High Court of Punjab and Haryana, Chandigarh
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Food Corporation of India v. The State of Punjab - STC-3-1999  RD-P&H 7965 (28 September 2006)
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
STC No.3 of 1999
Date of decision: 5.9.2006
Food Corporation of India
The State of Punjab
CORAM: HON'BLE MR. JUSTICE ADARSH KUMAR GOEL
HON'BLE MR. JUSTICE RAJESH BINDAL
Present: Mr. K.L.Goel, Advocate for the petitioner.
Mr. Amol Rattan Singh, Addl.AG Pb. for the State.
This petition has been filed under section 22(2) of the Punjab General Sales Tax Act, 1948 (for short, 'the Act') with a direction to refer following question of law for opinion of this court, arising out of order of Sales Tax Tribunal, Punjab, dated 29.10.1996, in respect of assessment year 1975-76:-
"Whether in the facts and circumstances of the present case, "Dami" could be included and treated as a part of the Purchase Turnover?"
The assessee is a dealer registered under the provisions of the Act. For the assessment year 1975-76, the assessee filed returns and deposited the tax. The assessing authority analysed the assessment, which was affirmed by the appellate authority as well as by the Tribunal.
The present petition is confined to the issue of commission/dami payable by the purchaser to the commission agent operating within the market area.
We find that the issue is covered against the assessee by judgment of the Hon'ble Supreme Court in Anand Swarup Mahesh Kumar v. Commissioner of Sales Tax (1980) 46 STC 477, wherein it was STC No.3 of 1999 2
observed at page 485:-
"There is, however, no substance in the third contention of the appellant that the commission (dami) payable by a purchaser to a commission agent operating within a market area established under the Adhiniyam cannot be treated as forming part of the turnover of purchases for two reasons (i) the commission paid by the purchaser is not any tax or fee payable to a Government or statutory body which is not a party to the contract of sale and (ii) the commission is actually the profit of the dealer who in this case happens to be a commission agent and should, therefore, necessarily be considered as consideration for the sale of goods.
The provisions contained in section 10 of the Adhiniyam and the Rules framed thereunder do not in any way affect the above conclusion reached by us.
Section 10 of the Adhiniyam merely provides that as from the date to be notified by the State Government in the Gazette, no person shall, in a principal market yard or sub-market yard, levy, charge or realise, any trade charges other than those prescribed by rules or by-laws made under the Adhiniyam, in respect of any transaction of sale or purchase of the specified agricultural produce and no court shall, in any suit or proceeding arising out of any such transaction, allow in any claim or counter- claim, any trade charges not so prescribed. It also provides that such charges shall be collected from the purchasers thereby barring the collection of such charges from the producers of agricultural produce who are ordinarily the sellers in a market area. Sub-rule (1) of rule 79 of the Rules framed under the Adhiniyam provides that as from the date notified by the State Government, no person shall, in a principal market yard or sub-market yard, levy, charge or realise, in respect of any transaction of sale or purchase of the specified STC No.3 of 1999 3
agricultural produce any trade charges, other than those specified by the market committee under sub-rule (2) thereof, and sub-rule (2) of rule 79 authorises the market committee to make bye-laws prescribing the maximum commission that may be charged by a commission agent or a broker. Sub-rule (3) of rule 79 reiterates that all trade charges shall be payable by the purchaser. A combined reading of section 10 of the Adhiniyam, rule 79 of the Rules made under the Adhiniyam and the bye- laws made by the market committee shows that a commission agent cannot realise any commission higher than what is prescribed by law. The commission chargeable by the commission agent is not a sum which he has in his turn to pay to an authority either by way of tax or by way of fee but is only a reward for the services rendered by him. We, therefore, reject the above submission made on behalf of the appellant." In view of the above, view taken by the authorities that the definition of "turnover" under section 2(i) of the Act did not exclude trade commission, cannot be held to be erroneous.
Accordingly, we do not find any merit in this petition and the same is dismissed.
(Adarsh Kumar Goel)
September 5, 2006 (Rajesh Bindal)
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