1973 (6) TMI 64 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether foreign liquor subjected to sales tax and gallonage fee under the Madras Prohibition Act can be taxed under the Madras General Sales Tax Act.
2. Whether sales tax and gallonage fee paid by the petitioners should be considered part of their turnover for the purpose of levy under the Madras General Sales Tax Act.

Analysis:
1. The petitioners contended that foreign liquor, already taxed under the Madras Prohibition Act, should be exempt from taxation under the Madras General Sales Tax Act. Previous court decisions were cited, but the court upheld that sales of foreign liquor are liable to be taxed under the latter Act, disagreeing with the petitioners' argument based on the precedent set by earlier cases. The court ruled that the petitioners were rightly assessed to tax under the Madras General Sales Tax Act.

2. The petitioners argued that the sales tax and gallonage fee paid should not be part of their turnover for taxation purposes. Referring to a specific case, the court held that the gallonage fee would be included in the cost price of goods sold, thus constituting turnover. However, regarding the sales tax collected under section 21-A of the Madras Prohibition Act, the court found a dichotomy between the sale price and the tax collected, leading to the conclusion that the tax collected under section 21-A should not be considered part of the turnover for taxation under the Madras General Sales Tax Act. The court upheld that the sales tax collected under section 21-A should be excluded from the taxable turnover, while the gallonage fee was rightly included. The court partially allowed the petition, ruling in favor of the petitioners on this specific point.