1952 (10) TMI 31 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of taxable turnover under the Central Provinces and Berar Sales Tax Act, 1947.
2. Whether the amount collected by a dealer from purchasers as sales tax should be included in the taxable turnover.

Analysis:

The judgment pertains to a petition under Article 226 of the Constitution involving the interpretation of the Central Provinces and Berar Sales Tax Act, 1947. The petitioner, acknowledged as a "dealer," contested the assessment of sales tax by the Regional Assistant Sales Tax Commissioner, Nagpur. The petitioner argued that the sales tax collected from customers should not be considered part of the taxable turnover, as it was collected specifically for tax payment by purchasers. The discrepancy in figures presented by the petitioner was noted but deemed immaterial to the case.

The key issue revolved around whether the amount collected by the dealer as sales tax from purchasers should be treated as part of the taxable turnover. The Court examined relevant provisions of the Sales Tax Act, emphasizing that the tax liability lies with the dealer as defined in the Act. Section 5 outlined the rate of tax based on the taxable turnover, which includes all amounts received by the dealer from purchasers. The definition of "sale price" under Section 2 (h) clarified that any sum received by the dealer from purchasers is considered part of the sale price for taxation purposes.

The petitioner argued that the dealer could shift the tax liability to purchasers, making the collected tax amount separate from the sale price. However, the Court held that regardless of such arrangements between the dealer and purchasers, the total amount collected constitutes the sale price for taxation. Additionally, the contention that the dealer acted as an agent of the Government for tax collection was dismissed, as there was no provision in the Act supporting this argument.

Referring to a similar case in Calcutta, the Court affirmed that the amount collected as sales tax from purchasers forms part of the sale price and must be included in the taxable turnover. Consequently, the Court answered the legal question affirmatively, dismissing the petition and allocating costs to the applicant in the related case. The judgment establishes that amounts collected by a dealer from purchasers as sales tax are integral to the taxable turnover under the Sales Tax Act.