IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL Trade Tax Revision No. 21 of 2004 Commissioner of Trade Tax, Uttaranchal, Dehradun. ...…………. Revisionist Versus M/s Poltawaski T.P.S. Power Services, Industrial Area, Bahadarabad, Haridwar. ...…………. Respondent Mr. Sudhir Kumar, Brief Holder for the revisionist / State. Mr. Sharad Sharma, Advocate for the respondent / assessee. Coram : Hon’ble Prafulla C. Pant, J. Hon’ble B. S. Verma, J. Prafulla C. Pant, J. (oral) This revision, preferred under Section 11(1) of the U.P. Trade Tax Act, 1948 (applicable to the State of Uttarakhand), is directed against the order dated 6th of April 2004, passed by the Trade Tax Tribunal, Dehradun, whereby the Second Appeal No. 248 of 2002, filed by the assessee (present respondent) has been allowed, holding that no entry tax is payable on the purchase of diaphragm. 2) Heard learned counsel for the parties. 3) Brief facts of the case are that the respondent assessee is a Firm registered with the Trade Tax Department, who deals with the purchase and sale of machineries and part of the machineries. During the assessment Year 1999-2000, the respondent assessee supplied 10 diaphragms to Bharat Heavy Electricals Limited, Haridwar, for manufacture of the steam turbines, which the dealer purchased for $ 2,05,000. In terms of rupees, as per the dealer, value of the goods was Rs. 90,05,650/-. As such, the price shown by the dealer was Rs. 9,00,565/- per diaphragm. Admittedly, no custom duty, insurance charges, port clearance charges were added to the price shown by the dealer. The Assessing Officer (hereinafter referred as the A.O.) took the view that after adding custom duty, insurance charges and port clearance charges, the value of the goods purchased is more than Rs. 10,00,000/-. As such, on the 10 diaphragms purchased, entry tax is payable under the U.P. Tax on Entry of Goods Act, 2000 (applicable to the State of Uttarakhand, as the said Act came into force before creation of the new State). Accordingly, the A.O. issued demand of Rs. 2,32,298/- as an entry tax. Aggrieved by said order of the A.O., the assessee preferred first appeal before the Deputy Commissioner (Appeals)-2, Trade Tax, Dehradun, which was registered as First Appeal No. 946 of 2001. However, said authority vide its order dated 25.10.2002, affirmed the order of the A.O. On this, the assessee went in second appeal before the Trade Tax Tribunal, Dehradun, under Section 10(2) of the U.P. Trade Tax Act, 1948. The Tribunal, after hearing the parties, took the view that custom duty which was not charged by the seller cannot form part of the purchase price, as such, cannot be the ‘value of the goods’ under the Tax on Entry of Goods Act, 2000, and set aside the orders passed by the A.O., and the first appellate authority. Hence, this revision by the Revenue. 4) Before further discussion, it is pertinent to mention here, the relevant provisions of law applicable to the case. Clause (e) of sub-section (1) of Section 2 of the U.P. Tax on Entry of Goods Act, 2000, defines expression ‘value of goods’. The said definition reads as under: “(e) “value of goods” in relation to a dealer who has affected entry of goods into a local area shall mean the purchase price of such goods as defined in Clause (gg) of Section 2 of the Uttar Pradesh Trade Tax Act, 1948, or the market value of such goods if they have been acquired or obtained otherwise than by way of purchase.” Since, it is nobody’s case that the items in question were not purchased, as such, as mentioned in the above definition, for calculating the value of goods one has to refer to the definition of ‘purchase price’ given under the U.P. Trade Tax Act, 1948. Clause (gg) of Section 2 of said Act defines expression ‘purchase price’ as under: “(gg) “purchase price” means the amount of valuable consideration paid or payable by a person for the purchase of any goods, less any sum allowed by the seller as cash discount according to trade practice, and shall include any sum charged for anything done by the seller in respect of the goods at the time of or before delivery thereof, other than the cost of freight or delivery or the cost of installation when such cost is separately charged.” The above definition of ‘purchase price’ makes it clear that it is the valuable consideration actually paid or payable by a person to the seller for purchase of any goods, which is relevant for calculating the ‘purchase price’ and in turn ‘value of goods’ for the purposes of the U.P. Tax on Entry of Goods Act. 5) Mr Sudhir Kumar, learned Brief Holder for the revisionist / State argued that the definition of ‘purchase price’ does not expressly exclude the custom duty or the insurance charges or the port clearance charges, as such, the same were rightly added by the A.O. in calculating the value of the goods. No doubt, it is not specifically mentioned in the definition of ‘purchase price’ whether the custom duty is to be added to it, or not, but it is evidently clear that what has been charged by the seller has to be included in the purchase price and whatever not charged by the seller and not paid or not payable by the purchaser to the seller does not form part of the purchase price. The intention of the Legislature appears to be clear that once the ‘sale’ is complete between the seller and purchaser, anything paid thereafter does not constitute the purchase price. In our opinion, that is why the expression ‘other than the cost of freight or delivery or the cost of installation when such cost is separately charged’ is used in defining the expression ‘purchase price’ in Clause (gg) of Section 2, quoted above. 6) Learned counsel for the revisionist / State contended that the item purchased by the dealer could not have been imported within India without payment of the custom duty, and as such, the duty paid by the purchaser has to be added to the price of the goods. We do agree with the learned counsel for the revisionist to the extent that custom duty is a kind of indirect tax like the Central Excise and it can be charged by the seller from the purchaser. But, in the case of custom duty, there can be two modes of making the payment. Supposing an item imported from abroad is purchased from a dealer in India, the Indian dealer has a right to add custom duty paid by him to the price of the goods, and same can be charged from the subsequent purchaser. Inclusion of such duty by the seller would make the purchase price higher to the purchase price paid by the dealer directly from the seller outside India and such purchaser for importing will have to make payment of custom duty himself. In a later case as per the spirit of definition of ‘purchase price’ given in Clause (gg) the custom duty or other charges paid by the purchaser separately (not charged by the seller does not to form part of the purchase price). That being so, we do not find any error of law committed by the Tribunal in holding that the A.O. and the first appellate authority have erred in law by adding the custom duty paid by the dealer (which the seller has not charged) in calculating the value of the goods imported by the dealer. 7) For the reasons as discussed above, the revision filed by the Revenue is liable to be dismissed. The same is dismissed. (B.S. Verma, J.) (Prafulla C. Pant, J.) Dt. September 12, 2008. H. Negi