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TMI Blog1987 (1) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... a Pradesh General Sales Tax Act, 1957: of the Act. In the former case it is shown expressly as sales tax and in the latter case it is shown in the form of debit notes. But in both the cases it is collected by the seller from the buyer at the time of the sale or rather as a condition of sale." The High Court repulsed the plea of the assessees that the amount of sales tax so collected from the buyers was not includible in the turnover for the purposes of computing the sales tax liability of the assessees. The concerned assessees have approached this Court by way of the present group of appeals by special leave. "'Turnover' means the total amount set out in the bill of sale (or if there is no bill of sale, the total amount charged) as the consideration for the sale or purchase of goods (whether such consideration be cash, deferred payment or any other thing of value) including any sums charged by the dealer for anything done in respect of goods sold at the time of or before the delivery of the goods and any other sums charged by the dealer, whatever be the description, name or object thereof: Provided that in the case of a sale by a person whether by himself or through an agent of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein an earlier decision of a Division Bench [State of Andhra Pradesh v. Bujranga Jute Mills Ltd. [1955] 6 STC 376 (AP)], to the effect that sales tax collected by the dealer from the buyers cannot be included in his turnover and is not liable to be taxed again was overruled. It may incidentally be mentioned that the aforesaid Full Bench judgment of the High Court was noted with approval by this Court in George Oakes P. Ltd. v. State of Madras [1961] 12 STC 476 (SC). Some salient features require to be underscored in order to test the merits of these submissions: (1) There is no provision in the Act which imposes a legal obligation on the vendor of the goods to recover sales tax on the goods sold to the vendee. For instance the vendor is not prohibited from selling the goods without recovering the sales tax from the vendee. The seller may not charge or recover the sales tax from the buyer. He will not be violating any provision of the Act or incurring any penal consequence by doing so. In other words the collection of the sales tax from the buyer is a matter of his choice. He may or may not do so. If he does not do so he does not expose himself to any penal consequence or legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e required to set apart the same without intermingling with his own money, for, he cannot use the monies belonging to the State for his own private purposes. If the intention of the legislature was to make him an agent, the legislature would have imposed penal liability on the vendor if he were not to collect the taxes. He would be obliged to maintain separate accounts of the collection made by him as also to treat the collections as the collections made by the agent on behalf of the principal. It is, therefore, futile to contend that the sales tax component of the sale price charged by the vendor to the vendee is collected by him as an agent of the State Government. Even if therefore the bill or the voucher issued to the purchaser indicates the amount of sales tax separately what is collected by the vendor from the vendee is not tax but is merely a part of the sale price charged by the vendor to the vendee. So far as the statute is concerned it does not cast any obligation on the purchaser of the goods to pay any tax and therefore what is collected by the vendor from the vendee by way of consideration for passing the property in the goods to the vendee is the price charged by him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . v. State of Madras [1961] 12 STC 476 (SC) this Court had an occasion to consider a similar challenge made in the context of the constitutional validity of section 8-B of Madras General Sales Tax Act, 1939, wherein this Court has repelled this very argument in no unclear terms: "Obviously, it is not the name the legislature accords to a payment by a purchaser to a seller, who is a dealer as defined by the Act, that determines the question of the legislative competence. No doubt section 8-13 called the payment as amount (collected) by way of tax. It is equally true that the statutory liability to pay the sales tax is laid on the dealer. What is taxable is not each transaction of sale but the total turnover of the dealer, computed in accordance with the provisions of the Act and the Rules. But it is well-recognised that whatever be the form of the statutory provisions, the ultimate economic incidence of the tax is on the consumer, the purchaser. It was that well-settled principle that was re-stated in Bengal Immunity Co. Ltd. v. State of Bihar [1955] 6 STC 446 (SC); [1955] 2 SCR 603. Even if the registered dealer collects the amount by way of tax under the authority of section 8-B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount which the statute authorised the dealer to collect from the purchaser separately and directly under the authority of section 17(iii)(b)(1) of the said Act and to pass it on or make it over to the market committee. It is evident that it was an amount collected by the dealer under the statutory authority as an agent of the market committee for being passed on to the management committee and therefore could not be treated as a component of the sale price of the goods which were sold to the purchaser. It was in this context that this court came to the conclusion that the market fee so collected could not be included in the turnover as is evident from the pertinent passage: "From the observations made in the decisions referred to above, it follows that where a dealer is authorised by law to pass on any tax payable by him on the transaction of sale to the purchaser, such tax does not form part of the consideration for purposes of levy of tax on sales or purchases but where there is no statutory provision authorising the dealer to pass on the tax to the purchaser, such tax does form part of the consideration when he includes it in the price and realises the same from the purchaser. ..... 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