Deputy Commissioner of Agricultural Income Tax and Sales Tax vs S. Veeriah Reddiar

This petition by the Department challenges the decision of the Sales Tax Appellate Tribunal in T. A. No. 98 of 1960 to the effect that the sales tax collected by the assessee from his customers is not liable to assessment even though it had not been shown as a separate item in the bills issued by him. The year concerned is 1956-57, and the amount of sales tax collected in respect of which relief was denied amounts to Rs. 43,460.

The controversy centres round Rule 7 of the General Sales Tax Rules, 1950. The relevant portion of that rule reads as follows :-

(i) The tax or taxes u/s 3 or 5 or the notifications u/s 6 shall be levied on the net turnover of a dealer. In determining the net turnover, the amounts specified in Clauses (a) to (k) shall, subject to the conditions specified therein, be deducted from the gross turnover of a dealer :-

(k) all amounts of sales tax collected by the dealer.

The assessing authority said :

So long as the sales tax has not been shown separately in the bill, no allowance can be given for that amount. The relevant amounts will therefore be added back to the admitted turnover.

The Appellate Assistant Commissioner affirmed the conclusion. The Appellate Tribunal said :

It may be observed that there is no condition attached to (k). Therefore all amounts of sales tax collected by the dealer should be deducted from his gross turnover in arriving at the net turnover taxable. It is obvious that the observation of the assessing authority that so long as the sales tax has not been shown separately in the bill, no allowance can be given for that amount, is incorrect. In Rule 7(1)(k) there is no condition that the sales tax collected should be shown separately.

We agree with the Appellate Tribunal that in the absence of a stipulation in Rule 7(1)(k) to the effect that the sales tax collected should be shown separately, the fact that the sales tax collected was not thus shown will not preclude the assessee from claiming the deduction. That the General Sales Tax Rules, 1950, specifically provide for an item being shown as a separate item when considered necessary is clear from Rule 7(1)(g) which says :

All amounts falling under the following two heads, when specified and charged for by the dealer separately, without including them in the price of the goods sold-

(i) freight ;

(ii) charges for packing and delivery and other such like services.

The T. R. C. fails and is dismissed. No costs.