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TMI Blog1956 (12) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... Learned Government Pleader contends that in view of the amended definition of the term "turnover", any sum collected by a dealer in respect of the goods sold at the time of or before the delivery of the goods would be part of his turnover, and, therefore, the sums collected towards dharmam in the present case should be included in the turnover. The amended definition reads: "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....................Including any sums charged by the dealer for anything done in respect of the 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." Learned Government Pleader contends that under this definition, whether the amount collected in respect of the goods sold or the other sums charged by the dealer form part of the consideration for the sale or not they would be part of the turnover if they are included in the bill of sale and in support of that contention reliance is placed upon the decision of a Divisional Bench of this Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 15th July, 1954. Section 2 of the Amending Act substituted the following definition of "turnover" for the one found in the Principal Act: "Section 2(i). 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................including any sums charged by the dealer for anything done in respect of the 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." Section 4 of the Amending Act repealed sections 8-B and 8-C of the Principal Act. Section 12 of the Amending Act gave retrospective effect to these changes by enacting that the new definition of "turnover" in section 2(i) and the repeal of section 8-B of the Principal Act "shall be deemed to have taken effect form the commencement of the Madras General Sales Tax (Amendment) Act, 1947". Section 10 of the Amending Act repealed section 15, clauses (f) and (g), of the Principal Act. Construing the expression "turnover" in section 2(i) and the provisions of section 8-B of the Principal Act, as they stood prior to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , are included. So, what is made comprehensive is the consideration for sale. To adopt the other interpretation would be straining the language a bit too much. If so, could a tax collected by a dealer come within the meaning of consideration for sale?" After some discussion of the point the learned Judge answered the question posed by him in these terms: "In our view, the definition of 'turnover' as amended by the Andhra State Legislature is not comprehensive enough to include sales tax collected by the dealer. " As we differ from the opinion of the learned Judges of this Court in the two cases cited above, we shall state our reasons at some length. Under section 2(h) of the Act, a sale is a transfer of the property in goods for cash or deferred payment or other valuable consideration. Under section 2(i) the consideration for the purchase of goods is included in the "turnover". The consideration proceeding from the buyer is the money which he has to part with and pay to the seller. The detriment to the buyer is the whole of the sum of money he has to pay the seller for, and on the occasion of, the sale and that is the consideration for the sale which should enter into the computati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s tax. So, if a seller offers goods for sale, it is for him to quote a price which includes the tax if he desires to pass it on to the buyer; if the buyer agrees to the price it is not for him to consider how it is made up, or whether the seller has included tax or not." The Court of Appeal approved of the decision of Lawrence, J., in Paprika v. Board of Trade[1944] 1 All E.R. 372. where that learned Judge held that the purchase tax was part of the price observing that "whenever a sale attracts purchase tax, that tax presumably affects the price which the seller who is liable to pay the tax demands, but it does not cease to be the price which the buyer has to pay even if the price is expressed as x plus purchase tax." No doubt the tax in England was a "purchase" and not a "sales" tax but it was chargeable on the wholesale value of chargeable goods bought under chargeable purchases, just like the tax on "turnover" here. It is no doubt open to a philanthropically minded dealer to bear the burden of the sales tax himself without passing it on to the buyer. Normally, however, the dealer, though he is liable to pay the sales tax, shifts his liability on to the purchaser, by includin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment to levy tax on tax." The decision of the Madras High Court in Deputy Commissioner of Commercial Taxes v. Krishnaswami Mudaliar[1954] 5 S.T.C. 88. was followed in State of Andhra v. Bujranga Jute Mills[1955] 6 S.T.C. 376.Later on, the attention of the learned Judges was drawn to the repeal of section 8-B and the substitution of a new definition of "turnover" in section 2(i) by the Amending Act and it was pointed out that as the decision of the Madras High Court was based on the old definition of "turnover" in section 2(i) and the repealed section 8-B, it did not hold good after the Amending Act came into force. Nevertheless in State of Madras v. Tungabhadra Industries Ltd.[1955] 6 S.T.C. 379. , the learned Judges hold that the introduction of the new definition of "turnover" in section 2(i) and the repeal of section 8-B by the Amending Act did not make any difference and they reaffirmed the conclusion reached in State of Andhra v. Bujranga Jute Mills[1955] 6 S.T.C. 376. though without reference to the Amending Act that had then come into force. The history of the legislation shows that in amending the definition of "turnover" in section 2(i) and repealing section 8-B of the Pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which held that sales tax collected by the registered dealer was not part of the price paid by the purchaser but a tax collected by the dealer as the agent of the State and in respect of which he was accountable to the State under section 8-B(1) and [1949] 1 S.T.C. 193. of the Act. With this knowledge, the Legislature not only repealed section 8-B of the Act but also amended the definition of "turnover" in section 2(i) so as to include the total amount set out in the bill of sale as the consideration for the sale, or purchase of goods, including any sums charged by the dealer for anything done in respect of the goods sold and any other sums charged by the dealer whatever be the description, name or subject thereof. The result is that the dealer no longer levies a tax on or collects a tax from the purchaser. What he does after the Amending Act is to increase the price of the article so as to ensure that he will not be the loser by having to pay the sales tax levied upon him by the Act. The tax is thus passed on to the buyer who pays it not as tax but as part of the price of the goods. The seller does not collect the tax qua tax from the purchaser. The total amount which the purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n section 2(i) must govern the rules and the definition in the Amending Act, in our opinion, clearly includes in the "turnover" tax charged to the purchaser as part of the price. If any rule says anything to the contrary it will, to that extent, be invalid. Section 3(5) provides that taxes under sub-sections (1) and (2) shall be assessed, levied and collected in such manner as may be prescribed. Section 3(1) provides that every dealer shall pay for each year a tax on his total turnover for such year at the rate specified therein and subsection (2) provides for a single point tax. Section 3(5) has reference to the assessment, levy and collection of tax levied on the dealer and made payable by the dealer under section 3(i). Section 8-B and rule 5-A (7) alone deal with the authority of the registered dealer to collect the tax from the purchaser and the conditions subject to which this power may be exercised. It is therefore difficult to accept the conclusion of the learned Judges that rule 5-A(7) exists "de hors section 8-B(1)". For these reasons we hold that, in view of the provisions of the Amending Act to which we have referred, State of Andhra v. Bujranga Jute Mills [1955] 6 S.T.C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ller is not obliged to sell and the buyer is not obliged to buy except by their own choice and on their own terms. The fact that the payment to charity is made as a matter of trade usage only shows that it is an incident that attaches to every contract for sale of goods, though not expressly stipulated, because it is so well-known and so widely recognised and acted upon. The fact that the payment is not shown in the bill or invoice as part of the price but separately as an item charged to the purchaser is not a decisive factor. So are processing and packing charges and sales tax payable by the dealer and yet they are included in his turnover. Dharmam is usually a small percentage of the price proper and is charged to the buyer. The buyer has to pay the total amount of the bill though it is split up into price plus packing charges plus sales tax plus dharmam plus sundry charges. Nor does the fact that the collection for dharmam is utilised by the dealer for charitable purposes decide the issue. The consideration for the sale is the whole of the amount paid by the purchaser and it makes no difference to him whether the consideration is paid to the dealer or to a third person on his d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s amended. The attitude of many merchants, traders and consumers towards sales tax is similar to that of Samuel Johnson who in his dictionary defined "excise" as a "hateful tax levied on commodities and adjudged not by the common judges of property but by wretches hired by those to whom the excise is paid". The sentimental aversion to include a dealer's collections from customers for dharmam in his turnover is intelligible but then it must be realised that it will be imposing an impossible burden on the assessing authority if it is obliged to find out in each case and for each year, how much of the collections has been spent for real charities, how much spent for nominal or colourable charities and how much was utilised by the dealer for his personal benefit. In any case, it is not for us to express an opinion on the expediency of the Amending Act, for considerations of policy lie wholly outside our sphere. We have construed the Amending Act as it stands without stretching or cutting down its language for the purpose of avoiding supposed hardship to individuals. Judgment After receipt of the opinion of the Full Bench, the judgment of the Court was delivered by SUBBA RAO, C.J. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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