1972 (1) TMI 86 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the amount of sales tax charged separately on the sale of coal forms part of the turnover.

Detailed Analysis:

Issue 1: Whether the amount of sales tax charged separately on the sale of coal forms part of the turnover.

Facts and Background:
The non-applicant, a coal mine operator, charged a price for coal plus M.P. sales tax separately. The sales tax department added the sales tax to the sale price of coal to calculate the turnover and assessed sales tax on the total. The assessee objected, and the Board of Revenue accepted the assessee's contention. Consequently, the Commissioner of Sales Tax sought a common reference for three cases under Section 44(1) of the M.P. General Sales Tax Act, 1958.

Relevant Legal Provisions:
- Section 2(r) of the M.P. General Sales Tax Act, 1958: Defines "taxable turnover" as the part of a dealer's turnover remaining after prescribed deductions.
- Section 2(t): Defines "turnover" as the aggregate amount of sale prices received or receivable by a dealer.
- Section 2(o): Defines "sale price" as the amount payable to a dealer as valuable consideration for the sale of goods, including any sum charged for anything done by the dealer in respect of the goods at or before delivery, excluding separately charged costs of freight, delivery, or installation.

Court's Analysis:
The court considered whether the tax charged by the assessee was realized as tax or as part of the price. The determination depended on whether the assessee was entitled to pass on the sales tax to its customers under any law.

Notification and Colliery Control Order, 1945:
- The notification fixed the price at which coal could be sold, exclusive of any sales tax under state or central laws.
- Paragraphs 4 and 5 of the Colliery Control Order: Fixed coal prices and prohibited selling coal at prices different from those fixed.
- Paragraph 12B: Stated that the price for an allottee would consider taxes paid by the original allottee.

Arguments:
- Assessee's Argument: The notification fixed the sale price, and the tax charged separately should not be treated as part of the price.
- Department's Argument: The notification allowed the price to be increased by adding the tax, making the tax part of the price.

Court's Conclusion:
The court agreed with the department, stating that quoting a price exclusive of taxes means the price will be increased by such taxes. The notification allowed the price to include the tax, making the tax part of the price. The court also distinguished the present case from the Supreme Court case of State of Orissa v. Utkal Distributors (Private) Limited, where the notification made it the customer's responsibility to pay the tax, unlike in the present case.

Supporting Case Law:
- Delhi Cloth & General Mills Co. Limited v. Commissioner of Sales Tax: The Supreme Court held that if a dealer passes on the tax burden to purchasers, the tax becomes part of the sale price and, consequently, part of the turnover.

Final Judgment:
The court concluded that the amount of sales tax charged separately on the sale of coal is part of the "turnover" liable to be assessed to tax under the M.P. General Sales Tax Act, 1958. The parties were ordered to bear their own costs.

References Answered Accordingly:
The court's answer to the question was that the sales tax charged separately on the sale of coal forms part of the turnover.