1955 (3) TMI 17 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the sales tax collected by the assessee should be included in the turnover for assessment.
2. Interpretation of rule 5(1) of the Turnover and Assessment Rules.
3. Determining the distinction between turnover and tax collected by the assessee.

Detailed Analysis:
The judgment by the Andhra Pradesh High Court, delivered by Judge Chandra Reddy, pertains to an assessment year where the assessee, a manufacturer of gunnies and twine, collected sales tax from purchasers under rule 5, sub-rule (7), of the Turnover and Assessment Rules. The assessing authority added the tax collected to the turnover, which was disputed by the assessee in appeals. The Sales Tax Appellate Tribunal later excluded the tax amount from the turnover, leading to the State Government challenging this decision in a revision case.

The main contention raised was whether the assessee could deduct the sales tax collected from the turnover, as it was not specifically mentioned in rule 5(1) of the Turnover and Assessment Rules. The Court rejected the argument that only items listed in rule 5(1) could be deducted from the turnover, emphasizing that the purpose of the rule was to determine the net turnover by deducting specific amounts. The Court clarified that the sales tax collected did not form part of the consideration paid by the purchaser for the goods, as it was a separate amount collected by the seller on behalf of the government.

The Court highlighted that the seller acts as an agent of the assessing authority in collecting and remitting the tax to the government, with any default leading to prosecution. The judgment referenced relevant provisions of the Act, emphasizing the distinction between turnover and tax collected by the assessee. It was noted that including the sales tax in the turnover would amount to taxing the tax collected, which was not supported by the law.

Referring to a previous case, the Court affirmed that the tax collected by the seller under rule 5(7) should not be taxed again and cannot be included in the net turnover of the assessee. The judgment concluded that the order under revision was correct, dismissing the case with costs. Additionally, the Court mentioned a previous decision where it was held that the definition of "turnover" does not encompass sales tax collected by the dealer, further supporting the dismissal of the petition.