@JUDGMENTTAG-ORDER
R. Sudhakar, J.@mdashThis revision is filed under Section 38 of the Tamil Nadu General Sales Tax Act, 1959 read with Rule 30 of the Tamil Nadu General Sales Tax Rules, 1959 against the order of the Tamil Nadu Sales Tax Appellate Tribunal (Main Bench), Chennai, dated 26.6.2009 passed in T.A. No.489 of 2001 for the assessment year 1997-1998 and the same was admitted on the following questions of law:
(i) On the facts and circumstances of the case, whether interest collected admittedly for the belated payment of the sale price can constitute pre-sale charges to be subjected to sales tax?
(ii) When sale by delivery of the goods took place and subsequently, for the belated payment of sale price interest was collected, whether it can partake the character of sale price attracting the levy of sales tax?
(iii)Is the Tribunal justified in applying the ratio of the decision of this Court in L&T McNeil Limited v. State of Tamil Nadu, (1990) 79 STC 70, notwithstanding the fact that in the instant case, sale by delivery of the goods took place on the date of the invoice and was not postponed to a later date?
2. In other words, the primal question that falls for our consideration is whether the interest received by the petitioner from its customers amounting to Rs.3,62,323/- for belated payment should be added in the taxable turnover for levy of tax.
3. The Original Authority came to hold that the interest amount received by the petitioner from its customers for belated payment should be treated as turnover and accordingly, levied tax on the said amount at 16%. On appeal by the petitioner, the Appellate Assistant Commissioner (CT) confirmed such demand of tax on the interest component and dismissed the appeal. On further appeal by the petitioner, the Tribunal upheld that order passed by the first appellate authority by placing reliance on the decision of this Court in L&T McNeil Limited v. State of Tamil Nadu, referred supra. Calling in question the said order, the present revision is filed on the substantial questions of law referred supra.
4. On facts, there appears to be no dispute that certain goods were sold and delivered by the petitioner based on the invoices raised. On these sales, payments were received by the petitioner belatedly from the buyer. Therefore, interest was charged. It is beyond any cavil and also recorded in paragraph (12) of the order passed by the Tribunal that the buyer agreed to pay interest for the belated payment in the very same invoice and there was no independent agreement. For better clarity, it would be apposite to refer to paragraphs (12) and (13) of the order passed by the Tribunal, which read as under:
"12. We are of the view that our Honourable High Court as in the case law cited above categorically held that interest has to be linked to the payment of delivery and they would form part of sale consideration. Further it has to be noticed that the buyers have agreed to pay interest for the belated payment in the very same invoice and not under an independent agreement. Hence the contract of sale between the assessee and its buyers included the payment of interest on belated payment at some agreed rate. Therefore, the receipt of interest on belated payment cannot be said to be arising out of a post-sale independent transaction. On the other hand as we have already noticed that it was part and parcel of the single contract of sale. By and under which the parties agreed on the ordinary sale consideration and on the sale consideration for belated payment of invoice amount.
13. Hence we hold that the order of the Appellate Assistant Commissioner in confirming the order of the assessing authority in including a sum of Rs.3,62,323/- representing the receipt of interest for the belated payment is correct and this point is answered accordingly against the appellants."
5. In the case of L&T McNeil Limited v. State of Tamil Nadu, referred supra, after considering the provisions of Section 2(r) of the Act which defines "turnover" and Section 2(q) of the Act which defines "total turnover", this Court came to hold that the aggregate amount received by the assessee would include all payments received in consideration of sale. In the said decision, in paragraph (5), it has been held as under:
"5. In view of the principles laid down by the Supreme Court, there is no doubt that the ''commitment charges'' have to be included in the taxable turnover. We are of the opinion that the Tribunal was right in saying that the sale was completed only on payment and not earlier nor was there an appropriation to the contract when the goods were ordered or manufactured. We are of the view that the ''commitment charges'' are linked to the payment and delivery and they form part of the consideration for the sale of goods which took place only at the time of delivery. In our view, the aggregate amount received by the assessee will include all payments made in consideration of the sale. We are not able to agree with the contention of Mr. K.J. Chandran, the learned counsel appearing for the petitioner, that the ''interest'' and ''commitment charges'' are something different and they cannot be included in the taxable turnover. We are of the view that instead of making a further revision of the sale price to compensate for the delay of goods, the parties agreed to the payment of ''commitment charges'' by way of interest on the outstanding up to the time of delivery. We are also of the view that it cannot be disputed that it is a credit sale. The terms of the package deal do not indicate that there was a credit for the amount fixed and agreed upon on the date of the deal and that interest was to be paid for subsequent period. So also, we are not impressed upon the argument based on explanation (3) to section 2(n) of the Act. In our view, the argument of the learned counsel appearing for the assessee, with regard to section 2(n) of the Act, has to be rejected since that section has nothing to do with the transaction on hand and that provision is only about the ''situs'' of the sale. In our view, ''interest'' or ''commitment charges'' have to be included in the taxable turnover of the assessee."
6. The said decision is sought to be distinguished by the learned counsel for the petitioner contending that in L&T McNeil Limited v. State of Tamil Nadu, referred supra, the documents were retired from the bank belatedly and, therefore, the sale took place later and hence interest or commitment charges were held to be forming part of the taxable turnover, whereas in the present case goods were sold and delivered immediately, but payment was not forthcoming and, therefore, interest was received from the buyer for belated payment. The learned counsel for the petitioner would plead that there is no postponement of sale and, therefore, interest amount would not form part of the taxable turnover of the petitioner.
7. We find that such a distinction made by the learned counsel for the petitioner does not, in any way, change the facts of the present case, as we find that the invoice itself gives an answer to the issue, as it contemplates interest on belated payment. So sale is coupled with interest on delayed payment. There is no independent agreement on interest, as rightly pointed out by the Tribunal. Moreover, Section 2(r) of the Act defines "turnover" as aggregate amount for which goods are bought or sold or supplied or distributed by a dealer either directly or through another, on his own account or on account of others whether for cash or for deferred payment or other valuable consideration. When the invoice of the petitioner contemplates interest on delayed payment, in our considered opinion, the Tribunal was justified in including the same in the taxable turnover.
For the foregoing reasons, we dismiss this revision and answer the department. No costs.
