1997 (8) TMI 496 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of section 8-A(1)(a) of the Central Sales Tax Act, 1956 regarding the entitlement of the assessee to the benefit of the formula set out in the section.

Analysis:
The State filed a revision against the Tribunal's order granting the assessee the benefit of section 8-A(1)(a) of the Act. The Government Advocate argued that the assessee had not proven the collection of tax from each buyer, thus not entitled to the benefit. However, the Court found that the invoice issued by the assessee included a statement that the Central sales tax would be absorbed by the assessee, without showing a separate break-up of the tax amount collected. The Court highlighted the definitions of "sale price" and "turnover" under the Act to support the assessee's entitlement to the benefit claimed.

Section 8-A of the Act deals with the determination of turnover, with subsection 1(a) providing a formula for deductions from the aggregate of sale prices. The Court emphasized that the assessee, by stating that the tax was included in the sale price, effectively precluded from claiming the tax amount from the buyer later. The Court clarified that unless the Revenue could show that the tax amounts collected were deducted from the sale prices, the assessee was entitled to the deduction under section 8-A(1)(a) of the Act.

The Court reiterated that the liability for tax payment rests with the dealer, and passing on the tax burden to buyers is not prohibited. As long as the tax amount collected is not deducted from the turnover, the assessee can claim the deduction under section 8-A(1)(a). Since the Revenue did not demonstrate that the tax amount was deducted before applying the formula, the Court upheld the Tribunal's decision, dismissing the revision petitions without costs.