Linde INDIA Limited Through Its Executive Indirect Taxation Namely Binoy Kumar Sharma vs. The State Of Jharkhand Through The Secretary Cum Commissioner Commercial Taxes Deptt

Held

The Court held that the facility charges are includible in the sale price for VAT purposes. The reasoning was that these charges are a consideration paid by the purchaser (Tata Steel Limited) to the dealer (Linde India Limited) in relation to the sale of gases. The plant, pipeline, and meter, for which the facility charges are levied, are crucial for the production, transportation, and measurement of the gases sold, thus making the charges directly relatable to the sale. The Court distinguished the present case from excise duty matters, emphasizing that the taxable event for VAT is 'sale', whereas for excise duty it is 'manufacture'. The definition of 'Sale Price' under Section 2(xlviii) of the JVAT Act, 2005, including Explanation II, was found to support the Revenue's contention, as it encompasses any amount charged by the dealer for anything done in respect of the goods at the time of or before delivery. The Court also noted that the Petitioner charged higher prices for gases sold to other customers when facility charges were not separately levied, indicating that these charges were a component of the overall sale consideration. The Court affirmed the previous judgment of the Division Bench, holding that there was no error in the orders of the Commercial Taxes Tribunal and the Commissioner of Commercial Taxes. The writ petitions were dismissed.

Facts

These two review petitions were filed by Linde India Limited against a common judgment dated September 3, 2019, passed by the learned Division Bench of the High Court, which had dismissed two writ petitions. The writ petitions sought to quash orders of the Commercial Taxes Tribunal, Jharkhand, dated March 24, 2017, which confirmed earlier orders of the Commissioner of Commercial Taxes, Jharkhand, dated October 30, 2012. These orders pertained to VAT proceedings for the years 2008-09 and 2009-10. The core dispute involved whether 'facility charges' collected by Linde India Limited from Tata Steel Limited were includible in the 'sale price' for VAT purposes. The High Court, in its previous judgment, had held that facility charges were includible in the sale price, being consideration for the sale of gases.

Key Issues

1. Whether the 'facility charges' collected by the petitioner from Tata Steel Limited are includible in the 'sale price' for the purpose of Value Added Tax (VAT) under the Jharkhand Value Added Tax Act, 2005? The Petitioner (Linde India Limited) argued that the facility charges, which cover the provision, operation, and maintenance of plant, pipelines, and meters, are not part of the sale price of gases. They relied on Supreme Court judgments concerning excise duty, such as the case of Commissioner of Central Excise, Delhi v. Union Carbide India Ltd. (2008), arguing that these charges were distinct from the sale of goods. The Petitioner also contended that the facility charges were not for anything done in respect of the goods at the time of or before delivery, as per Explanation II to the definition of 'Sale Price'. The Revenue (State of Jharkhand) contended that the facility charges are a consideration passing from the purchaser to the dealer in relation to the sale of gases. They argued that the plant, pipeline, and meter are essential for the sale and delivery of gases, making the facility charges directly relatable to the sale. The Revenue relied on the definition of 'Sale Price' under Section 2(xlviii) of the JVAT Act, 2005, and Explanation II thereof, asserting that any amount charged for anything done in respect of the goods at the time of or before delivery is includible. They also cited the Supreme Court's decision in BOC India Limited Vs. Commissioner of Commercial Tax and Ors. (Civil Appeal No. 1799 of 2010), which clarified that VAT is leviable on facility charges.