1988 (8) TMI 383 - HC - VAT and Sales Tax

Summary

Issues:
- Whether market cess collected by dealers can be considered part of the taxable turnover for levying sales tax.

Analysis:
The judgment of the High Court of Andhra Pradesh addressed the issue of whether market cess collected by dealers falls within the taxable turnover for sales tax purposes. The court referred to previous Supreme Court decisions to provide clarity on the matter. In the case of Anand Swarup Mahesh Kumar, it was established that if a dealer is authorized by law to pass on any tax to the purchaser, it does not form part of the consideration for sales tax. However, if there is no statutory provision allowing the dealer to pass on the tax, it becomes part of the consideration. The court emphasized that the distinction lies in the existence of a statutory provision authorizing the recovery of tax from the purchaser. This principle was reiterated in the case of Central Wines v. Special Commercial Tax Officer, where it was clarified that sales tax shown separately in the bill is part of the turnover and not collected as an agent of the State.

The court also discussed the relevance of insurance charges in the taxable turnover based on the Hyderabad Asbestos Cement Products Ltd. case. It was highlighted that insurance charges claimed in the bills of sale become part of the turnover. However, the court differentiated this scenario from the case at hand, emphasizing that the insurance charges issue was not relevant to the current matter. The judgment emphasized that the decisions in Anand Swarup Mahesh Kumar and Central Wines cases adequately covered the proposition at hand, confirming that market cess collected under statutory obligation does not form part of the taxable turnover.

In conclusion, the High Court dismissed the Tax Revision Cases, affirming that market cess collected under statutory obligation does not constitute part of the taxable turnover for levying sales tax. The court relied on established legal principles and previous Supreme Court decisions to reach this conclusion, emphasizing the importance of statutory authorization in determining the tax treatment of amounts collected by dealers from purchasers.