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