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TMI Blog1961 (12) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... r returned a net turnover of only Rs. 4,43,000 and odd, representing the sale price of the matches, exclusive of the excise duty paid by him, and deducting also the freight charges incurred. A sum of Rs. 10,85,300 had been paid by was of excise duty and collected by the petitioner from the buyers outside the State on foot of separate debit notes referred to. The petitioner contended before the assessing authority that this amount of excise duty did not form part of the sale price. But this contention was overruled and the Deputy Commercial Tax Officer assessed the net turnover liable to assessment under the Central Sales Tax Act at Rs. 15,17,631, and the tax payable thereon at Rs. 15,176. An appeal was taken to the Commercial Tax Officer before whom also it was claimed that the excise duty was paid on behalf of the buyer, and though it was recovered by a separate debit note it was entered in a separate ledger and did not form part of the sale consideration. it was alleged that it was agreed between the buyer and the seller that only the value of the matches was to be paid. It was further contended that since the Central Sales Tax Act has to be administered in the same manner as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to tax on his "turnover", and "turnover" is defined in section 2(j) of the Act in these words: "Turnover used in relation to any dealer liable to tax under this Act means the aggregate of the sale prices received or receivable by him in respect of sales of any goods in the course of inter-State trade or commerce made during any prescribed period and determined in the prescribed manner." Under section 13(1) of the Act, the Central Government is empowered to make rules providing for "(b) the period of turnover, the manner in which the turnover in relation to the sale of any goods under this Act shall be determined and the deduction which may be made in the process of such determination." Since the liability to taxation of the turnover is on the turnover as "determined in the prescribed manner", and the manner in which the turnover is to be determined has to Prescribed by the rules framed under the Act, the learned counsel contends that the rules, as they stand, do not prescribe the manner in which the turnover should be determined. According to him, therefore, the levy fails to take effect. This contention has now to be examined. The Central Sales Tax (Registration and Tur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mposing the tax... To illustrate my point, I would take the cases of rules framed under section 3(4) for the computation of the turnover. It cannot be disputed that without the rules prescribing the method of computing the turnover, the charging provision in section 3(1) could not be brought into play..........." The learned Judge was in that case dealing with the argument that certain of the rules framed under the Madras General Sales Tax (Turnover and Assessment) Rules did not have the effect of making the necessary prescription regarding the assessment and collection of taxes imposed by sections 3 and 5 of the Madras General Sales Tax Act. We have no quarrel with the proposition advanced by the learned counsel for the petitioners that if the rules do not prescribe the method of computing the turnover, the charging provision cannot come into play. The immediate question is whether the rules as they stand cover the alleged lacuna. It is not disputed that rule 11(2) is operative for the assessment year in question. Even in the form in which it stood prior to its amendment in September, 1958, what it stated was that "in determining the turnover of a dealer for the purposes of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nover of a dealer. In contrast to this set of rules, the Central Sales Tax Act contains only a single rule for the determination of the turnover providing within the ambit of that very rule for the deduction of certain amounts from the sale price of the goods. A mere comparison of the two sets of rules cannot lead us to the conclusion that rule 11(2) as it stands does not have the result of determining the turnover for the purpose of laying the charge under section 8 of the Central Sales Tax Act. The next contention advanced is that by the terms of section 8, the dealer is entitled to have the excise duty paid in respect of the goods excluded from the turnover. We shall later deal with the question whether the sale price of the goods is inclusive of this excise duty or not. But what the learned counsel claims in this regard is that under the very terms of section 8, that result is reached. The argument runs in this manner. Under section 8(1) of the Act every dealer who sells any goods to the Government, or sells to a registered dealer other than the Government, goods of a specified description in the course of interState trade or commerce, is liable to pay tax at one per cent. on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her under section 8(1) or 8(2) of the Act is on the turnover and in so far as the expression "turnover" occurring in these provisions is concerned, it is the turnover under the Central Sales Tax Act and not that under the Madras General Sales Tax Act. Examining the provisions of section 8(2) further, what is provided for is that if a case is taken out of section 8(1) and made taxable under section 8(2) it is only the rate which should apply to those transactions that is specified in this sub-section and not that the entire State law is made applicable to the transaction. There is nothing in any of these provisions, section 8(2) or (2-A), to say that the inter-State nature of the transaction is taken away and the transaction becomes an intra-State one. It is only if the transaction is specifically declared to be deemed to be one inside the State that the local sales tax law can apply to it wholly. That is not the case here. The clause "for the purpose of making any such calculation any such dealer shall be deemed to be a dealer liable to pay tax under the sales tax law of the appropriate State, notwithstanding that he in fact may not be so liable under that law" does not bring about ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the same manner as the tax on the sale or purchase of goods under the general sales tax law of the State is assessed, paid and collected; and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State.........." Learned counsel for the petitioners lays emphasis upon the phrase "in the same manner as the tax......under the general sales tax law of the State is assessed, paid and collected" and calls upon us to infer therefrom that all the incidents of the local law become applicable to the assessment under the Central Sales Tax Act. We are totally unable to appreciate this interpretation. This section provides only for the procedural part of making the assessment. In quantifying the charge that is laid by section 8 of the Act, the powers which the authorities are to exercise in making the assessment such as calling for returns, accounts etc., in issuing notices of demand and enforcing the default provisions are what are contemplated in the above sub-section. If the local sales tax law in its entirety is made applicable, there seems to be no purpose served by the Central Government making special rules under the Central Sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... local law being followed, but the liability and the quantum of tax being governed only by the Central Sales Tax Act and subject to the rules made thereunder. The two expressions referred to cannot possibly be equated, and no assistance in interpreting the one can be derived from the other. It has been argued that the sale consideration for the supply of the goods, matches in the present case, does not include the excise duty paid by the seller to the Government. The goods are excisable commodities and before the manufacturer could deal with them by way of sale, the duty has to be paid to the Government. What is contended is that the contract between the buyer and the seller-no contract was produced either here or in the Tribunals below-was that the sale was to be for a stated price which did not include the excise duty and that when the seller paid the excise duty, he paid it on behalf of the buyer and that part of the payment, though subsequently recovered from the buyer, was never intended to be part of the sale consideration. It is difficult to see how this contention can be accepted. It is not denied by the learned counsel that the buyer would not be able to take possession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t either the principal Act or the impugned Act proceeds on any immutable distinction between sale price and tax such as learned counsel for the appellants has suggested. The principal Act does not contain any separate definition of sale price. We have already referred to the definitions of 'sale' and 'turnover'; those definitions do not show any such distinction. On the contrary, the expression 'turnover' means the aggregate amount for which goods are bought or sold, whether for cash or for deferred payment or other valuable consideration, and when a sale attracts purchase tax and the tax is passed on to the consumer, what the buyer has to pay for the goods includes the tax as well and the aggregate amount so paid would fall within the definition of turnover. In Paprika Ltd. v. Board of Trade[1944] 1 All E.R. 372. , Lawrence, J, said, 'Whenever a sale attract 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.' The same view was again expressed in Love v. Norman Wright (Builders) Ltd.[1944] 1 All E.R. 618., whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion for the sale of any goods", less certain normal trade discounts, or such other sums as are specifically excluded. It should necessarily follow that having regard to the transaction that took place, since it was an integral part of the agreement that the buyer should be the bearer of the excise duty paid by the seller, this excise duty certainly does form part of the sale price of the goods. We are therefore unable to accept the contention advanced in this regard. Our attention has been drawn to a decision of this Court in C.R.P. No. 1874 of 1952. That was a case which arose under the Madras General Sales Tax Act and the question arose whether the excise duty paid on cured coffee which was the subject-matter of the sale, was deductible. What happened was that the India Coffee Board which sold the coffee had collected the excise duty from the buyer and paid it to the Central Government. The department contended that the assessee, the India Coffee Board, had not itself paid the excise duty and that therefore that amount was not deductible under rule 5(1) of the General Sales Tax (Turnover and Assessment) Rules. The decision of this Court was that whoever might have paid the exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not in dispute that wherever such freight was separately charged, deduction has been allowed. It seems clear that unless freight had been separately charged to the knowledge of the buyer, the cost of the freight cannot be deducted from the sale price. What we are told is that in some of these cases, after charging an inclusive price in respect of the goods sold, an entry was made at the bottom of the bill giving the number of the railway receipt and other particulars of freight incurred. We are unable to accept the claim that this indication on the bill amounts to a separate charge in respect of the freight. What we understand this expression to mean is that the sale price indicated on the bill should be in respect of the cost of the goods alone and an additional charge should have been indicated in the bill, the total making up the consideration which the buyer was called upon to pay. That would be in keeping with the wording of the definition of sale price and would comply with the requirement that the freight had been charged separately, that is to say, the buyer was informed that the quantum of freight charges was additional to the sale price of the goods and that he had to pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is result, viz., that if the movement commenced in the State of Jammu and Kashmir, those inter-State sales cannot be brought to tax under the Central Sales Tax Act. But the taxability of sales, when the movement commenced from a State in which the Central Sales Tax Act is in force, cannot probably be affected, so long as the other territory involved in the movement is a "State", whether or not the Central Sales Tax Act has been extended to it. Next it was argued that the non-extension of the Central Sales Tax Act resulted in the position that the assessees became taxable under section 8(2) of the Act at a higher rate of tax. The favourable rate of one per cent. of tax under section 8(1) of the Act is available, broadly speaking, only when the buyer at the other end is a registered dealer, i.e. registered under the Central Sales Tax Act. If the Central Sales Tax Act is not in force in Jammu and Kashmir, it follows that no dealer there can get himself registered under that Act; the selling dealer of this State would not be in a position to furnish the certificates required under section 8(4) of the Act; non-compliance with section 8(4) of the Act takes the sale out of section 8(1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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