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TMI Blog1957 (1) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1939) is not ultra vires the Madras Legislature on the ground that it imposed a tax on purchases. Shri Patel has, however, contended that there is no reference to such a tax in the charging section, viz., section 5 of the Act, and that in view of the preamble which begins, "Whereas it is expedient to provide for the levy of a tax on the sale of goods in the Province of Bombay" and the general scheme of the Act, the provision relied on by the authorities below is not only improper but also should be held to be ultra vires, for, as held in Wallace Brothers Co. Ltd. v. Commissioner of Income-tax, Bombay[1948] 16 I.T.R. 240; 50 Bom. L.R. 482. , the liability to tax arises "by virtue of the charging section alone". Shri Patel also points out that in the Madras Act the turnover has been defined as the aggregate amount for which goods are either bought or sold by a dealer, and a dealer is made liable for the tax on the basis of his turnover, whereas in the Bombay Sales Tax Act, 1946, there is no amendment of the definitions of "dealer" and "turnover" which relate to the sale or supply of goods alone. There can be little doubt that proviso (b) to clause (ii) under rule I of sub-sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the form in which it was enacted and not by amending the charging section, and if not, whether the proviso in question was valid in law.' In view of the decision in Wallace Brothers Co., Ltd. v. Commissioner of Income-tax, Bombay[1948] 16 I.T.R. 240; 50 Bom. L.R. 482., it seems to us that it is reasonably arguable that the decision of this Tribunal has been erroneous. We, accordingly, allow the application and refer the question as redrafted by us for the decision of the High Court. S.P. Mehta and R.V. Patel, for the applicants. H.D. Banaji with D.P. Madan, instructed by M/s. Little and Co., for the opponents. JUDGMENT (Civil Reference No. 20 of 1956). SHAH, J.-Messrs. M.N. Gobhai Co., whom I will hereafter refer to as the assessees, are a firm carrying on business in cloth at Bombay and at Madras. The principal place of business of the assessees is in Bombay and they have a branch office at Madras. The assessees are registered dealers under the Bombay Sales Tax Act (V of 1946) and holding registration certificate No. BC 2296, in C Ward, Bombay. The assessees purchased cloth of the value of Rs. 30,712-12-6 on the strength of a certificate registering them as dealers in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as essentially purchase price, in assessment for levying sales tax on sales of commodities, the incidence of sales tax is sought to be altered. In our view there is no substance in either contention. The period of assessment with which we are concerned is 1st April, 1949, to 31st March, 1951. The relevant provisions of the Bombay Sales Tax Act, 1946, as amended and in operation at the relevant time were as follows: The expression "turnover" was defined by section 2(j) as meaning "the aggregate of the amounts of sale prices received and receivable by a dealer in respect of sale or supply of goods effected or made during a given period after deducting the amounts, if any, refunded by the dealer to a purchaser in respect of any goods purchased and returned by the purchaser within the prescribed period." Section 5, sub-section (1), which was the charging section, rendered every dealer whose gross turnover during the year immediately preceding the commencement of the Act, in respect of sales or supplies of goods, exceeded certain amounts as liable to pay tax on his turnover in respect of sales or supplies of goods. A dealer to whom sub-section (1) of section 5 did not apply was liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t instance be the gross turnover and certain amounts should be deducted therefrom and certain other amounts should be added. Admittedly the goods of the value of Rs. 30,712-12-6 in respect of which the impugned tax has been levied by the Sales Tax Authorities falls within proviso (b) to rule I(ii) in sub-section (3) of section 6. The goods have been despatched by the assessees to a place outside the Province of Bombay and by the operation of that proviso the price of the goods purchased by the assessees is liable to be included in the taxable turnover of the assessees. It is true that the expression "turnover" is defined by the Legislature as meaning the aggregate of the amounts of sale prices received and receivable by a dealer, and it may at first blush be difficult to regard price paid for purchasing goods as part of the turnover of an assessee. But the Legislature has not sought to levy a tax on turnover; it has sought to levy a tax on the taxable turnover and the method of computation of the taxable turnover is prescribed in sub-section (3) of section 6, and in the "taxable turnover" is liable to be included a certain amount equivalent to the price paid by the asses- see for p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question. The scheme of the Sales Tax Act is that the incidence of tax must fall upon a seller and not upon the purchaser, and the question is whether by a rule framed under the Act it is open to the rule-making authority to alter the incidence, to make the purchaser liable to pay the tax instead of the seller, and to make something a part of the turnover which the Legislature itself has not provided." In our judgment, these observations are not only not in favour of the contentions advanced by Mr. Mehta but they appear to destroy the contentions raised. It may be noted that in that case the Court was concerned to deal with the validity of rule 6(1)(i)(b) of the Bombay Sales Tax Rules framed under the Bombay Sales Tax Act, 1953. Under the Act, section 11 provided for the computation of taxable turnover by prescribing that from the turnover certain amounts shall be deduct- ed. In section 11 there was no clause similar to section 6(3), rule I, proviso (b). But by a rule framed under that Act under the authority reserved in section 49 of that Act it was provided: "For the purpose of clauses (i) and (ii) of sub-rule (1)(i) the goods shall be consigned by the purchasing dealer from a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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