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TMI Blog2004 (7) TMI 630X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of the Karnataka Sales Tax Act, 1957 ( the KST Act , for short) and the Central Sales Tax Act, 1956 ( the CST Act , for short), dealing in copper, copper sulphate, etc. For the assessment year 1993-94, the assessee had filed its annual returns, declaring its total turnover and taxable turnover and also had claimed certain exemption and deductions on the sales tax collected separately in its invoices, transactions governed under CST Act and the entry tax collected on the sale of copper and allied products, on the ground, that it had not included the same on the sale price of the goods sold as it had not collected sales tax on this component of entry tax. The assessing authority being of the view that the entry tax component forms part and parcel of the sale price of goods sold by the assessee, proposed to reject the returns filed by the assessee as incorrect and proposed to levy sales tax and turnover tax on the entry tax component collected at the appropriate rate. Accordingly, the assessing authority issued a pre-assessment notice directing the assessee to file its objections, if any, to the proposal made in the pre-assessment notice. The proposal made was objected to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nior Counsel appearing for the respondent in S.T.R.P. No. 102 of 1999 and Sri Indrakumar, learned counsel appearing for the respondent in S.T.R.P. Nos. 50 and 51 of 2000 by placing heavy reliance on section 3A of the Karnataka Entry Tax Act, 1979, submit that the dealer is authorised to collect tax as an agent of the State Government and therefore, the entry tax so collected from the purchasers would not form part and parcel of the sale price for the goods sold by the assesseedealers. In support of this submission, the learned Senior Counsel relies on the law laid down by the Supreme Court in the case of Anand Swarup Mahesh Kumar's case [1980] 46 STC 477 and the observations made by a Division Bench of this court in Karnataka Forest Plantation Corporation's case (STRP Nos. 16 and 17 of 1988 disposed of on March 13, 1992). In sum and substance, the contention of the assessee-dealers in these revision petitions is that the amount of entry tax collected cannot be treated as pre-sale value of the goods as it is a statutory liability and that the element of entry tax collected separately in the sale bills do not form sale price and that the collection of entry tax is made bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealer and has levied tax. The question now is, whether the assessing authority was justified in including the entry tax collected by the assessee-dealer in the taxable turnover of the dealer for the purpose of calculating tax liability of the assessee-dealer? Now let us first refer to the decision on which strong reliance is placed by the learned Senior Counsel Sri Sarangan appearing for the respondent in S.T.R.P. No. 102 of 1999 and Sri Indra Kumar, learned Counsel appearing for the respondent in S.T.R.P. Nos. 50 and 51 of 2000. Anand Swarup Mahesh Kumar's case [1980] 46 STC 477 (SC), was considered and distinguished by the Constitution Bench of the Supreme Court in McDowell Company Limited v. Commercial Tax Officer [1985] 59 STC 277. In the said decision, the court has observed that in Anand Swarup Mahesh Kumar's case [1980] 46 STC 477 (SC), the court was considering the liability for sales tax under the corresponding U.P. Act in respect of a dealer carrying on business at Mandi Anand Ganj, Baraut in the District of Meerut. The sales tax authorities had included in the dealer's purchase turnover market fee and the commission payable to the commission agent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orest Tax Act. The section makes it abundantly clear that the tax payable by the purchaser of forest produce and the petitioner-Corporation is only obliged to collect the same for and on behalf of the State Government by virtue of section 98A of the Karnataka Forest Tax Act. In Our view, the law laid down in the aforesaid two cases is primarily based on the existence of the statutory provision giving authority to the dealer to collect the tax payable on the transaction from the purchasers. Therefore, where a dealer is authorised by law to pass on any tax payable by him on the transactions of sale to his purchasers, such tax does not form part of the sale price. But where there is no such statutory provision authorising him in that behalf, the tax does form part of the consideration when he includes it in the price and realises the same from the purchaser. Keeping these aspects in view, let us consider the contentions canvassed by the learned Senior Counsel for the assessee-dealer. The learned Senior Counsel's primary contention is that in view of section 3A of the KTEG Act, 1979, the assessee-dealer is obliged to collect tax. In so far as this fact is concerned, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be the component of sale price for the purpose of sales tax legislation is explained by the Supreme Court in number of cases. In our view, it would be sufficient to refer to the law laid down by the apex Court in the case of Hindustan Sugar Mills Ltd. v. State of Rajasthan [1979] 43 STC 13, Central Wines v. Special Commercial Tax Officer [1987] 65 STC 48 and E.I.D. Parry (I) Ltd. v. Assistant Commissioner of Commercial Taxes [2000] 117 STC 457. In Hindustan Sugar Mills Ltd.'s case [1979] 43 STC 13, the Supreme Court has held that the sale price would include all the amounts which are payable by the purchaser for the sale of goods. In Central Wines v. Special Commercial Tax Officer [1987] 65 STC 48, the Supreme Court has observed (page 53): . . . 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 do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of mortgage, hypothecation, charge or pledge by one person to another in the course of trade or business for cash or deferred payment or other valuable consideration. Section 2(v) read with Explanation (ii) of the Act would define the meaning of the expression turnover to mean the aggregate amount for which goods are bought or sold for cash or deferred payment or valuable consideration. The amount for which goods are sold would include any sums charged for anything done by the dealer in respect of the goods sold at the time of or before the delivery thereof. Section 2(u1) of the Act defines the meaning of taxable turnover ascertainable after deduction from the turnover as prescribed under rule 6 of the Rules. Rule 6(4) of the rules provides for determining the taxable turnover. The said rule envisages that all amounts specified in clauses (a) to (p) of the sub-rules subject to the conditions specified therein be deducted from the total turnover (a) to (e) of sub-rule (1). Apart from other permissible deductions, rule 6(4)(h) authorises the deductions of all amounts collected by way of tax under the Act by a dealer. In view of these definition clauses in the Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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