1999 (5) TMI 606 - HC - VAT and Sales Tax

Summary

Issues:
1. Inclusion of trade tax in dealer's turnover.

Analysis:
The judgment revolves around the dispute regarding the inclusion of the trade tax realized by the dealer from its customers in its turnover. The dealer's invoicing system includes a gross price for the goods sold, with the trade tax not shown as a separate component but mentioned in the invoice. The dealer also maintains a 'sales day book' where the sales tax amount is separately recorded. The revenue argues that since the trade tax was not separately charged, it should be included in the turnover.

The definition of 'turnover' as per Section 2(i) of the U.P. Trade Tax Act is crucial in determining whether the trade tax should be excluded. The Act specifies that the amount realized as trade tax on the sale of goods should be excluded if separately charged. The dealer contends that despite not separately charging the trade tax to maintain a uniform price nationwide, the amount is clearly indicated in the bills and should be deemed as separately charged.

The court referred to precedents like CSX v. Girdhar Das and C.S.T. v. Alodel Chemicals Manufacturing Co., where similar scenarios were considered. These cases established that even if the tax amount was not explicitly mentioned in the invoice but could be identified from other records maintained by the dealer, it should be treated as separately charged. This approach ensures that the trade tax is not included in the turnover if it can be discerned from the dealer's accounting practices.

Considering the evidence presented, including the clear indication of sales tax in the invoices and registers, the court concluded that the trade tax had indeed been separately charged from the buyers. Therefore, the trade tax amount should not be included in the dealer's turnover. Consequently, the revision petition was allowed, and the Tribunal's order was set aside in favor of the dealer.

In essence, the judgment clarifies the interpretation of the term 'turnover' concerning the treatment of trade tax in cases where it is not explicitly charged but can be identified from the dealer's records. The decision emphasizes the importance of maintaining accurate accounts to demonstrate the separate charging of taxes, ultimately impacting the calculation of turnover for taxation purposes.