1970 (3) TMI 125 - HC - VAT and Sales Tax

Summary

Issues:
Validity of assessment order under Madras General Sales Tax Act of 1959 regarding levy of tax under section 5 on turnover already subjected to tax under section 7.

Analysis:
The petitioner, a registered dealer under the Madras General Sales Tax Act of 1959, reported a gross turnover and taxable turnover for the year 1967-68. The assessing authority found that a part of the turnover included sales turnover of goods purchased in Mysore State and sold within the State of Madras against 'C' form declarations. The tax payable under section 3(1) was computed on the total turnover, and an additional tax was levied under section 5 of the Act at 3% on the specific turnover amount. The petitioner challenged the assessment order on various grounds, primarily arguing that the levy of tax under section 5 on a portion of the turnover already taxed under section 7 was erroneous.

During the hearing, the petitioner contended that once tax is collected under section 7 on the entire turnover, it is not permissible for the State to levy an additional tax under section 5. The petitioner argued that the tax under section 5, although levied at the same rate as section 3(1), was essentially a tax under section 3(1) and that the tax under section 7 was in lieu of tax under either section 3(1) or section 5. However, the Court rejected this argument, holding that the levy of tax under section 5 is separate and independent from the levy under section 3(1) and that section 7 provides an option to pay tax based on total turnover, not taxable turnover.

The Court referred to a previous decision where it was held that a dealer registered under section 7(3) of the Central Sales Tax Act, 1956, is liable to tax under section 5 of the Madras Act, even if the total turnover is below the minimum limit for tax liability under section 3(1). The Court emphasized that the reference to section 3 in section 5 is specific to goods with different tax rates and that tax under section 5 does not imply taxation under section 3 to attract section 7. Therefore, the Court dismissed the petitioner's contention, upholding the validity of the assessment order. The writ petition was dismissed with costs, and the petitioner's counsel was awarded a fee of Rs. 100.