Ramanujam, J.
1. The common question that arises is as to whether the 'lot cooly charges' collected by the assessees in these cases from the customers would form part of the turnover. The assessees in these cases are dealers in timber and they had collected 'lot cooly charges' in addition to the sale price at a particular percentage of the sale price. They claimed that the aggregate amounts of the said collections should be excluded from their turnover as the said collections are not part of the sale price payable by them for the goods sold. But the said claim was rejected by the assessing authority as well as the Appellate Assistant Commissioner on the ground that the 'lot cooly charge' will form part of the turnover in view of explanation (2)(ii) to Section 2(r) of the Madras General Sales Tax Act, 1959, defining 'turnover' which is as follows:
The amount for which goods are sold shall include any sums charged for anything done by the dealer in respact of the goods sold at the time of, or before the delivery thereof.
2. The Tribunal, however, following an eariler decision of this court in Srinivasa Timber Depot v. Deputy Commercial Tax Officer [1969] 23 S.T.C. 158, upheld the claim of the assessees for deduction of the 'lot cooly charges' from the turnover.
3. In these cases filed by the revenue it is urged that the above decision of this court which directly dealt with this point and decided against the revenue requires reconsideration in view of the decision of the Supreme Court in Dyer Meakin Breweries Ltd. v. State of Kerala [1970] 26 S.T.C. 248.
4. It is not disputed by the revenue that the decision in Srinivasa Timber Depot v. Deputy Commercial Tax Officer [1969] 23 S.T.C. 158 directly governs the present cases and that if the principle of that decision is applied, the assessees have to succeed. In the circumstances, the question is whether the decision in Srinivasa Timber Depot v. Deputy Commercial Tax Officer [1969] 23 S.T.C. 158 requires reconsideration.
5. In Srinivasa Timber Depot v. Deputy Commercial Tax Officer [1969] 23 S.T.C. 158, the identical question came up for consideration, and the revenue sought to sustain the addition of 'lot cooly charges' in the turnover on two grounds: (1) that the definition of 'turnover' itself will include 'lot cooly charges' for, so far as the purchaser is concerned, he has no option but to pay the 'lot cooly charges' and the total amount which he is compelled to pay as price for the goods purchased by him includes the 'lot cooly charges' and 'lot cooly charges' is part of the amount charged by the dealer and paid by the customer at the time of the sale, and (2) that even otherwise 'lot cooly charges' will fall within the second limb in explanation (2) (ii) to Section 2(r) of the Act. As regards the first ground the court held that though 'lot cooly charges' had been paid by the customers along with the price for the goods, they have been shown separately in the bills. As regards the second ground based on explanation (2)(ii) to Section 2(r), the court expressed:
In our opinion, the explanation cannot be read in the abstract. Its context is with reference to the sale and turnover as defined. It is now well-settled that the expression 'sale of goods' in the State legislative entry bears the same meaning and scope as it has been understood in the legislative practice of this country since the enactment of the Sale of Goods Act. 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 aggregation of the consideration for the transfer of property in the goods. Obviously, it should follow that service charges cannot be equated to consideration for transfer of property in the goods. In the explanation referred to, if understood in the context, as it should be, 'any sums charged for anything done by the dealer in respect of the goods' can only relate to something done by the dealer in respect of the goods which involves transfer of property in the goods and for consideration. The further condition is that something should have been done in respect of the goods at the time of, or before the delivery of, the goods. So, what is chargeable to tax is not any sum charged at the time of, or before the delivery of, the goods, but any sum charged for transfer of property in the goods, involved in anything done by the dealer in respect of the goods at the time specified by the explanation. The explanation read in the abstract is, of course, of wide scope and may possibly take in any sum charged for anything done by the dealer in respect of the goods whether or not it involved also transfer of property in the goods. But, as we said, the fact that it is an explanation to the definition of 'turnover' and the 'turnover' is but the aggregate amount of the consideration of sales shows that it has to be read in the context and not de hors it.
6. The learned counsel for the revenue would, however, contend that the construction of explanation (2)(ii) to Section 2(r) placed in that case is not the proper one and that the said provision will include all sums charged by the dealer at the time of the sale, whether the services have been rendered in respect of the goods sold or de hors it. The learned Government Pleader refers to the decision in Associated Cement Companies Ltd. v. State of Bombay [1956] 7 S.T.C. 373, in support of his stand. In that case, the Associated Cement Company Ltd., who are dealers in cement charged in their bills the price of cement at the controlled rate at Rs. 89 8-0 per ton plus sales tax at half anna per rupee and town duty at one rupee per ton paid by them at the time of the import of cement into the city of Bombay. The question was whether the sales tax authorities were justified in adding to the sale price the town duty paid by the company. The Sales Tax Tribunal, Bombay, took the view that the consideration which moves from the purchaser to the dealer for the purchase of the goods is a lump amount which he actually pays to the dealer and that except for the deductions permissible under the law, the whole of that amount can in law be regarded as the sale price for the goods. This decision of the Tribunal is no binding authority, and even otherwise, we consider that the proposition laid by the Tribunal is too wide and should be confined to the pre-sale charges. Reference is also made to Sun-N-Sand Hotel Private Ltd. v. State of Maharashtra [1969] 23 S.T.C. 507. In that case, the question arose as to whether service charges at 10 per cent of the tariff rates collected by the hotel could be included in the sale price. The Bombay High Court expressed:
We are unable to accept the contention of the petitioner that what is charged to the customer in the hotel by the assessee inclusive of 10 per cent by way of service charges is really not the 'sale price' for the goods which are offered and consumed by the customer in the establishment.
Once it is found that there is no option to the customer whether to pay or not to pay the service charges at the rate of 10 per cent over and above the tariff, we find it difficult to dissociate this part of the bill from the total contract which a customer enters into with the assessee when ordering any food.
7. The following observations in that case are strongly relied on by the revenue:
The contention of the assessee, that it merely acts as if it were a channel or conduit through which the benefits flow from the collection of this amount for the purpose of distribution to its employees, cannot be accepted. For one thing there is no direct nexus between the whole body of employees to whom the benefits go and the customer who is served by an employee. In the case of a tip, it is a direct payment for satisfactory service rendered by a particular employee who serves the customer. For aught one knows, the customer may not know the number of employees in the establishment, their grades or salaries, and what services they actually render. If the charges were only for the services rendered to the customer, the matter would be on a different footing. Here the services rendered are rendered by the totality of employees in the establishment; some of them may be in the kitchen and some of them may be at other places. In other words, they may be employed in the task with which the customer is not directly concerned at all. It will, therefore, be seen that what is charged as service charges and required to be paid by the customer is in effect an addition to the price which he has to pay and is properly to be considered as sale price of the food ordered by him in that establishment.
8. It is urged that as in that case here also the 'lot cooly charges' are not paid to any particular person who renders the services but the amounts collected are intended to be paid to all the employees of the assessees doing similar services. But we find the principle laid down in that case to be that the service charges have a direct nexus and are relatable to the food or refreshments taken by the customer. But, in the case on hand, the service charges do not exclusively relate to the goods supplied to the customers. The nature of the 'lot cooly charges' has been adverted to in Srinivasa Timber Depot v. Deputy Commercial Tax Officer [1969] 23 S.T.C. 158. The usual practice is said to be that the customers who come to the depot for the purchase of specific varieties of timber of particular measurements take meticulous care in selecting the cut timber for the specified purposes and this would involve some labour such as lifting of logs of timber, showing them to the purchasers, cutting them to sizes on purchasers' approval of the quality of the timber and so on and that the trade practice is to collect certain charges as 'lot cooly charges' if ultimately the purchaser selects the articles and purchases them. In the sale bills the lot cooly charges are shown separately, without including the same in the sale price. The nature of the work for which lot cooly charges are collected appears to consist in taking out the logs of timber from the place of storage so as to put them before the customer for their selection and approval and instead of valuing the services then and there in respect of each customer at varying rates dependent upon the actual services rendered, a uniform rate bearing a certain percentage of the sale price of timber is collected as a trade practice. It is said that all timber merchants usually employ persons who are called 'lot men' for the specific purpose of doing the services referred to above for the customers before the goods are actually selected and purchased. From what has been stated above 'lot cooly charges' are not paid exclusively for the services rendered in respect of the goods sold but for the services rendered by the 'lot men' for the purpose of enabling the purchasers to select the goods.
9. In Dyer Meakin Breweries Ltd. v. State of Kerala [1970] 26 S.T.C. 248 , the assessee-company which manufactured liquor at various places in U.P. and Haryana, transported the goods from its breweries and distilleries to its place of business in Ernakulam and sold them there to various customers. While selling liquor, the assessee made out separate bills for ex factory price and for 'freight and handling charges'. The assessee claimed that the amount of freight and handling charges incurred by it in transporting the goods from the breweries and distilleries to the warehouse at Ernakulam had to be deducted under Rule 9(f) of the Kerala General Sales Tax Rules, 1963, in determining its taxable turnover. This claim was rejected by the Supreme Court on the ground that all the expenditure incurred by the assessee towards freight and handling charges was incurred prior to the sale and was, therefore, a component of the price for which the goods were sold and hence the assessee was not entitled to the deduction claimed. According to their Lordships of the Supreme Court, the said Rule 9(f) can be used to exclude only those charges which are incurred either expressly or by necessary implication for or on behalf of the purchaser, after the sale, when the dealer undertakes to transport the goods and to deliver the same or where the expenditure is incurred as an incident of sale, and that the rule is not intended to exclude from the taxable turnover any component of the price, such as the expenditure which the dealer has to incur before sale to make the goods available to the intending customer at the place of sale. Relying on this decision, the learned Government Pleader urges that 'lot cooly charges' represent the cost of pre-sale services which the assessees have to incur for making the required goods available to the customers. But the Supreme Court was considering Rule 9(f) of the Kerala General Sales Tax Rules, 1963, providing for deduction in respect of the amounts paid as freight in relation to the goods sold and, naturally, it was held that the freight in respect of which deduction was claimed should be the freight incurred subsequent to the sale in relation to the goods sold. But we are concerned in this case with certain charges paid by the customer for the services rendered by lot men in assisting them to select the required specified goods they want out of the total stock or lot held by the assessees. Therefore, we are inclined to agree, with respect, with the view expressed in Srinivasa Timber Depot v. Deputy Commercial Tax Officer [1969] 23 S.T.C. 158, that 'lot cooly charges' are collected de hors the sale and that the explanation in question will take in only the sum charged for anything done by the assessees in respect of the goods sold and not other amounts which have no sufficient nexus with the sale. In these circumstances, we must say that no convincing reason is shown to have the decision in Srinivasa Timber Depot v. Deputy Commercial Tax Officer [1969] 23 S.T.C. 158 reconsidered.
10. The result is the tax cases are dismissed with costs in T.C. Nos. 16 of 1970 and 78 of 1970. Counsel's fee Rs. 150 in each of the above two cases. There will, however, be no order as to costs in the other cases.