1966 (7) TMI 71 - HC - VAT and Sales Tax

Summary

Issues:
Determining turnover for imposing tax under section 8 of the Central Sales Tax Act, 1956 - Whether excise duty paid should be deducted or not.

Analysis:
The main issue in this case was whether the turnover of the petitioner for tax assessment under the Central Sales Tax Act should include or exclude the excise duty paid by the assessee. The contention of the assessee was based on section 9(3) of the Act, which states that tax should be assessed in the same manner as under the general sales tax law of the State. The definition of turnover under the General Sales Tax Act and rules applicable to it required the deduction of excise duty paid by the dealer. The debate centered around whether these rules should apply to the computation of turnover under the Central Sales Tax Act.

The counsel for the assessee argued that the assessment should follow the process outlined in the General Sales Tax Act and its rules to determine the net taxable turnover, which should then be used to assess the petitioner. On the other hand, the department's counsel emphasized that the Central Act provides a specific mechanism for determining turnover, which should be governed by the rules under the Act. The Central Sales Tax (Registration and Turnover) Rules, 1957, provided a detailed method for calculating turnover, including deductions and provisions for different rates of tax.

The court referred to various decisions, including those by the Madras High Court, Kerala High Court, and Mysore High Court, which supported the view that the specific provisions of the Central Act and its rules should be followed for turnover determination. However, the counsel for the assessee cited a Supreme Court decision which suggested that taxation under the Central Act should mirror the State's general sales tax law. The majority judgment in the Supreme Court case clarified the interpretation of relevant sections and emphasized that the Central Act's provisions should guide the calculation of tax.

Ultimately, the court concluded that the turnover should be calculated by deducting the excise duty paid by the assessee, in line with the specific provisions of the Central Sales Tax Act and its rules. The same principle applied to the discount claimed by the assessee, which was also subject to deduction as per the General Sales Tax Rules. Additionally, the issue of producing C Forms for exemption was resolved in favor of the assessee, with the court directing modifications to grant the exemption claimed at a reduced tax rate.

In conclusion, the court disposed of the Tax Revision Case by affirming the deductions of excise duty and discount from the turnover, as per the provisions of the Central Sales Tax Act and relevant rules. The production of C Forms was accepted for granting the exemption claimed, resulting in modifications to the tax assessment.