SALE OF GOODS ACT (III OF 1930)
64A. In contracts of sale amount of increased or decreased duty or tax to be added or deducted. In the event of any duty of customs or excise or tax on any goods being imposed, decreased or remitted after the making of any contract for the sale of such goods without stipulation as to the payment of duty or tax where the duty or tax was not chargeable at the time of the making of the contract, or for the sale of such goods dutypaid or tax-paid where duty or tax was chargeable at that time,
(a) if such imposition or increase so takes effect that the duty or tax or increased duty or tax, as the case maybe, or any part thereof, is paid, the seller may added so much to the contract price as will be equivalent to the amount paid in respect of such duty or tax or increase of duty or tax, and he shall be entitled to be paid and to sue for and recover such addition, and
(b) if such decrease or remission so takes effect that the decreased duty or tax only or no duty or tax, as the case may be, is paid, the buyer may deduct so much from the contract price as will be equivalent to the decrease of duty or tax or remitted duty or tax, and he shall not be liable to pay, or be sued for or in respect of, such deduction.
Explanation.__ The word “tax” in this section means the tax payable under the Sales Tax Act, 1951 (III of 1951).
In contracts of sale amount of increased or decreased duty to be added or deducted — Scope — Section 64A applies only in relation to three types of taxes: central excise duty, customs duty and sales tax — These are taxes normally classified as indirect, in relation to which the economic incidence or financial burden is regarded as being passed (or at least capable of being passed) on to the consumer — The section makes no mention of income tax, which is normally classified as a direct tax, in relation to which the financial burden is regarded as falling on the person who is the subject of the tax. [PLR 2024 SC 7 = PLD 2024 SC 81 = 2023 SCP 361]
— In contracts of sale amount of increased or decreased duty to be added or deducted — Scope — Section 64A clearly provides that it applies only if there is no stipulation (in the contract between the parties) as to what is to happen if a duty or tax not payable at the time the contract is made subsequently becomes payable or, being payable at a certain rate at that time subsequently becomes payable at some other rate. [PLR 2024 SC 7 = PLD 2024 SC 81 = 2023 SCP 361]