1958 (8) TMI 45 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Inclusion of sales tax in the gross turnover.
2. Material to hold the assessee as a dealer in coal transactions.
3. Liability for assessment and penalty under section 24A of the Bihar Sales Tax Act, 1947.

Detailed Analysis:

1. Inclusion of Sales Tax in the Gross Turnover:
The primary issue was whether the sales tax collected by the assessee could be legally included in the taxable turnover. The Sales Tax Officer included the amount of sales tax realized from purchasers in the gross turnover, holding that it formed part of the sale price. This inclusion was upheld by the Deputy Commissioner of Sales Tax and the Board of Revenue, Bihar.

The assessee argued that the amount collected as sales tax should not be treated as part of the sale price under section 2(h) of the Bihar Sales Tax Act, which defines "sale-price" and "turnover." The counsel for the assessee referred to the decision in Messrs Tata Iron and Steel Company Limited v. State of Bihar, where it was held that sales tax should not be included in the taxable turnover.

However, the Government Advocate contended that the legal position had changed with the Bihar Sales Tax (Definition of Turnover and Validation of Assessments) Act, 1958, which deemed sales tax collections as part of the turnover for sales made before April 1, 1956. This Act validated all assessments and collections made on this basis.

The court held that the impugned statute, Bihar Act XIII of 1958, fell within item 54 of the State List and did not fall under any items of the Union List. The court emphasized that the primary subject of legislation was the sale of goods, and the inclusion of sales tax in the taxable turnover did not change the nature of the tax. The court rejected the argument that the Act was ultra vires and held it constitutionally valid.

2. Material to Hold the Assessee as a Dealer in Coal Transactions:
The second issue was whether there was sufficient material on record to hold that the assessee was a dealer in respect of the coal transactions referred to in the assessment order. The assessment order, appeal, and revision documents did not provide detailed reasoning or evidence for this determination. The court did not specifically address this issue in its judgment, focusing instead on the primary question of the inclusion of sales tax in the taxable turnover.

3. Liability for Assessment and Penalty under Section 24A:
The third issue was whether the assessee was liable for assessment and penalty under section 24A of the Bihar Sales Tax Act, 1947, in respect of the coal transactions. Similar to the second issue, the judgment did not delve into the specifics of the assessee's liability under section 24A, as the primary focus was on the inclusion of sales tax in the taxable turnover.

Conclusion:
The court concluded that the sales tax collected by the assessee could be legally included in the taxable turnover. The question referred to the High Court by the Board of Revenue was answered in favor of the State of Bihar and against the assessee. There was no order as to costs for the hearing of the reference. The court did not specifically address the issues related to the assessee's status as a dealer in coal transactions or liability under section 24A, focusing primarily on the inclusion of sales tax in the gross turnover.