1983 (9) TMI 267 - HC - VAT and Sales Tax

Summary

Issues:
- Whether additional tax collected by the petitioner should be included in the gross turnover for the purpose of computing sales tax liability.
- Whether the amount of additional tax collected should be deductible from the taxable turnover under the Bihar Sales Tax Act.

Analysis:
1. The petitioner, a government company, collected additional tax from purchasers but did not include it in the gross turnover for the year 1975-76. The assessing officer held that the additional tax formed part of the gross turnover and was not deductible from the taxable turnover for computing sales tax liability. The appellate and revisional orders affirmed this decision, leading to the petitioner filing a writ application explaining the delay in approaching the Commercial Taxes Tribunal.

2. The petitioner raised two contentions: first, that the additional tax collected should not be included in the gross turnover, and second, that the amount of additional tax should be deducted from the taxable turnover under the Bihar Sales Tax Act. The court first addressed the second contention, citing relevant sections of the Act, including section 3B authorizing additional tax on the gross turnover and section 7 detailing the taxable turnover for general and special sales tax.

3. The State contended that only sales tax collected as general or special sales tax was deductible under section 7 of the Act, excluding additional tax. However, the court interpreted the definition of tax under section 2(s) as inclusive of all amounts payable as tax under the Act, including additional tax. It emphasized that a dealer could collect additional tax from purchasers as part of the sales tax liability.

4. The court clarified that for computing taxable turnover, the sales tax actually collected, including additional tax, should be deductible. It highlighted that if a dealer collected additional tax as a tax, it should be considered for deduction along with general or special sales tax. The court's interpretation aligned with the scheme of the Bihar Sales Tax Act.

5. Addressing the first contention, the court acknowledged the lack of direct precedents from the High Court but opined that the gross turnover under the Act included sales tax amounts, including additional tax, realized from customers. Despite the petitioner's delay in approaching the Tribunal, the court deemed the legal controversy significant and granted relief by quashing the orders that denied the deduction of additional sales tax from the gross turnover. The case was remitted for redetermination of the petitioner's liability.