1983 (11) TMI 268 - HC - VAT and Sales Tax

Summary

Issues:
Whether charity collections made by the assessee should be included in the total turnover for tax purposes under the Karnataka Sales Tax Act, 1957.

Analysis:
The revision petition before the Karnataka High Court centered around the inclusion of charity collections in the total turnover for tax purposes under the Karnataka Sales Tax Act, 1957. The assessee, a wholesale dealer in foodgrains, claimed exemption for the amount collected as charity from customers at the rate of 10 paise per bag or article. The assessing officer disallowed this claim, considering the collections as part of the price paid before the sale was completed. The Deputy Commissioner of Commercial Taxes (Appeals) allowed the appeal, excluding charity collections from the taxable turnover.

The State appealed to the Tribunal, which relied on a Supreme Court decision in Bijli Cotton Mills' case to overturn the Deputy Commissioner's order. The Tribunal held that charity collections were not part of the price or trading receipts of the assessee. However, the High Court noted that the Supreme Court's decision did not directly address whether charity collections could form part of the turnover under the Sales Tax Act. The High Court highlighted previous decisions under similar sales tax legislation that considered such collections as part of the turnover unless specific statutory deductions were available.

The High Court examined sample bills provided by the assessee, showing charity collections as components of the total bill amount alongside the cost of goods, sales tax, and handling charges. The court emphasized that for determining turnover, it is the aggregate amount mentioned in the bill that matters, not individual components. The court rejected the argument that charity collections were not intended to be part of the price, stating that they are collected on the occasion of sale and are connected with the transaction, thus forming part of the turnover.

In conclusion, the High Court allowed the revision petition, setting aside the Tribunal and Deputy Commissioner's orders, and restoring the assessing officer's decision to include charity collections in the total turnover for tax purposes under the Karnataka Sales Tax Act, 1957.