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TMI Blog1975 (3) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... ,50,275.17, respectively. Before the Joint Commercial Tax Officer, who was the assessing authority, the appellant claimed exemption in respect of a turnover of Rs. 33,862.82 representing two transactions of sale made on 2nd March, 1967, and 25th March, 1967. Though the assessing authority held that those transactions were not exempt and liable to sales tax, the Appellate Assistant Commissioner held that they were exempt from the levy of sales tax. The facts necessary for the claim of this exemption may now be noted. The validity of the Pondicherry Sales Tax Act (Act No. 10 of 1965), which came into force on 1st April, 1966, was questioned before the Supreme Court and by its judgment in Shama Rao v. Union Territory of Pondicherry[1967] 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imply executed the letter of indemnity as in the other case agreeing to pay sales tax in case the Pondicherry Government demanded at a later stage. After the Pondicherry General Sales Tax Act (Act No. 6 of 1967) was published, the Government of Pondicherry issued a notification on 21st November, 1967, which read as follows: "In exercise of the powers conferred by sub-section (1) of section 19 of the Pondicherry General Sales Tax Act, 1967 (Act No. 6 of 1967), the Lieutenant Governor, Pondicherry, is pleased to exempt the levy of tax under the provisions of the said Act in respect of every purchase and every sale effected by any dealer during the period commencing from 20th February, 1967, to 19th November, 1967, if the dealer proves to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary, Finance Department, took the view that only in cases where the assessee had not in fact collected any tax in respect of a transaction of purchase or sale that the exemption notified would apply and that in respect of the transaction dated 2nd March, 1967, there was in fact a collection of sales tax which took it out of the scope of the notification itself. In this connection, he also stated that the fact that the amount was refunded later on was immaterial and did not alter the situation. In support of his view, he also relied on the decision in Kassam and Co. v. State of Madras[1962] 13 S.T.C. 907., and distinguished Kathan Nadar Co. v. State of Madras[1963] 14 S.T.C. 694., which was relied on by the Appellate Assistant Commissioner. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as tax. In our view, the amount was collected by the appellant only as a deposit in order to enable enforcement of the indemnity executed by the purchaser without resorting to any legal proceedings or otherwise. Therefore, though by reason of the retrospective operation of the Pondicherry Act (Act No. 6 of 1967), with effect from 1st April, 1966, the sales tax liability shall be deemed to have in force even on 2nd March, 1967, when the transaction took place, the amount could not be said to have been collected as tax and, in fact, the facts showed that it was only a deposit. The refund of that money on 24th May, 1968, though after the Act came into force, would also go to show that the intention of the parties was not to treat that as a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Merchants Association, was relied on by the assessee in support of the claim of waiver. Regarding the condition that he had not collected the additional tax from the customers, the assessee contended that though he had collected the amount of additional tax at the rate of 8 per cent as prescribed in section 3(2) he had noted it in his accounts as "contingent liability". How the amount collected was shown in the bill issued by the assessee was not in evidence. On those facts, this court held that from the mere fact that he had accounted it as "contingent liability" will not detract from the fact that he has collected it as tax. But ultimately the decision was not based even on this reasoning. The assessee was held not liable to the benefit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not an unauthorised collection and that, therefore, that could not be subject to tax by the State Government. The decision in State of Mysore v. Mysore Spinning and Manufacturing Co. Ltd.[1960] 11 S.T.C. 734 (S.C.). is also of the same type as Kathan Nadar Co. v. State of Madras[1963] 14 S.T.C. 694. That was one under section 11(2) of the Mysore Sales Tax Act, corresponding to section 8-B(2) of the Madras General Sales Tax Act, 1939, and the transaction in dispute was a transaction of inter-State character under article 286(2) of the Constitution and another transaction in respect of which the dealer was not entitled to collect enhanced rate of tax. Therefore, both these decisions also do not help us for deciding the present case. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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