen for the purposes of
enabling the purchaser to select the goods. Hence, the charges were said to
have been recovered de hors the sale. In that context, while interpreting the
expression “any sums charged for anything done by the dealer in respect of
the goods”; the Madras High Court, held, as under:
“It is now well settled that the expression “sale of goods” in the State Legislative entry
bears the same meaning and scope as it has been understood in the legislative practice of
this country since the enactment of the Sale of Goods Act. The object of the Madras
General Sales Tax Act is to levy a general tax on the sale or purchase of goods in the
State. It is clear, therefore, that what could legitimately be brought to tax under the Act is
the aggregation of the consideration for the transfer of property in the goods. Obviously, it
should follow that service charges cannot be equated to consideration for transfer of
property in the goods. In the Explanation referred to, if understood in the context, as it
should be, “any sums charged for anything done by the dealer in respect of the goods” can
only relate to something done by the dealer in respect of the goods which involves transfer
of property in the goods and for consideration. The further condition is that something
should have been done in respect of the goods at the time of, or before the delivery of the
goods. So what is chargeable to tax is not any sum charged at the time of or before the
delivery of the goods, but any sum, charged for transfer of property in the goods, involved
in anything done by the dealer in respect of the goods at the time specified by the
Explanation. The Explanation read in the abstract is, of course, of wide scope and may
possibly take in any sum charged for anything done by the dealer in respect of the goods
whether or not it involved also transfer of property in the goods. But, as we said, the fact
that it is an Explanation to the definition of “turnover” and the “turnover” is but the
aggregate amount of the consideration of sales shows that it has to be read in the context
and not de hors it.”
The above decision was carried upon appeal before the Hon’ble Supreme
Court in the case of State of Tamil Nadu v. Srinivasa Timber Depot , reported
in (1991) 80 STC 393(SC), wherein, the Hon’ble Supreme Court held that the
statement of principle was in accordance with law and dismissed an appeal by
the State.
34. The Bombay High Court, again, in the case of Sehgal Autoriders Pvt.
Ltd.(supra), examining the question as to whether the service charges
received from the customer for registration of the motor-cycle, formed a part
of the sale price. The Bombay High Court examining the provisions of the
Maharashtra Value Added Tax Act, 2002, as well as the Central Motor Vehicle
Rules, 1989, held, as under:
Page No.# 19/21
“In the present case, there is no reason to fault the finding of the Tribunal that the goods
which form the subject-matter of the contract between the respondent and its buyer are in
a specific and deliverable state. The transfer of property in the goods in pursuance of the
sale contract takes place against the payment of the price of the goods. Delivery of the
goods is effective by the seller to the buyer. The obligation under the law to obtain
registration of the motor vehicle is cast upon the buyer. The service of facilitating the
registration of the vehicle which s rendered by the seller-assessee is to the buyer and in
rendering that service, the seller acts as an agent of the buyer. The handling charges
which are recovered by the respondent cannot therefore be regarded as forming part of the
consideration paid or payable to the respondent for the sale. Those charges cannot fall
within the extended meaning of the expression, “sale price”, since they do not constitute a
sum charged for anything done by the seller in respect of the goods at the time of or before
the delivery thereof.”
35. In the light of foregoing decisions of the Hon’ble Supreme Court as well
as of the various High Courts; this Court holds that the handling/logistic
charges, charged by the petitioner, herein, are in the nature of post-sale
services rendered by the petitioner and the same is taxable under the Central
Act, namely, the Finance Act, 1994. The petitioner, herein, has already paid
service tax to the Central Government under the Finance Act, 1994, and the
transaction, in question, being services under the Central Act, the State
cannot impose Value Added Tax(VAT) on the said transaction, treating the
same to be sale, inasmuch as, the said Act cannot come in conflict with the
Central Act and even, if such conflict arises; the Assam Value Added Tax,
2003, must give way to the provisions of the service tax in the Finance Act,
1994. This Court is of the further considered view that since the transaction, in
question, is a taxable service as defined in the Finance Act, 1994, and taxed
accordingly, any other interpretation will lead to overlapping and has to be
avoided as otherwise the same will be taxed both as services and goods.
36. This Court further holds that in view of the fact that the petitioner,
herein, has already paid tax to the Central Government under the provisions
of the Finance Act, 1994, the transaction, in question, being service, ‘taxable’
under the Central Act; the question of imposition of Value Added Tax(VAT) in
respect of the transaction, in question, under the Assam Value Added tax Act,
Page No.# 20/21
2003, does not arise and consequently, the impugned action of the respondent
No. 3, herein, in levying Value Added Tax(VAT) on the handling/ logistic
charges charged by the petitioner under the said Assam Value Added Tax Act,
2003, is absolutely illegal and without jurisdiction and in that view of the
matter, the impugned orders of assessment, all dated 15-12-2016 and the
notices of demand, all dated 16-12-2016, issued in pursuance thereof, are
liable to be interfered with.
37. It is a settled proposition of law that either, a transaction is chargeable to
Value Added Tax(VAT), or, it shall be chargeable to service tax. Whereas Value
Added Tax (VAT) can be levied on ‘sale’ by the State, it is the Central
Government that can levy service tax. No person can be directed to pay both
Value Added Tax(VAT) and Service Tax on the same transaction. In the case on
hand, the petitioner, herein, in its reply, dated 08-08-2016, has specifically
stated that handling/logistic charges collected by it, were taxable under the
Finance Act, 1994, and the petitioner was paying service tax on the said
amount collected by it and thereby, the said amount cannot form part of the
sale price and thereby, the same is not taxable under the Assam Value Added
Tax, 2003.
38. This Court, accordingly, holds that the handling/logistic charges would
not fall within the extended meaning of the expression “sale price” since it did
not constitute a sum charged for anything done by the seller in respect of the
goods at the time, or, before the delivery, thereof.
39. In the light of the discussions made hereinabove; this Court is of the
considered view that the petitioner, herein, has successfully been able to
dispel the conclusions reached by the Superintendent of Taxes, Jorhat, i.e.
Page No.# 21/21
respondent No. 3, in the impugned assessment orders, holding the handling/
logistic charges levied by the petitioner, to be inclusive within the meaning of
the expression “sale price” of the vehicle, in question and thus, taxable under
the Assam Value Added Tax, 2003.
40. In view of the above discussion; the impugned assessment orders, all
dated 15-12-2016, for the assessment years i.e. 2011-2012; 2012-2013;
2013-2014; and 2014-2015, and the subsequent notice of demand, all dated
16-12-2016, whereby, the value added tax(VAT) has been levied upon the
petitioner, herein, for handling/logistic charges, charged by it, are not found
sustainable and the same are hereby set aside and quashed.
41. With the above directions, all these 4(four) writ petitions, accordingly,
stand allowed and disposed of.
JUDGE
Comparing Assistant