1999 (2) TMI 67 - SC - Income Tax

INCOME SALES TAX COMMISSION AGENT AMOUNT COLLECTED AS SALES TAX AS COMMISSION AGENT AND PAID TO DEPARTMENT REFUND RECEIVED FROM DEPARTMENT WHEN SALES TAX FOUND NOT PAYABLE NOT INCOME OF ASSESSEE INCOME-TAX ACT (43 OF 1961).

Summary

Issues:
- Interpretation of whether sales tax collected by a commission agent and subsequently refunded constitutes income liable for income tax.

Analysis:
The judgment in question involves an appeal against the Andhra Pradesh High Court's decision regarding the treatment of sales tax collected and refunded by a commission agent for income tax purposes. The High Court had ruled in favor of the assessee, relying on its own earlier judgment. The primary issue was whether the sales tax collected by the commission agent, along with any refunds received, should be considered as income taxable under the Income Tax Act. The Tribunal had referred this question to the High Court for opinion. The Tribunal, based on the principle established in the case of Kedarnath Jute Mfg. Co. Ltd. v. CIT, held that the assessee was not liable to pay tax on such amounts. However, the appellant contended that the decision in Chowringhee Sales Bureau P. Ltd. v. CIT should apply, arguing that the Tribunal erred in distinguishing that case.

The Supreme Court analyzed the facts of the case and compared them to the precedent cited by the appellant. In the Chowringhee Sales Bureau case, the assessee was an auctioneer who collected sales tax from purchasers but did not remit it to the actual owner or the state exchequer. The court held that in that scenario, the amount collected was considered part of the trading or business receipts of the auctioneer and was taxable. However, in the present case, the assessee was a commission agent, not an auctioneer, when collecting sales tax. The court noted that the grounds of appeal did not reference the relevant provisions of the Andhra Pradesh General Sales Tax Act, which could have affected the outcome. The appellant's argument that the sales tax collected should be treated as income due to claiming revenue expenditure benefits was not supported by evidence.

Ultimately, the Supreme Court dismissed the appeals, upholding the High Court's decision in favor of the assessee. The court found that the appellant's arguments did not provide sufficient legal or factual basis to overturn the High Court's ruling. The judgment reaffirmed the distinction between the roles of an auctioneer and a commission agent in the context of sales tax collection and income tax liability.