Patna High Court
The Tinplate Company Of India Ltd. vs State Of Bihar on 18 October, 1955
Equivalent citations: AIR1957PAT298, [1957]8STC532(PAT), AIR 1957 PATNA 298
ORDER
1. In this case the assesses is an incorporated company namely, the Tinplate Company of India, Limited, carrying on business of manufacturing tinplates at Golmuri in the district of Singhbhum for the period from the 1st of April 1949 to the 3lst of March, 1950. The assessee submitted a return showing gross turnover of Rs. 5,12,37,262/15/6, but the sales-tax authorities determined that the gross turnover was Rs. 5,16,41,117/15/6. During the period in question, the assessee realised a sum of Rs. 4,03,855 as sales tax from its customers.
It was held by the sales-tax authorities that the amount of sales-tax realised by the assessee should also be shown in the gross turnover for the purpose of being assessed to tax. The assessee raised an objection before the Sales Tax Officer and also before the Commissioner of Sales Tax and the Board of Revenue that there was no liability to pay sales-tax on the amount of Rs. 4,03,855/-. This contention was rejected by all these authorities. At the instance of the assessee the Board of Revenue has submitted the following question of law for the opinion of the High Court under Section 25 (1) of the Bihar Sales Tax Act (Bihar Act 19 of 1947);
"Does the 'sale price' as defined in the taxing statute include the amount charged and realised by the assessee dealer as "sales-tax" in addition to the controlled price fixed by the Government?"
2. On behalf of the assessee Mr. Bhabananda Mukherji nut forward the argument that the sales tax authorities were not legally right in including the amount of sales-tax realised from the customers in the taxable turnover of the assessee. It was submitted that the payment of sales-tax by the consumers was not a part of the bargain and sale and that the amount of sales-tax was not a part of the price of the goods sold, and that the dealer merely collected the sales-tax from the customer and paid it to the Government under Section 14 of the Bihar Sales Tax Act.
Counsel also referred to Section 14A which was for the first time enacted by Bihar Act 6 of 1949. Section 14A provides that a registered dealer may realise any amount by way of tax on sale of goods from purchasers in accordance with such restrictions and conditions as may be prescribed. Reference was made to Section 14 (6) which says that any amount of tax imposed upon the dealer shall be recoverable as arrear of land revenue. It was also contended that "sale price" was defined in section 2 (h) of the Bihar Sales Tax Act to mean the amount payable to a dealer as valuable consideration for the sale or supply of any goods.
Section 2 (i) defines "turnover" to mean the aggregate of the amounts Of sale-prices receivable by a dealer in respect of sale or supply of goods or carrying out of any contract. On the basis of all these provisions the argument addressed on behalf of the assessee was that the amount collected by the registered dealer, from the customers as sales tax and paid over to Government cannot be treated as part of the purchase price under Section 2(h) and so does not constitute part of the taxable turnover of the registered dealer. In our opinion this argument must be accepted as correct.
In a recent decision of a Division Bench of this Court in the case of Messrs. Tata Iron and Steel Co., Ltd, v. State of Bihar, M.J.C. 577 of 1953, D/- 17-10-1955: (AIR 1956 Pat 92) (A), it was held that after the enactment of Bihar Act 6 of 1949 and the insertion o£ section 14A by the amended Act, the sales-tax authorities were not legally entitled to include sales-tax in the taxable turnover of the assessee. It was also pointed out in that case that the previous decision of this Court in Messrs. Kaniram Janki Das v. The State of Bihar, AIR 1953 Pat 10 (B), was distinguishable because there was no provision by the statute at that time which empowered the registered dealer to realise sales tax from the purchaser, and in the absence of such a provision it should be taken that the entire amount payable by the purchaser including sales-tax was the sale price of the goods supplied. But the basis of this decision disappeared after the enactment of section 14A by the amending Act, namely, Bihar Act 6 of 1949. As the statute stands at present, in our opinion the sales tax authorities are not legally entitled to include sales tax in the taxable turnover of the assessee. That is the view taken by the Division Bench of this Court in MJ.C. 577 of 1953: (AIR 1956 Pat 92) (A), judgment of which was pronounced yesterday, and we are bound by the authority of this decision.
3. For these reasons, we hold that 'sale price' as defined in the Bihar Sales Tax Act does not include the amount charged by the assessee dealer as sales-tax, and the question referred by the Board of Revenue to the High Court must be auswered in favour of the assessee and against the State of Bihar.
4. We direct the State of Bihar to pay the costs of this reference. Hearing fee Rs. 250/.