Summary
The Supreme Court allowed a cylinder manufacturer’s claim for refund of sales tax paid on the portion of a provisional price later reduced under the government-controlled pricing arrangement. The supply order expressly made Rs.682 per cylinder provisional; after adjustment the legally receivable and actually retained price was Rs.645. The Court restored the Deputy Commissioner’s order and awarded interest at 9% annually from that order until payment.
Issues
- Whether sales tax remained payable on the portion of a provisional cylinder price subsequently reduced and refunded to buyers.
- What amount constituted sale price and turnover under the Rajasthan Sales Tax Act.
- Whether the assessee was entitled to refund and interest.
Provisions considered
- Section 2(39), Rajasthan Sales Tax Act, 1994Sale price meant the consideration paid or payable; the provisional amount could not prevail over the lower price the assessee was legally entitled to receive. (¶¶ 8, 15, 16, 17)
- Section 2(44), Rajasthan Sales Tax Act, 1994Turnover comprised the aggregate amount received or receivable, read in light of the binding price adjustment. (¶¶ 9, 15, 17)
Held
- The purchase orders expressly made Rs.682 provisional and subject to the price approved by the Ministry. The assessee was bound to refund the excess after downward revision, just as an upward revision would have required collection and deposit of additional tax. The excess tax was refundable. (¶¶ 3, 4, 5, 6, 16)
- The Rs.37 adjustment was undisputed. The assessee actually received and was legally entitled to retain only Rs.645 per cylinder; price fixation was beyond both its control and that of the oil companies. The provisional collection did not establish a permanent right to Rs.682. (¶¶ 15, 16, 17)
- MRF’s excise ruling did not govern this sales-tax case, because that ruling concerned the point at which excise liability attached on removal from the factory. (¶ 14)
- The assessee was entitled to refund of sales tax on the excess consideration, with interest at 9% per annum from the Deputy Commissioner’s order until payment. (¶ 18)
Result
Appeals allowed. High Court judgment set aside, Deputy Commissioner’s order restored, and excess sales tax ordered refunded with 9% annual interest from that order until payment; pending applications disposed of.