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Issues involved: The judgment addresses the question of whether sales tax collected by commission agents on jaggery sales constitutes income liable to tax and if it is allowable as a deduction under the Andhra Pradesh General Sales Tax Act for specific assessment years.
Summary: Issue 1: Taxability of sales tax collected by commission agents The assessees, merchants acting as commission agents in jaggery sales, collected sales tax from purchasers but did not remit it to the authorities or their principals. The department treated these amounts as trading receipts subject to income tax. The assessees argued that subsequent amendments made the collection legal and cited relevant case law. The court held that the sales tax collected, though initially illegal, became legal under the Amendment Act of 1970. The court determined that the collected sales tax constituted business receipts and were taxable, rejecting the department's reasoning that the collection was illegal until 1970. Issue 2: Allowability of sales tax as a deduction The court ruled that the sales tax collected by the assessees could not be claimed as an admissible deduction. However, if the assessees paid the sales tax to the authorities, they could then claim deductions. The court emphasized that sales tax collected by a dealer forms part of the sale price and is considered valuable consideration, making it a trading receipt. Citing relevant case law, the court held that the sales tax collected by the assessees was legally collected under the Amendment Act of 1970 and should be treated as business receipts until paid to the authorities. Conclusion: The judgment favored the revenue, determining that the sales tax collected by the assessees was taxable as business receipts. The court highlighted the legal implications of the sales tax collection by commission agents and the subsequent tax treatment based on the Amendment Act of 1970. No costs were awarded, and advocate's fees were specified for each reference.
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