1982 (11) TMI 157 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Whether the amount collected by way of surcharge on account of sales tax was tax within the meaning of section 46(2) of the Bombay Sales Tax Act, 1959.
2. Whether there was any evidence for the Tribunal to hold that the amount collected as surcharge was tax.

Summary:

Issue 1: Whether the amount collected by way of surcharge on account of sales tax was tax within the meaning of section 46(2) of the Bombay Sales Tax Act, 1959.

The applicants, registered dealers under the Bombay Sales Tax Act, 1959, collected amounts labeled as "surcharge on account of sales tax" from their customers. The Sales Tax Officer found that these amounts exceeded the sales tax paid by the applicants to their vendors and thus forfeited the excess amount. The Tribunal upheld this decision. The court examined whether these collections violated section 46(2) of the Act, which prohibits collecting any amount by way of tax in excess of the tax payable. The court concluded that the amounts collected as "surcharge on account of sales tax" were in contravention of section 46(2) except for the amounts that were merely recouping the tax paid to their vendors. The court directed the Tribunal to calculate and forfeit only the excess amounts collected.

Issue 2: Whether there was any evidence for the Tribunal to hold that the amount collected as surcharge was tax.

The court noted that the representation made by the applicants in their bills led customers to believe that the surcharge was the amount of sales tax payable to the Government, which was not the case. The court found that the excess amount collected was indeed in violation of section 46(2). However, the court did not find it necessary to answer this question separately due to the comprehensive answer provided for the first issue.

Conclusion:

The court held that the amounts collected by the applicants as "surcharge on account of sales tax" were in violation of section 46(2) of the Bombay Sales Tax Act, 1959, except for the amounts that were merely recouping the tax paid to their vendors. The Tribunal was directed to calculate and forfeit only the excess amounts collected. The additional question raised by the applicants and the second question in Sales Tax Reference No. 42 of 1979 were not separately answered.

The applicants were ordered to pay the respondents' costs consolidated at Rs. 300.