1995 (4) TMI 257 - HC - VAT and Sales Tax

Summary

Issues:
Assessment of turnover for sales tax, exemption on disputed amount, power of Commercial Tax Officer to tax escaped amount, appeal against Commissioner's order, determination of turnover for taxation.

Analysis:
The appellant, a registered dealer under the Andhra Pradesh General Sales Tax Act, 1957, had a disputed amount of Rs. 1,86,000 received as commission from a company. The Commercial Tax Officer initially granted exemption but later taxed the amount under section 14(4) for escaping assessment. The Deputy Commissioner (Appeals) overturned this decision, stating the amount was for handling charges, not goods' turnover. However, the Commissioner revised the order, levying tax at 4 1/4 per cent under section 20(1). The appeal questions whether the amount forms part of the appellant's turnover.

The key issue in this appeal is whether the disputed amount of Rs. 1,86,000 constitutes turnover for the appellant. The Commissioner argued it could be part of the turnover of the company paying the commission, but the Court disagreed. The Court analyzed the definition of "turnover" under section 2(s) of the Act and found that the amount in question, received as handling charges or commission, did not relate to the sale or purchase of goods by the appellant. Therefore, it could not be considered as turnover for taxation purposes.

The Commissioner's order was deemed illegal as it incorrectly treated the disputed amount as part of the appellant's turnover. The Court held that since the amount was not received as part of the goods' sales or purchase price, it did not fall within the definition of turnover. As a result, the Court set aside the Commissioner's order and allowed the appeal with costs. The judgment emphasizes that the disputed amount cannot be taxed in the hands of the appellant as it does not meet the criteria for turnover under the Act.

In conclusion, the Court ruled in favor of the appellant, highlighting that the disputed amount was not part of their turnover and therefore should not be subject to taxation. The judgment clarifies the distinction between handling charges/commission and turnover for sales tax assessment, providing a clear interpretation of the relevant legal provisions to determine tax liability accurately.