1974 (5) TMI 97 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of Bihar Sales Tax Act, 1959 regarding deduction of sales tax from gross turnovers for computing taxable turnover.

Analysis:
The case involved two references made under section 33(1) of the Bihar Sales Tax Act, 1959 to decide if the rejection of the dealer's claim to deduct specific sums representing sales tax from the gross turnovers of 1963-64 and 1964-65 for computing taxable turnover was legal and valid. The dealer argued that sales tax, even if not separately realized, could be deducted based on pro forma calculations. The assessing officer, however, added the amounts to the taxable turnovers as the cash memos did not indicate separate collection of sales tax. Appeals were dismissed, leading to applications for revision before the Tribunal.

Before the Tribunal, the dealer presented bills showing inclusion of sales tax in the sale price, arguing that the tax amount was calculated and deducted for working out taxable turnover. The Tribunal held that only sales tax collected separately from customers could be deducted for computing taxable turnover, rejecting the dealer's claim for deduction of the sums in question. The Tribunal emphasized that the dealer cannot deduct sales tax amounts not separately collected from customers.

The dealer contended that the Sales Tax Act did not mandate separate mention of sales tax collection in cash memos and cited a Supreme Court case supporting the dealer's position. However, the Tribunal's finding that the dealer did not separately collect special sales tax from customers led to the rejection of the deduction claim. The judgment highlighted that the rejection was not solely based on lack of separate mention in cash memos but on the absence of separate collection by the dealer. Consequently, the question was answered in favor of the department, denying the dealer's claim for deduction of sales tax amounts from the gross turnovers.

In conclusion, the Court upheld the Tribunal's decision, ruling against the dealer and in favor of the department, with no order as to costs. The judgment was agreed upon by both judges, and the reference was answered accordingly.