9911796707
TMI Blog1984 (7) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... but something less to provide for sales tax. The Mysore High Court had held that Chunilal Pranjivandas Co. would not be liable to sales tax. Hence, Chunilal Pranjivandas Co. had, therefore, to refund to the assessee that part of the sale/purchase price, which had earlier been retained by them. The assessee and Chunilal Pranjivandas Co. agreed that the amount should be kept as a deposit with the latter at current bank rate of interest. If as a result of any change of law Chunilal Pranjivandas Co. was made liable to pay sales tax, the assessee was to pay equivalent amounts to Chunilal Pranjivandas Co. out of the deposit standing to the credit of the assessee with Chunilal Pranjivandas Co. Chunilal Pranjivandas Co. also agreed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be refunded after Kartak Sud 1, Samvat year 2025 and that for Samvat year 2021, will be refunded after Kartak Sud 1, Samvat year 2026 and so on. (ii) The party of the first part authorises the party of the second part to make payment of any such tax, interest or penalty, which they might be asked to pay as a result of any change in law, rules or issue of any Ordinance or Notification, from the deposit lying with them, as provided in clause (1) or any other amount that may otherwise be due from the party of the second part to the party of the first part. If for any reason whatsoever the party of the second part cannot recover the amount of tax, interest or penalty that they might be asked to pay, the party of the first part jointly and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement prior to sales that the assessee would pay their sales tax. The Commissioner (Appeals) found that for the assessment year 1975-76, a sum of Rs. 2,061 related to the assessee's own liability. For the year 1976-77, the assessee's own liability was Rs. 3,913. The allowability of the rest, viz., Rs. 18,457 for 1975-76, Rs. 42,842 for 1976-77 and Rs. 1,33,853 for 1977-78 was considered by the Commissioner (Appeals). The relevant extracts from his order for 1975-76 are given below : "As regards the balance of Rs. 18,457, the facts of the case are that there was refunds of sales tax for the assessment years 1959-60 to 1962 and the same was demanded back by the Commercial Tax Officer, in view of the Amendment Act 28 of 1969. The appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r hand, submitted that the assessee did not receive the full sale proceeds of cotton sold by it in the first instance. Part of the purchase price payable by Chunilal Pranjivandas Co. was retained by it, but as a deposit on behalf of the assessee subject to the discharge of any future sales tax liability that might arise. Such a contingency arose during the relevant years of account. The credit not received by the assessee was bifurcated into the amounts receivable towards sales effected in various years and were taxed as per the directions of the Tribunal in its order in IT Appeal No. 318 (Bang.) of 1979. The agreement between the assessee and Chunilal Pranjivandas Co. stipulated that the liability was to be met out of the sum of Rs. 3, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w much of it relates to each of the years over which the transactions have taken place and then tax them in the respective years. But the question here is the liability which the assessee has now to discharge. Since Chunilal Pranjivandas Co. had to pay sales tax, it would have deducted the corresponding amount from the amounts it had to pay to the assessee. At the time the agreement was entered into, there was no sales tax liability. Therefore, part of the sale proceeds of the assessee was treated as a deposit in favour of the assessee and retained by the purchaser. In case of any liability arising in future, that had to be adjusted against the deposits held. In other words, the assessee would, ultimately, receive the amount held in depos ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
