Chauhan, J.
1. The instant revision has been filed against the order of the Division Bench of the Rajasthan Tax Board, Ajmer, dated 24.7.2001, by which it has held that the inspection charges paid by the assessee but subsequently reimbursed by the purchaser, shall not form part of the sale price.
2. The facts and circumstances giving rise to this case are that the respondent-assessee had entered into an agreement with the public Health & Engineering Department, Rajasthan, for the sale of A.C. Cement Pressure Pipes and inspection charges had to be paid by the purchaser subsequently. The Assessing Authority, when made the assessment for the years 1987-88, 1990-91 and 1991-92, held that the said inspection charges formed part of the turn over being ah integral part of the sale price and the tax was imposed. Subsequently, appeals were filed, which had been accepted by the Appellate Authority vide judgment and order dated July 15/16, 1998, against which further appeals were preferred before the Rajasthan Tax Board, which have been rejected vide impugned judgment and order dated 24.7.2001. Hence this revision.
3. The only legal question involved in the revision is : whether inspection charges paid by the dealer-assessee and subsequently reimbursed by the purchaser would form a part of 'sale price' within the meaning of Section 2(p) of the Rajasthan Sales Tax Act, 1954 (hereinafter called 'the Act, 1954') and could be included in the turn over within the meaning of Section 2(p) of the Act, 1954.
4. The provisions of Section 2(p) of the Act, 1954 are analogous to the provisions of Section 2(39) of the Rajasthan Sales Tax Act, 1994 and the definition is para-materia with the definition of the term given in Central Sales Tax Act and reads as under :-
''Sale price' means the amount payable to a dealer as consideration for the sale less any sum allowed as cash discount 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 other than the cost of freight or delivery or the cost of installation in cases where such cost is separately charged and the expression 'purchase price' shall be construed accordingly....'
5. The said provision makes it clear that the sale price means the consideration, for which a title of the property has been transferred and it may not include discount or rebate given according to the practice prevailing in the trade, but would include any sum charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof. Therefore, the question does arise as to whether the 'inspection charges' could be included in the sale price and to determine the said issue, it may also be relevant to find out as to whether inspection was necessary/mandatory requirement of some statutory of some statutory provision for giving effect to the sale.
6. The expression 'sale price' has been considered by the Courts from time and again. The Hon'ble Supreme Court in Hindustan Sugar Mills Ltd. v. State of Rajasthan and Ors., (1), considered the issue as to whether the freight paid by the purchaser and deducted from invoice could be included in the sale price under the provisions of Section 2(p) of the Act, 1954 or Section 2(h) of the Central Sales Tax Act, 1956. As per the then existing statutory provisions, i.e. Cement Control Order, 1967, the freight stood included in the sale price and it was shown separately recovered from the purchaser b the dealer assessee, it was found to be in contravention of law, i.e. the Control Order. The Hon'ble Supreme Court observed that the definition was in two parts; the first part provided that the sale price was a consideration for the sale of any good, therefore, actual or real sale price in such eventuality became irrelevant and the test to determine as what was the sale price, was held to be as what was the consideration passing from the purchaser to the dealer for the sale of good.
7. The sale price will take within its ambit the excise duty etc. being the component of the sale price and in such an eventuality, the dealer-assessee does not have any option except to reimburse the producer for the excise duty already paid by him on the manufacture of the goods, but it would be a part of the sale price because it forms a component of the consideration payable by the purchaser to the dealer. It is only as part of the consideration for sale of the goods that the amount representing excise duty would be payable by the purchaser. The Court further observed as under:-
'There is no other manner of liability statutory or otherwise, under which the purchaser would be liable to pay the amount of excise duty to the dealer.... but as the freight under the Control Order was to be paid by the seller, it had to form the part of the sale price.'
8. The Court further held that as the definition was inclusive and exclusive both, the Revenue must show that the particular amount falls within the first part of the definition and is, therefore, part of the sale price. The exclusion clause cannot avail the assessee to take the amount out of the amount of sale price. The exclusion clause is not intended to apply to a case where the cost of the freight is part of the sale price but the dealer chooses to split up the price and claims the amount of freight as a separate item in the invoice. Where the cost of the freight is part of the price, it would fall within the first part of the definition and to such a case, the exclusion clause in the second part has no application.
9. The case was basically of an interpretation of statutory requirement where the freight charges stood included in the sale price by the Control Order and the Hon'ble Supreme Court held that the provisions of the Act, 1954 had to be read in consonance with the Control Order. It is settled legal proposition that the contract has to be read in consonance with the law and not otherwise. (Vide Union Territory, Chandigarh Administration and Ors. v. Managing Society, Goswami GDSDC, (2) and V. Karnal Durai v. District Collector, Tuticorin and Anr., (3).
10. In Hindustan Sugar Mills Ltd. (supra), the Apex Court placed reliance upon its earlier judgment in Dyer Meakine Breveries Ltd. v. State of Kerala, (1970) 3 STC 253.
11. In Central Wines v. Special Commercial Tax Officer, 65 STC 48, the Hon'ble Supreme Court considered the provisions of Section 2(s) of the Andhra Pradesh General Sales Tax Act, 1957, dealing with a case where the sales tax had been charged by the dealer in his bill to the purchaser but shown separately as a part of the turn over. The Court held that even where the sales tax is not included in the bill but is collected simultaneously and kept in a Suspence Account by the dealer, the amount collected would be part of the turn over and cannot be excluded merely by the reason of accountancy device adopted by the dealer concerned. The Court held as under :-
'It is the amount, but for the payment of which, the dealer would not transmit his title to the goods in favour of the purchaser, and not any amount paid by the purchaser towards any tax liability incurred by him on making the purchase of the goods.'
12. In Hyderabad Asbester Cement Product Ltd. v. State of Andhra Pradesh, 65 STC 172, the Hon'ble Supreme Court held that if as per the terms of the agreement, the goods are to be delivered at a different place for destination price and it was as per the desire of the purchaser, the destination charges becomes a part of the sale price for the reason that the 'domain over the goods in transit in such a case clearly vests with the dealer as under the terms of the contract, the delivery is to be effected at the other end.
13. A Division Bench of this Court in Commercial Taxes Officer v. Uttumal Gagumal, 64 STC 428, examined the scope of Section 2(p) of the Act, 1954 and explained the meaning of expression 'other charges.' The Court observing that the said expression was very wide and would cover any charge or amount received by the assessee-whether by way of commission or Aadhat in respect of the goods sold. But it must be a part of the consideration for sale of goods.
14. In Commercial Taxes Officer v. Kelvinator (India), 90 STC 336, this Court examined the issue as to whether the warranty charges for sale of refrigerator could be included in the sale price, and held that the case would depend upon the agreement and if the buyer can purchase it without paying the warranty charges being optional, it cannot form part of the sale price. The Court further held that as the warranty charge was not a part of consideration for the sale of goods, it cannot be included in the sale price. The payment in respect of warranty was found to have been opted voluntarily and had been charged separately. Thus, it was held not to be part of the sale price.
15. In Commercial Taxes Officer v. Amrit Vanaspati Co. Ltd., 1986 Tax World 190, a Division Bench of this Court considered a case as to whether 'Dharmada' collected at a fixed percentage of the value of goods, was a part of the sale price for the reason that recovery of Dharmada had a sanction of law in Rajasthan; the dealer required the buyer to pay it as a part of consideration for the sale of goods; buyer was not in a position to purchase the goods from the assessee without making payment of Dharmada; and the assessee could not parted with the goods unless the Dharmada had been paid by the purchaser. The Court observed as under :-
'....The real test for determining the definition of the 'sale price' was as to what was the consideration passing from the purchaser to the dealer for the sale of goods. It was immaterial to inquire as to how the amount of consideration was made up and the only relevant question to be considered' was as to what was the amount payable by the purchaser to the dealer as consideration for the sale or not to what was not the consideration retainable by the dealer.'
16. The Court further held that as the amount of 'Dharmada' was charged from every purchaser on a fixed rate and was included in the bills, though shown separately, would not make any difference and would be included in the turn over of the assessee for the purpose of payment of sales tax. The said view was taken by this Court in special circumstances as collection of 'Dharmada' was found to be valid. Its validity and enforcibility have also been up-held by the Hon'ble Supreme Court in Municipal Corporation, Kota v. Delhi Cloth and General Mills Co. Ltd., (2001) 3 SCC 654.
17. In Srinivasa Timber Depot and Ors. v. Deputy Commercial Taxes Officer, 23 STC 158, the Madras High Court examined the issue as to whether the charges paid on a percentage basis by customers for picking out or selecting timber from the timber depot described as lot-cooly charges and shown separately in the bills, can form part of the turn over of the dealer. The Court held as under :-
'It is well settled that the expression 'sale of goods' in the State Legislation bears the same meaning and scope as it has been understood in the legislative practice....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 aggregate of the consideration for the transfer of property in the goods. Obviously it should follow that the service charges cannot be calculated to consideration for transfer of property in the goods. In the explanation referred to, if understood in the context as it should be, 'any sum' charged for anything done by the dealer in respect of the goods can only relate to something done by the dealer in respect of goods which involved transfer of property in the goods and for consideration.'
18. The Court further held that lot cooly charges made on percentage basis could not be a part of sale price. Therefore, it is clear that the expenses borne by the seller for transfer of goods can be included in the sale price and it should be mandatory and not optional. Other service charges cannot be included in it. The said judgment was approved by the Hon'ble Supreme Court in the State of Tamil Nadu v. Srinivasa Timber Depot, (1990) 80 STC 393, observing that the lot cooly charges collected by the dealer of timber (charging them separately in the sale bill) for the service rendered by lotmen for the purpose of enabling the customers to select the goods, were collected dehors the sale of timber and did not form part of the dealer's turn over.
19. In E.I.D. Parry (1) Ltd. v. Asstt. Commissioner of Commercial Taxes and Ors., AIR 2000 SC 551, the Hon'ble Supreme Court held that the amount of subsidy received by the assessee relatable to the sale of fertilizer forms an integral part of the sale price. The Court held as under ;-
'The planting subsidy was given by the appellants to the cane-growers not by way of agrarian reform or a social welfare measure. The appellants had given planting subsidy as purchasers of surgarcane and as a part of the consideration for which the surgarcane was ultimately purchased by them.'
20. In State of Tamil Nadu v. Kothari Sugars & Chemicals Ltd., (1996) 7 SCC 751, the issue arose as to whether the excess amount paid by the purchaser to the cane-grower in advance over and above the minimum cane price fixed under the provisions of the Surgarcane (Control) Order, can be held to be a price paid by the purchaser to the cane-growers for the purpose of levy of sales tax on purchases. The Hon'ble Apex Court held that as it was an advance over and above the price fixed by the Surgarcane (Control) Order and the amount so paid as advance under the State advice did not have any contractual basis since it had been paid as a result of an agreement between the growers and the purchaser and in anticipation of fixation of the additional can price under the said Order, it cannot be included in the sale price.
21. In Assam Staff Electricity Board and Ors. v. Brahama Putra Steels (P) Ltd., (1996) 8 SCC 73, the Hon'ble Apex Court held that the policy of the Government providing for grantof subsidy to an industry, if not linked with the payment of electricity charges by theindustry to the Board, the subsidy so paid cannot form the part of the sale price and, thus, the industry was under a legal/contractual obligation to pay the electricity charges to the Board, even if the subsidy had not been paid by the State to the industry.
22. In State of Orissa v. Utkal Distributors (P) Ltd., AIR 1966 SC 1170, the issue arose as to whether Central Sales Tax paid by the assessee at purchase point and subsequently recovered from its customers would form part of sale price or turnover so as to be liable to tax under the Orissa Sales Tax Act, 1947. The Court held as under :-
'In our opinion, the facts that the price which the stock-holder was entitled to charge was statutorily fixed and the stock-holder was not entitled to and did not charge more, are sufficient to enable us to come to the conclusion that central sales tax paid under the provisions of the Iron and Steel (Control) Notification did not form part of the price paid by the customer to the assessee.'
23. Similar view had been reiterated by the Constitution Bench of the Apex Court in Messrs George Oakes (Private) Ltd. v. State of Madras and Ors., AIR 1962 SC 1037, as it was held therein that as tax imposed by the Government on a buyer making the assessee-dealer a merely collecting agency, 'the tax must always remain outside the sale price'. In Madras Fertilizers Ltd. v. Assistant Commissioner (Assessment), (1994) 95 STC 134, the Kerala High Court examined the issue of subsidy and held as under :-
'Sale is a bi-lateral transaction which stems out of a contract between the seller and the purchaser. An essential ingredient of a sale is price. Fixation of the price is a matter of agreement between the parties....Therefore, price is an essential element of a contract of sale and is ordinarily a matter of agreement between the parties. What the purchaser of the fertilizer bargains when he purchases fertilizer from the petitioners is to obtain a certain quantity of fertilizers at a certain price which shall not exceed the price fixed by the Central Government by notification under the Fertilizer (Control) Order. The sale is not conditional on the Central Government paying any amount by way of subsidy. ....This being the contract, any other sum received by the seller-petitioners for a different purpose and not as consideration for the sale, is not part of the sale price, and therefore of their turnover.'
24. The said judgment in Madras Fertilizers (supra) has been approved by the Hon'ble Supreme Court in Neyveli Lignite Corporation Ltd. v. Commercial Tax Officer, Cuddalore and Anr., (2001) 9 SCC 648, wherein the Apex Court considered as to whether the subsidy, not linked with the sale, can form part of the sale pries. The court held as under :-
'It is the sale consideration, whether in cash or otherwise, which is receivable in respect of sales made by a dealer which can possibly form part of the turnover of a dealer. It is that sum which can be legitimately regarded as forming part of the aggregate amount for which the goods have been bought or sold. The sum has to be paid either by the purchaser or on his behalf by some other person. The subsidy is payable on the basis of quantity of fertilizer produced and removed from the factory. The forms on the basis of which the subsidy has to be given go not indicate that the reimbursement of subsidy is dependant on the sale of fertilizer have not been made. The basis for the grant of subsidy is the removal of the fertilizer from the factory, though it has to be certified by the company that the said removal is for sale for agricultural purposes....The subsidy so given is undoubtedly to see that the ultimate consumer gets fertilizer at a reasonable price and the manufacturer is not unduly burdened by the lower fixation of the price of fertilizer. The payment which is so made by the Government to a manufacturer cannot be regarded as a discharge of any liability or obligation by the Government towards the purchaser of fertilizer. The two payments received by the manufacturer, namely, the subsidy and the price fixed under the Fertilizer (Control) Order are independent of each other. Subsidy does not form part of the bargain between the manufacturer and the purchaser of fertilizer. ...It is clear...that it is that amount which flows from the purchaser to the seller which alone would form part of the turnover of the seller. Any sum received dehors the contract of sale from another entity, whether it be Government or anyone else, cannot be regarded as being an amount which would form part of the sale price on which tax is payable.'
25. Thus, in view of the above, if the issue of 'inspection charges' is examined, it is clear that it was only for the satisfaction of the buyer regarding the quality of goods as it wanted to select the good pieces and such a selection was not mandatorily required by the statute nor such an inspection was a pre-requisite condition for transferring the title of goods from the dealer to the purchaser, it is difficult to imagine how it could be a part of sale price. Inspection charges had been borne by the purchaser-Department and as per the terms of the contract, the inspection charges had to be ultimately paid by the purchaser and not by the assessee. It could not form, part of the the sale price for the reason that before and after the inspection, the sale price remained the same. Merely because of inspection, the sale price had not been enhanced and the consideration for transferring the title of goods could not be altered. Sale had not been conditional on inspection. It is not the case of the Revenue that assessee was not willing to part with the good without inspection. It was merely on the desire of the buyer.
26. The learned Board has rightly held that inspection charges do not form part of the sale-price. The facts involved herein do not warrant any review thereof. I find no force in the petition and it is accordingly dismissed without notice to the other side.