M/S. UNIVERSAL CYLINDERS LIMITEDversusTHE COMMERCIAL TAXES OFFICER

508                      [2018]REPORTS
               SUPREME COURT    2 S.C.R. 508               [2018] 2 S.C.R.


A                 M/S. UNIVERSAL CYLINDERS LIMITED
                                        v.
                    THE COMMERCIAL TAXES OFFICER
                     (Civil Appeal No(s). 2431 of 2018 etc.)
B                             FEBRUARY 23, 2018
            [MADAN B. LOKUR AND DEEPAK GUPTA, JJ.]
             Rajasthan Sales Tax Act, 1994: ss.2(39), 2(44) – Refund of
      sales tax – Appellant-assessee manufacturer of cylinders for storage
      of LPG supplied the entire production to Government owned
C
      companies – The cost of the cylinders was to be determined by the
      Ministry of Petroleum and Natural Gas (MOP & NG) under the
      pricing policy – IOC placed an order for supply stating in the
      supply order to charge a provisional price of Rs.682 per unit and
      that pricing formula was under review by the Government and the
D     final prices applicable after 1.7.1999 would be only as per approval
      of MOP & NG – Accordingly appellant-assessee supplied the
      cylinders – On 31.10.2000, IOC sent letter to appellant that after
      review of the prices, cylinders have again been provisionally revised
      to Rs.645 per unit w.e.f 1.7.1999 – Thereafter oil companies
      deducted/adjusted excess payment of Rs.37 and proportionate sales
E
      tax thereon from the payments due to the assessee – Claim for refund
      of sales tax on the excess amount of Rs.37 – Entitlement for – Held:
      s.2(39) defines “sale price” as a price which is either paid or payable
      to a dealer as consideration for sale – The definition itself makes it
      clear that any sum by way of any discount or rebate according to
F     the practice normally prevailing in the trade would be deducted
      and not be included in the sale price – The definition of ‘turnover’
      means the aggregate amount received or receivable by a dealer –
      In the instant case, when the orders were placed with the assessee,
      the price was not finalized – There was a clear cut stipulation in the
      purchase order that price of Rs.682/- was only a provisional subject
G
      to review and the final price applicable after 01.07.1999 would 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 – Assessee had to refund the amount of Rs.37/- per
H
                                       508
        M/S. UNIVERSAL CYLINDERS LIMITED v. THE                          509
               COMMERCIAL TAXES OFFICER

cylinder to the oil companies – Therefore, it actually received only     A
Rs.645 per cylinder – 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
                                                                         B
to receive – The assessee is entitled to refund of the amount of sales
tax paid on the excess amount.
      Allowing the appeals, the Court
      HELD: It is undisputed that the assessee had to refund
the amount of Rs.37/- per cylinder to the oil companies.                 C
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. 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             D
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. The assessee shall be
refunded the amount of sales tax paid on the excess amount.
The order of the Deputy Commissioner is restored. [Paras 17,             E
18] [514-B, D]
      IFB Industries Limited v. State of Kerala [2012] 4 SCR
      802 : 2012 (4) SCC 618; ONGC v. State of Gujarat
      2014 SCC Online Guj 15385; Gail India Ltd. v. State
      of M.P. (2014) 72 VST 161; MRF Ltd. v. Collector of                F
      Central Excise, Madras (1997) 5 SCC 104 – referred to.
                        Case law reference
[2012] 4 SCR 802                referred to             Para 12
(2014) 72 VST 161               referred to             Para 13
                                                                         G
(1997) 5 SCC 104                referred to             Para 14
      CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2431
of 2018.
      From the Judgment and Order dated 27.02.2015 of the High Court
                                                                         H
510            SUPREME COURT REPORTS                          [2018] 2 S.C.R.


A     of Judicature for Rajasthan at Jaipur in S. B. Sales Tax Revision Petition
      No. 59 of 2006.
                                       WITH
            C. A. Nos. 2432, 2433 and 2434 of 2018
B           Sameer Jain, Ms. Anu Sura, Angad Sandhu, Love Kumar Gupta,
      Rabin Majumdar, Advs. for the Appellant.
            Amit Sharma, Sandeep Singh, Ankit Raj, Ms. Indira Bhakar, Ms.
      Ruchi Kohli, Advs. for the Respondents.
            The Judgment of the Court was delivered by
C
            DEEPAK GUPTA J. 1. Leave granted.
             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 appellant-assessee manufactures cylinders for storage of
      Liquefied Petroleum Gas (LPG). At the relevant time, the entire
D
      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
E     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
F             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.”
            4. The appellant-assessee supplied the cylinders and charged the
      amount of Rs. 682/- per cylinder and also charged sales tax on the same
G     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
H     portion of the letter reads thus :-
       M/S. UNIVERSAL CYLINDERS LIMITED v. THE                                 511
     COMMERCIAL TAXES OFFICER [DEEPAK GUPTA J.]

        “Pending finalization of the report and the short time available to    A
        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
                                                                               B
        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 the sales tax paid on the excess sale
amount i.e. Rs.37/-. The case of the assessee was that he had paid tax         C
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.   D
       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           E
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 Respondent-Revenue
approached the Tax Board, which allowed the appeals of the Revenue.
Being aggrieved, the assessee approached the High Court by filing revision
petitions, which were dismissed. Hence, the present appeals.                   F

      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       G
        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.”
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512             SUPREME COURT REPORTS                           [2018] 2 S.C.R.


A           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
B             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.”
            10. The High Court held that since the words ‘paid’, ‘payable’,
C     ‘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
D     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
E     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.
F            13. Reliance has also been placed on the judgment of the Gujarat
      High Court in ONGC v. State of Gujarat 2 , 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
G
      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
      1
        (2012) 4 SCC 618
      2
        2014 SCC Online Guj 15385 (Tax Appeal No. 50 of 2014)
H     3
        (2014) 72, VST 161
          M/S. UNIVERSAL CYLINDERS LIMITED v. THE                             513
        COMMERCIAL TAXES OFFICER [DEEPAK GUPTA J.]

oil companies on the basis of provisional price and final bill invoice was    A
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
                                                                              B
the assessee. It held 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,         C
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      D
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      E
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     F
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         G
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
4
    (1997) 5 SCC 104.                                                         H
514              SUPREME COURT REPORTS                        [2018] 2 S.C.R.


A     is therefore legally entitled to get refund of the tax paid on the excess
      amount.
             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
B     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
C     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
D     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.
             19. Pending applications, if any, shall also stand disposed of.
E

      Devika Gujral                                               Appeals allowed.




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