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TMI Blog1972 (5) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and in the circumstances of the case, the sum of Rs. 1,30,045 represents income of the assessee for the assessment year 1958-59 ?" - - - - - Dated:- 4-5-1972 - Judge(s) : R. L. GULATI., C. S. P. SINGH. JUDGMENT The judgment of the court was delivered by GULATIJ. - This is a reference under section 256(1) of the Income-tax Act, 1961. The assessee is a partnership firm which carried on wholesale business in cloth. During the previous year relevant to the assessment year 1958-59, it collected from its customers sales tax amounting to Rs. 4,46,944 and paid a sum of Rs. 3,16,899 to the sales tax department leaving a balance of Rs. 1,30,045. The Income-tax Officer treated the sum of Rs. 1,30,045 as the assessee's income for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he computation of the assesssee's income. The Tribunal has further observed that the Sales Tax Act imposed an obligation on the assessee to collect sales tax from its customers and to pay the same to the sales tax authorities at specified intervals. According to the Tribunal both at the time the sales tax was collected as also at the time when the tax so collected was paid to the Government, there was a valid statute in force. It further held that the true nature of the amount both at the time of collection and till s uch time as it was actually paid to the sales tax authorities remained as money in trust with the assessee and at no point of time such collections could be treated to be the assessee's income. The short question that we have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of the Bihar Sales Tax Act, authorising the Government to forfeit the sales tax collected by a registered dealer in excess of his statutory liability, the Supreme Court observed as follows in paragraph 11 : " In either case the liability to pay tax under the Act lies upon the dealer: he does not collect any tax for and on behalf of the Government. The dealer may ;recover from the purchaser the tax payable by him as part of the price, but on that account the purchaser is not the person liable to pay tax on the sale to the State." In Delhi Cloth and General Mills Co. Ltd. v. Commissioner of Sales Tax, a question arose before the Supreme Court as to whether the sales tax realised by a dealer was a part of the price of goods sol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly borne out from the following observations of the Supreme Court in the case of Tata Iron Steel Co. Ltd. v. State of Bihar. " The circumstance that the 1947 Act, after the amendment, permitted the seller who was a registered dealer to collect the sales tax as a tax from the purchaser does not do away with the primary liability of the seller to pay the sales tax. This is further made clear by the fact that the registered dealer need not, if he so pleases or chooses, collect the tax from the purchaser and sometimes by reason of competition with other registered dealers he may find it profitable to sell his goods and to retain his old customers even at the sacrifice ofthe sales tax. This also makes it clear that the sales tax need not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rever a sale attracts 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." To the same effect is the observation of Goddard L.J. in Love v. Norman Wright (Builders) Ltd. : "Where an article is taxed, whether by purchase tax, customs duty or excise duty, the tax becomes part of the price which ordinarily the buyer will have to pay. The price of an ounce of tobacco is what it is because of the rate of tax, but on a sale there is only one consideration, though made up of cost plus profit plus tax. So, if a seller offers goods for sale, it is for him to quote a price w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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