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TMI Blog1971 (7) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... e (A.N. Sinha and G.S. Chatterjee, Advocates, with him), for the appellant in C.A. Nos. 1272 and 1273 of 1967. I.N. Shroff, Advocate, for the respondent. A.N. Sinha and G.S. Chatterjee, Advocates, for the appellant in C.A. No. 2543 of 1968. -------------------------------------------------- The judgment of the court was delivered by HEGDE, J.- These appeals by special leave arise from the decision of the High Court of Madhya Pradesh in three references under section 44(1) of the Madhya Pradesh General Sales Tax Act, 1958 (to be hereinafter referred to as the Act). Those references were made at the instance of the assessee who is the appellant in all these appeals. The question of law referred to the High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adesh." A dealer is defined in section 2(d) as meaning any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash, or for deferred payment, or for commission, remuneration or other valuable consideration, be it a society, a club, firm or association which buys goods from or sells, supplies or distributes goods to its members or commission agent, a broker, a del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of buying, selling, supplying or distributing goods on behalf of any principal. "Turnover" is defined thus in section 2(t): "'Turnover' used in relation to any period means the aggregate of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have to see is whether the collection of sales tax by the dealer from his purchasers can be considered as valuable consideration received by him for the sale of goods. Under section 4 the liability to pay tax is that of the dealer. The purchaser has no liability to pay tax. There is no provision in the Act from which it can be gathered that the Act imposes any liability on the purchaser to pay the tax imposed on the dealer. If the dealer passes on his tax burden to his purchasers he can only do it by adding the tax in question to the price of the goods sold. In that event the price fixed for the goods including the tax payable becomes the valuable consideration given by the purchaser for the goods purchased by him. If that be so, the ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clude in the price the tax payable by him to the Government. If he does so, he cannot be said to be collecting the tax payable by him from his buyers. The levy and collection of tax is regulated by law and not by contract. So long as there is no law empowering the dealer to collect tax from his buyer or seller, there is no legal basis for saying that the dealer is entitled to collect the tax payable by him from his buyer or seller. Whatever collection that may be made by the dealer from his customers the same can only be considered as valuable consideration for the goods sold. In George Oakes (Private) Ltd. v. State of Madras and Others [1961] 12 S.T.C. 476 (S.C.)., this court was called upon to consider whether a dealer can pass on his t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ., who delivered the majority judgment of the court said: "The circumstance that the 1947 Act, after the amendment, permitted the seller who was a registered dealer to collect the sales tax as a tax from the purchaser does not do away with the primary liability of the seller to pay the sales tax. This is further made clear by the fact that the registered dealer need not, if he so pleases or chooses, collect the tax from the purchaser and sometimes by reason of competition with other registered dealers he may find it profitable to sell his goods and to retain his old customers even at the sacrifice of the sales tax. This also makes it clear that the sales tax need not be passed on to the purchasers and this fact does not alter the real nat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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