1970 (2) TMI 128 - HC - VAT and Sales Tax

Summary

Issues:
- Whether sales made through commission agents can be added to the turnover of the assessee for fixing gross sales?

Analysis:
The judgment delivered by the High Court of Allahabad pertained to a reference submitted by the Additional Judge (Revisions) Sales Tax, Agra, at the instance of the Commissioner of Sales Tax, U.P., Lucknow. The core question raised was whether sales conducted through commission agents could be included in the turnover of the assessee for determining gross sales. The assessee, dealing in food-grains, oil-seeds, and gur, had filed returns showing specific turnovers for two assessment years, which were later increased by the Sales Tax Officer. Despite the enhanced figures falling below the taxable threshold, the inclusion of sales made through commission agents raised the tax liability issue.

The court delved into the relevant provisions of the U.P. Sales Tax Act, particularly Section 3, which outlines the tax rate based on turnover exceeding a specified amount. The definition of a dealer under Section 2(c) encompassed individuals engaged in buying or selling goods, including commission agents acting on behalf of principals. The term "turnover," as defined in the Act, referred to the aggregate amount of goods sold directly or through intermediaries. Notably, Rule 8 emphasized determining a dealer's tax liability based on gross turnover, encompassing sales made directly or through commission agents.

In a previous case, the court had affirmed that sales by an assessee acting as a commission agent could be considered in their gross turnover for tax assessment purposes, even if such sales were not individually taxable. Another significant ruling by a Full Bench highlighted that sales conducted outside Uttar Pradesh could not be factored into the gross turnover due to statutory provisions prohibiting taxation on inter-State transactions. However, in the present scenario, where sales through commission agents were potentially taxable but exempted under specific provisions, the court concluded that such sales should be included in the assessee's gross turnover.

Ultimately, the court answered the reference question affirmatively, supporting the department's stance and ruling against the assessee. As there was no representation from the assessee's side during the proceedings, no costs were awarded, and the counsel fee was fixed at Rs. 100. The judgment provided clarity on the treatment of sales made through commission agents in determining the gross turnover of an assessee under the U.P. Sales Tax Act.

Conclusion:
The judgment underscored the inclusion of sales conducted via commission agents in the assessee's gross turnover for tax assessment purposes, aligning with statutory provisions and prior judicial interpretations. The decision favored the department's position, emphasizing the comprehensive aggregation of all sales, whether direct or through intermediaries, to ascertain the tax liability of dealers under the U.P. Sales Tax Act.