1976 (9) TMI 165 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether octroi duty paid by a dealer and subsequently realized from customers is part of the sale price under the Orissa Sales Tax Act?
2. Whether octroi duty paid by the assessee and realized separately in bills should be included in estimating gross turnover and taxable turnover under the Orissa Sales Tax Act?

Analysis:
The case involved the interpretation of the Orissa Sales Tax Act regarding the inclusion of octroi duty in the sale price and taxable turnover. The assessee, a registered dealer, had paid octroi on goods acquired and collected it from customers at the point of sale. The assessing officer demanded sales tax on the octroi amount, which the assessee contested, arguing that since octroi was not included in the sale price and charged separately, it was not taxable. The Member, Additional Sales Tax Tribunal, upheld the deduction claim, prompting the State of Orissa to seek clarification from the High Court.

Octroi is acknowledged as a tax levied under the Orissa Municipal Act, authorized for goods brought into a municipality. The Sales Tax Act allows dealers to pass on tax incidence to purchasers. The statutory definition of "sale price" includes consideration for goods supply, excluding specific costs like freight or delivery. The court noted that octroi does not fall under these excluded costs and must be considered part of the sale price. The court rejected the Tribunal's view that separately charged octroi would be outside the sale price definition.

The primary issue was whether separately charged octroi should be part of the sale price. The court determined that octroi cannot be exempted from taxation under the Sales Tax Act simply because it is separately charged by the dealer. Both judges, Misra R.N. and Panda K.B., concurred with this interpretation, answering the reference questions accordingly. No costs were awarded in the judgment.