Treatment of supply of ballast and chips subject to 4% Sales tax in Odisha

Saraswati Stone Quarry Vs State of Orissa (Orissa High Court)

Orissa High Court held that treatment of supply of ballast and chips and deduction of incidental charges from gross turnover is decided in favour of assessee in D.K. Construction case i.e. supply subject to 4% tax, accordingly, Assessing Authority directed to re-compute the tax liability based on observation in D.K. Construction case.

Facts- The assessee owns a stone quarry and the petitioner effected sale of ballasts and chips. During the material period ballast was supplied to South Eastern Railway as per agreement. The order of supply contained “supply and delivery in stack of 50mm. gauge machine crushed hard stone ballast conforming to Railway specifications at Rayagada station depot including all costs of materials, loading, unloading handling, transportation, royalty, octroi, sales tax and other taxes imposed by Central Govt./State Govt. and other local bodies including all other incidental charges with all lead, lift, etc. complete and crossing of railway lines as per instructions of railway representative. Similar agreement is also executed for supply of ballast in respect of Sambalpur Division of Railways. The assessing authority levied tax @ 12% treating supply of ballast to be goods not specified elsewhere in the schedule of taxable goods. However, he has allowed deduction towards loading charges ascertaining the same to be post-sale service rendered by the dealer.

Aggrieved by the demand so raised in the assessment, the petitioner approached the appellate authority under Section 23(1) of the Odisha Sales Tax Act, 1947 (“OST Act”). The first appellate authority confirmed the assessment.

Being unsuccessful in the appeal, the petitioner carried the matter before the Sales Tax Tribunal under Section 23(3) of the OST Act. Tribunal observed that the goods, viz. ballasts and chips in question fall within the scope of Entry 189 of scheduled goods declared taxable under the OST Act and the transportation of such goods being pre-sale event falling within the ambit of Section 5(2)(iii) read with Section 2(h), the charges relating thereto would form part of taxable turnover.

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