Parle Products Private Limited vs The Assistant Commissioner of Commercial Taxes

N. Kumar, J.—The assessee has preferred these revision petitions challenging the order passed by the Tribunal rejecting its appeal. The Tribunal framed the following two questions for consideration:

(i) Whether in the facts and circumstances of the appellant''s case, the FAA is justified in confirming the order of the AA disallowing the claim of exemption of tax on freight charges?

(ii) Whether in the facts and circumstances of the appellant''s case, the FAA is justified in confirming the order of the AA disallowing the claim of exemption of tax on the so-called sales returns?

Insofar as the first issue is concerned, the Tribunal has held it is clear from the records that the sale is FOR destination for the wholesaler/distributor who are the buyers. The freight charges charged and collected in the tax invoice is a pre-sale expenditure and therefore, constitutes part of the sales turnover and is liable to tax. Moreover, Rule 3 of the Karnataka Value Added Tax Rules, 2005 do not provide for deduction of freight charges from the taxable turnover. Therefore, affirming the findings recorded by the Court below, the said issue was held against the assessee and in favour of the revenue.

Insofar as second issue is concerned, the Tribunal held the input tax credit availed has not been reversed and in view of the fact that no supporting documents are shown to them, they have no reason to take a different view from the view taken by the AA and FAA in this regard. Therefore, the said issue was also answered in favour of the revenue and against the assessee. Aggrieved by this order, the assessee has preferred these revision petitions.

The assessee has challenged the findings of the Tribunal on the very same ground urged before the Tribunal as could be seen from the questions of law framed in these revision petitions. However, the learned Counsel for the assessee assailing the impugned order contends in view of the judgment of this Court in the case of Sky Gourmet Catering Private Limited, Bangalore v. The Assistant Commissioner of Commercial Taxes (Enforcement-13), South VTK 2, Bangalore and Others 2011 (71) Kar.L.J. 759 (HC) (DB) : (2011) 46 VST 35 (Kar.) (DB), the service tax paid by the assessee for the services rendered should have been deducted out of the total turn over. The said question being purely a question of law, it is a fit case where this Court should remand the matter to the Assessing Authority to go into the said question and pass appropriate orders in the light of the law declared by this Court. He also contends even on merits, the finding recorded by the authority that the amount collected towards transportation was before sale and therefore, it is inclusive of taxable turn over is not correct.

Three authorities after looking into the documents have concurrently held that the transportation charges were collected before the goods were delivered to the purchasers and therefore, it is a pre-sale expense and rightly included in the total taxable turn over. We do not find any justification to interfere with the said question of fact.

Insofar as payment of service tax is concerned, such contention was not raised before the authorities. In fact, the case was adjourned to find out whether any such service tax is paid. The learned Government Advocate after verification of records submits that no such service tax is paid. However, the learned Counsel for the assessee produces some invoices and wants the Assessing Authority to look into it and then decide whether service tax is paid or not. These appeals arise out of the assessment year April 2005 to March 2009. When the ground of payment of service tax is not raised before the three authorities and the learned Government Advocate on verification submits no such tax is paid, in our view no case is made out for remitting the matter to the Assessing Authority. It is well-settled that these orders will not operate as res judicata. If the assessee is paying service tax for the future period he can always produce the same and seek the requisite deduction. In the circumstances, we do not find any justification to interfere with the well-considered orders passed by the Tribunal. No merits. Petitions stand dismissed.