9911796707
TMI Blog2001 (11) TMI 995X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 2 3 4 20202/01 H.P.C. 9/1997 to 3/1998 36,39,71,704 " " 4/1998 to 12/1998 47,32,14,803 25455/01 B.P.C. 1997-98 35,32,94,559 " " 1998-99 90,68,22,306 25984/01 I.O.C. 1997-98 78,54,77,606 " " 1998-99 86,76,73,631 27054/01 I.B.P. 1997-98 9,04,02,248 " " 1998-99 12,52,78,161 Total 3,96,61,35,018 3.. The assessees aforementioned challenge the aforesaid orders on the following grounds: (i) Section 46A of the Kerala General Sales Tax Act, 1963, has no application to these cases in so far as the assessees have not collected from the customers the surcharge payable by the assessee under the Kerala Surcharge on Taxes Act, 1957. The very basis of the orders therefore vanishes. (ii) In the bills issued to the customers the petitioners have not mentioned that they were collecting any "State surcharge" from them. (iii) The amounts mentioned in the impugned orders actually formed part of the sale price. The petitioners have included the entire sales turnover including the amounts mentioned in these orders as their turnover and have paid not only the sales tax due to the State; but also the surcharge payable by the assessee. The Government has not lost even a pie in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts collected by the dealers towards the surcharge payable under the Act has no application to the assessments in question because the said provision has come into effect only with effect from April 1, 1999 and the period for assessment involved in these cases were periods prior to the said date. 4.. For the State of Kerala it is contended by the learned Government Pleader that the assessing authority can very well go behind the sale bills and see whether any irrecoverable item has, in fact, been collected from the purchasers. 5.. The question arising for decision in these cases, thus, is the legality of the orders passed by the sales tax authorities under the Kerala General Sales Tax Act in exercise of powers under section 46A of the KGST Act which reads as follows: "46A. Penalty for illegal collection of tax.-(1) If any person collects any sum by way of tax or purporting to be by way of tax in contravention of sub-section (2) or sub-section (3) of section 22, the shall be liable to pay penalty not exceeding five thousand rupees and any sum collected by the person by way of tax or purporting to be by way of tax in contravention of sub-section (2) or sub-section (3) of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out, during hearing, that in order to maintain the stability in the price of petroleum products throughout India; to provide for subsidy with regard to LPG, kerosene, etc., to avoid unhealthy competition between the dealers and also to avoid fluctuations in the price depending upon the continual fluctuations in the price of crude oil in the international market, the Central Government is maintaining an oil pool account and that even with the collections made by the dealers and paid over to the oil pool account, still there is a deficit of crores of rupees in the account as on date. 8.. The above facts show that this is not a case where the dealer is trying to make an undue profit or enrichment fleecing the customer through collection of the levy in question and that the collections actually have gone over for the benefit of the citizens of the country on directions of the Central Government. Of course, even such collections cannot be in violation of the statutory provisions and the State will be well within rights to contend that as far as the sales tax is concerned, which is a State subject, the Central Government, through its directions given to the petroleum companies cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnover in all goods of a dealer at all places of business in the State, whether or not the whole or any portion of such turnover is liable to tax, including the turnover of purchase or sale in the course of inter-State trade or commerce or in the course of export of the goods out of the territory of India or in the course of import of the goods into the territory of India". 13.. Under section 2(xxvii) "turnover" is the aggregate amount for which goods are either bought or sold, supplied or distributed by a dealer, either directly or through another, on his own account or on account of others, whether for cash or for deferred payment or other valuable consideration, provided that the proceeds of the sale by a person of agricultural or horticultural produce, grown by himself or grown on any land in which he has an interest whether as owner, usufructuary mortgagee, tenant or otherwise, shall be excluded from his turnover. 14.. Section 22(1) of the KGST Act authorises the dealer to collect tax payable by him on the sale of any goods from the person to whom he sells the goods to pay over the same to the Government in the manner prescribed. Thus, as far as the sales tax is concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich notwithstanding anything contained in section 22(1) of the K.G.S.T. Act 1963, no dealer shall be entitled to collect the surcharge payable under the said sub-section. 17.. The net effect of the aforesaid provisions of law is that unlike the general sales tax, the liability to pay turnover tax, purchase tax and surcharge is on the dealer; but he can neither realise the amount from the purchaser nor claim exclusion of such amounts from the taxable turnover. It is in this perspective that section 46A already quoted in para 5 above assumes significance. Under this section if any person collects any sum by way of tax or purporting to be by way of tax in contravention of section 22(2) or 22(3), he shall be liable to pay penalty and any amounts collected by him by way of tax or purporting to be by way of tax against the bar under section 22(2) or 22(3) shall be liable to be forfeited to the Government. It necessarily follows that under this section the sales tax authority would be justified in forfeiting the amounts collected by a dealer towards turnover tax, purchase tax or surcharge, if such amounts have been collected by the dealer. Further the dealer can also be penalised for su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collected and paid over to the Government on the sale price, the bar created under the provisions mentioned supra will not be attracted. 20.. The aforesaid contention appears to me to be acceptable. For finding out the taxable turnover, one has to look into the bills and find what exactly is the sale price. It does not appear to be open to the assessing authority to go behind the sale price mentioned in the bill and analyse the contents. No reasonable person can be expected to conduct business at a loss. When he has to pay tax in another State besides turnover tax, purchase tax or surcharge, he has necessarily to fix the sale price in such a way that he does not suffer any loss in the business. This is all that the petitioners herein have done. That there is no taboo for doing so is clear from the decision in Indian Oil Corporation Limited v. State of Assam [1999] 112 STC 389 (Gauhati) which has been confirmed in appeal vide decision in Indian Oil Corporation Ltd. v. State of Assam [2001] 123 STC 234 (Gauhati). 21.. None of the bills issued by the petitioners shows that they have realised from the purchasers the turnover tax, purchase tax or surcharge. Only the sale price and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . State of Kerala [1974] 34 STC 73; AIR 1974 SC 2272. While considering the burden of the dealer it was observed in para 12 of the judgment (page 76 in STC) as follows: "The legal incidence of a tax on sale of goods under the Tamil Nadu General Sales Tax Act, 1959, falls squarely on the dealer. It may be that he can add the tax to the price of the goods sold and thus pass it on to the purchaser. " 24.. The learned Government Pleader, during hearing, placed reliance on the decision in S. Rajamani v. State of Tamil Nadu [1980] 46 STC 451 (Mad.). That was a case where the Board of Revenue expressly called upon the dealer to state whether he was prepared to refund the amount illegally collected from the customers. The dealer did not give a straight reply; but tried to put forward the contention that he had passed credit notes in favour of the customers and produced the certificate of posting allegedly for communicating those credit notes to the customers. The Board of Revenue was not satisfied. In the circumstances, it was held that the Board of Revenue was justified in revising the assessment suitably. It is to be mentioned here that it was a case where against the express provi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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