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TMI Blog1995 (9) TMI 348X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Sales Tax Act or the Assam Finance (Sales Tax) Act is paid by way of tax to the sales tax authority as the tax is only one point tax and tax is being realised by the tax authority on the first sale. Subsequent transactions are not liable to be taxed, i.e., the tax authority cannot make the seller of the subsequent sale being liable to tax even if the seller realises by way of reimbursement an amount equal to tax that has been paid treating the same as total sale price. In the facts of this case, a retailer whenever he issues cash memos to the consumer they realise the amount which is printed on the packages being the price of the goods plus sales tax paid to the wholesalers by way of reimbursement and treat the same as a part of their sale price. Retailer could very easily add the amount paid by way of sales tax to the price written on the packages but they cannot do so in view of the fact that the Drugs (Price Control) Order, 1987 and Drugs (Price Control) Order, 1995, which have put certain parameters regarding sale of the said goods and (the price to be charged. The said orders have been issued under the provisions of section 3 of the Essential Commodities Act. Clause 17 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach smaller pack and such price shall not be more than the pro rata retail price of the main pack rounded off to the nearest paisa." The said provisions of the Drugs (Price Control) Order, 1987, did not permit anybody to sell the goods beyond the price mentioned on the packages except the adding of local taxes which include the sales tax under the sales tax laws. Under the new Order of 1995 such provisions are retained in clause 14 in the cases of Scheduled formulation but for non-Scheduled formulations the maximum retail price printed on the packages can only be realised as packages contain the following words "inclusive of all taxes". As such retailer is prevented from passing on any burden to the consumer. In fixing price of different drugs clause 7 of the Control Order of 1995 provides as follows: "The retail price of a formulation shall be calculated in accordance with the following formula, namely: MAPE R.P. = (M.C.+C.C. + P.M. + P.C.) x (1+1 ----------) + ED 100 R.P.means retail price. M.C.means material cost and includes the cost of drugs and other pharmaceutical aids used including overages, if any plus process loss thereon specified as a norm from time to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been prohibited under clause 15 of the Drugs (Price Control) Order, 1995. It has been urged that though it is shown as tax, in fact, the same is the total price of the goods. In view of the above submission, the petitioners have challenged the notification issued by the Commissioner on December 15, 1982. By the said notification dated December 15, 1982 the Commissioner intended to clarify the position as regards deduction of sales tax and finance tax from suppliers and dealers. It was stated that a supplier would include the amount of sales tax paid by him at the point of purchase in the price of the goods and not to show it as a separate item in the bill. Subsequently, a notice or a circular dated October 15, 1987 was issued by the Assistant Commissioner of Taxes, Tinsukia, stating that the Assam Finance sales tax is not leviable in respect of sale of goods purchased within Assam. Any contravention of the same is criminal offence. The said notification dated October 15, 1987, was published in a local daily "Anchalik Batory" reads as follows: "All concerned are hereby informed that Assam finance sales tax is not leviable in respect of sale of goods purchased within the State of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e last seller and the sellers in-between would be out of business inasmuch as the earning from commission would be much less than the tax payable on the said goods. Accordingly it is submitted that though the said amount is realised by the retailer in the cash memos showing the same to be tax the same is only reimbursement of the tax already paid at the first point. The Supreme Court in Central Wines v. Special Commercial Tax Officer reported in [1987] 65 STC 48 wherein it has observed: "The sales tax component of the sale price charged by the dealer to the purchaser is not collected by him as an agent of the State. Even if, therefore, the bill or the voucher issued to the purchaser indicates the amount of sales tax separately what is collected by the dealer from the purchaser is not tax but is merely a part of the sale price charged by the dealer to the purchaser. 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 dealer from the purchaser by way of consideration for passing the property in the goods to the purchaser is the price charged by him and not tax collected by him from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the notification of 1982 and the notice of 1987. It is admitted that sales tax is payable under the Central Sales Tax Act, 1956 and under the local Sales Tax Act whenever there is first sale by the wholesalers or the manufacturers to the next purchaser. This is not the case of anybody including the respondent-authority that at no point of time sales tax is not realised by the authority from the first seller of the medicine at the first point. Further it is not the case of the respondent-authority that the intermediary or the retailer is not permitted or entitled to reimburse themselves of the tax paid at the first point. There is no bar under the sales tax laws whereby the seller, i.e., intermediary and retailer of medicine cannot realise the amount of tax from its immediate purchaser/consumers. Nothing to that effect has been brought to the notice of the court. Provisions of the Price Control Order, 1987 and 1995 specifically permit the realisation of local tax if paid as discussed above. This tax which has been realised by the intermediary or the retailer is in fact only by way of reimbursement of taxes already paid at the first point and the said amount by way of tax is real ..... X X X X Extracts X X X X X X X X Extracts X X X X
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