1968 (8) TMI 121 - SC - VAT and Sales Tax

As we are bound to follow the majority judgment we find no escape from the conclusion after applying the ratio therein that the general sales tax law of the State which would include the rules framed thereunder governed the levy and assessment of the tax in the matter of inter-State sales - Appeal dismissed.

Summary

Issues:
1. Deduction of excise duty paid by the assessee from the turnover for the purpose of levy and imposition of sales tax.
2. Interpretation of the provisions of the Central Sales Tax Act, 1956 and the rules made thereunder regarding deductions in the determination of turnover.
3. Application of the general sales tax law of the State in the levy and assessment of tax on inter-State sales.

Detailed Analysis:

1. The first issue in this case pertains to the deduction of excise duty paid by the assessee from the turnover for the purpose of levy and imposition of sales tax. The assessee claimed a deduction on account of excise duty paid for a specific year, which was contested by the departmental authorities and the Appellate Tribunal. The High Court allowed the revision petition based on the decision in State of Mysore v. Yaddalam Lakshminarasimhiah Setty & Sons, which held that turnover represented by excise duty was liable to be deducted. However, the Attorney-General argued that the Central Sales Tax Act and the rules made thereunder did not provide for such deductions, and the assessee could not invoke the general sales tax law of the State for computation of turnover and claim deduction.

2. The second issue revolves around the interpretation of the provisions of the Central Sales Tax Act, 1956 and the rules made thereunder regarding deductions in the determination of turnover. The Act defines "turnover" as the aggregate of sale price received by a dealer liable to tax in inter-State trade. The rules, specifically rule 11(2), do not include a deduction for excise duty paid. The contention raised was that the Act and its rules govern the determination of taxable turnover, and since no provision allowed for excise duty deduction, the assessee's claim was not valid.

3. The final issue concerns the application of the general sales tax law of the State in the levy and assessment of tax on inter-State sales. The majority judgment in State of Mysore v. Yaddalam Lakshminarasimhiah Setty & Sons interpreted the expression "in the same manner" in section 9(2) of the Act to mean that the tax on inter-State sales should be levied as per the general sales tax law of the State. The High Court applied this interpretation, allowing deductions as per the State's sales tax rules. The learned Attorney-General highlighted potential conflicts that could arise if different rules apply, but the court upheld the High Court's decision based on the majority judgment.

In conclusion, the Supreme Court dismissed the appeal, affirming the High Court's decision to allow deductions based on the interpretation of the general sales tax law of the State in the levy and assessment of tax on inter-State sales. The judgment emphasizes the application of relevant provisions and rules in determining taxable turnover and the importance of adhering to the majority judgment in interpreting statutory provisions.