CHAPTER 3 OF THE SALE OF GOODS ACT,SECTION 22 THAT APPLIES WHERE THE CONTRACT OF SALE OF SPECIFIC GOODS IN A DELIVERABLE STATE, INCLUDING THE CONDITIONS TO DO SUCH ACTS WITH REFERENCE TO THE GOODS FOR THE PURPOSE OF ASCERTAINING THE PRICE:KERALA HIGH COURT
The High Court of Kerala passed a judgement on 1 March, 2023 stated that Chapter 3 of the Sale of Goods Act,section 22 that applies where the contract of sale of specific goods in a deliverable state, including the conditions to do such acts with reference to the goods for the purpose of ascertaining the price. It was stated in the case of Kerala State Electricity Board vs The Authority For Clarification (O.T. Appeal No. 06 of 2017) which was passed by the division bench comprising of JUSTICE A.K.JAYASANKARAN NAMBIAR and JUSTICE MOHAMMED NIAS C.P.
FACTS OF THE CASE:
The Kerala State Electricity Board Limited has filed this appeal challenging order of the authority for clarification under Section 94 of the Kerala Value Added Tax Act, 2003, that held the charges incurred for loading, unloading, stacking, and transportation formed part of the taxable turnover in the contract entered into between the appellant and M/s. Kothamangalam Aggregates, Kothamangalam, for the manufacture and supply of electrical poles. Board contends that it had invited tenderers for the purchase of Prestressed concrete poles purchase order contains the basic price, transportation charges, taxes, and duties, and therefore, except the sale price other components do not form part of the same price and therefore, determining the taxable turn including those charges other than the basic price was illegal going by the provisions of the KVAT Act. Initially, the manufacturers filed their monthly returns showing only the price of the poles while computing the taxable turnover, which the department accepted but later on, due to the audit objection, the department sought to levy tax on the freight charges also, which led to one of the manufacturers seeking a clarification.
JUDGEMENT OF THE CASE
When the transfer of the property or the goods is to be at the place of the buyer to which the seller is under an obligation to transport the goods, the expenditure incurred by the seller on freight in order to carry the goods from his place of manufacture to the place at which he is required under the contract to deliver, would thus become part of the amount for which the goods are sold by the seller to the buyer and would fall within the scope of “turnover”.The discussions above would lead to the irresistible conclusion that of clarification calls for no interference, and the OT appeal is without merit, and the same is, accordingly, dismissed.
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JUDGEMENT REVIEWED BY ROSHNI SABU, KERALA LAW ACADEMY LAW COLLEGE.