1973 (1) TMI 85 - HC - VAT and Sales Tax

Summary

Issues:
- Whether the assessee is entitled to delete a sum from the turnover representing sales tax collections made.
- Whether the sales tax collected separately can form part of the turnover as defined in the Act.
- Whether the assessee is entitled to have the sales tax excluded from the total turnover based on the executive instruction issued by the Board of Revenue.

Analysis:
The judgment in this tax case revolves around the issue of whether the assessee, a tea wholesaler, is entitled to delete a sum of Rs. 3,94,543.50 from the turnover as determined by the authorities, contending that it represented sales tax collections made. The assessing authority, Appellate Assistant Commissioner, and Tribunal all rejected the assessee's claim, stating that the sales tax collected formed part of the turnover. The Tribunal found that the assessee charged an inclusive price without separating the sales tax, leading to the rejection of the claim. The assessee sold tea based on a printed price list, indicating net prices and sales tax payable for various brands. The Tribunal's view was challenged, arguing that the inclusive amount in bills represented both the net price and sales tax, as per the price list provided to purchasers.

The key contention was whether the sales tax collected separately could be considered part of the turnover as defined in the Act. The assessee argued that the sales tax collected separately should not form part of the turnover, referencing executive instructions by the Board of Revenue. The instruction stated that sales tax collected separately should not be included in the dealer's total turnover. The court held that if the sales tax was collected separately, the dealer was entitled to exclude it from the turnover. Despite the sales tax not being separately shown in the bills, the court emphasized that the bills should be read along with the price list to understand the breakdown of actual price and sales tax. As the assessee intended to pass on the tax to the purchaser, they were deemed to have substantially complied with the conditions for exclusion under the executive instruction.

Ultimately, the court allowed the petition, setting aside the Tribunal's order and excluding the disputed turnover from the taxable turnover. The court ruled in favor of the assessee, granting them the benefit of the direction given in the executive instruction. No costs were awarded in the case.