1967 (7) TMI 125 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of the term "sale price" under the Madhya Pradesh General Sales Tax Act, 1958.

Analysis:
The judgment of the High Court of Madhya Pradesh dealt with two references under section 44(1) of the Madhya Pradesh General Sales Tax Act, 1958, concerning the inclusion of sales tax in the sale price. The question raised was whether the sales tax recovered by the petitioner constitutes a part of the sale price as defined in the Act. The assessment proceedings for the relevant periods saw the assessee attempting to exclude the sales tax amount from its turnover, which was disallowed by the Assistant Commissioner of Sales Tax and upheld in subsequent appeals. The definition of "sale price" under section 2(o) of the Act was crucial in determining whether the sales tax formed part of the consideration for the sale. The court emphasized that the ordinary meaning of "valuable consideration for sale" includes the sales tax amount paid by the buyer to the dealer. Therefore, the sales tax was deemed to be an integral part of the sale price, as it was necessary for the buyer to pay the tax to obtain possession of the goods.

Moreover, the court relied on previous decisions by the Supreme Court in similar cases to support its interpretation. The Supreme Court had previously held that the turnover includes the tax amount as part of the price paid by the buyer, as it becomes part of the circulating capital of the dealer until it is paid to the government. The court reiterated that the sales tax collected is ordinarily considered a part of the sale price and turnover unless there are specific provisions in the Sales Tax Act or Rules for its exclusion. The judgment also referenced a recent decision by a Division Bench of the same court and a ruling by the Nagpur High Court, both supporting the inclusion of sales tax in the sale price under similar statutory provisions.

Consequently, the court answered the questions referred in the affirmative, affirming that the sales tax collected separately by the dealer from purchasers is indeed a part of the sale price. The assessee was directed to pay the costs of the reference, and counsel's fee was fixed at Rs. 100 in each case.