2006 (9) TMI 528 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of "turnover" under the Punjab General Sales Tax Act, 1948.
2. Whether the levy under the Rural Development Fund forms part of the turnover.

Issue 1: Interpretation of "turnover" under the Punjab General Sales Tax Act, 1948:

The Sales Tax Tribunal of Punjab referred a question regarding the interpretation of "turnover" under the Punjab General Sales Tax Act, 1948 for the assessment year 1990-91. The term "turnover" was defined in section 2(i) of the Act to include sales, purchases, and other related amounts. The crucial aspect was whether the fee under the Rural Development Fund Act, 1987 should be considered a part of the turnover.

Issue 2: Whether the levy under the Rural Development Fund forms part of the turnover:

The argument put forth by the assessee, a registered dealer under the Act, was supported by a judgment of the Supreme Court in a previous case. The Supreme Court's ruling emphasized that the obligation to pay market fee lies with the buyer, and the seller only acts as a facilitator in collecting it. Therefore, the market fee should not be treated as part of the sale consideration, and by extension, not be included in the turnover for sales tax purposes.

The Revenue's counsel failed to provide a valid distinction from the aforementioned judgment, leading to the conclusion that the levy under the Rural Development Fund should not form part of the turnover. Consequently, the question was answered in favor of the assessee and against the Revenue.

This judgment clarifies the interpretation of "turnover" under the Punjab General Sales Tax Act, 1948 and establishes that the levy under the Rural Development Fund should not be included in the turnover for taxation purposes based on the principles outlined in the Supreme Court's previous ruling.