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1978 (2) TMI 199 - HC - VAT and Sales Tax
Issues Involved:
1. Inclusion of sales made through commission agents in the gross turnover. 2. Estimation of turnover of molasses. 3. Determination of liability to pay sales tax based on gross turnover. Issue-wise Detailed Analysis: 1. Inclusion of Sales Made Through Commission Agents in the Gross Turnover: The primary issue was whether the sales of khandsari sugar, on which Central excise duties had been paid and which were effected through commission agents, should form part of the gross turnover of the assessee for the assessment year 1966-67. The court examined the provisions of the U.P. Sales Tax Act, particularly section 3, which imposes a tax on the turnover of a dealer, and section 2(i), which defines "turnover" to include the aggregate amount for which goods are sold, either directly or through another. The court emphasized the distinction between liability to tax and payability of tax, noting that while the former is determined based on gross turnover, the latter is based on net turnover after deductions. The court concluded that all sales, including those made through commission agents, must be aggregated to determine the gross turnover and, consequently, the liability to tax. The court referred to previous judgments, including Commissioner of Sales Tax v. Allied Chemicals and Commissioner of Sales Tax v. Ganga Ram Ghurey Lal, which supported the inclusion of such sales in the gross turnover. The court dismissed the reliance on Commissioner of Sales Tax v. Mithulal Murlidhar, declaring it per incuriam, as it did not consider earlier relevant decisions. 2. Estimation of Turnover of Molasses: The assessee contested the estimation of the turnover of molasses by the Assistant Sales Tax Officer, who had estimated it at Rs. 28,000. The Assistant Commissioner (Judicial) reduced this estimate to Rs. 13,000, and the Additional Judge (Revisions), Sales Tax, further reduced it to Rs. 12,000. The court did not delve deeply into this issue in the judgment, suggesting that the final estimation by the Additional Judge (Revisions) was accepted. 3. Determination of Liability to Pay Sales Tax Based on Gross Turnover: The court examined the process of determining the liability to pay sales tax, which involves calculating the gross turnover to ascertain if it exceeds the minimum taxable limit of Rs. 12,000. If the gross turnover exceeds this limit, the dealer is liable to pay tax, subject to deductions to determine the net turnover. The court reiterated that the liability to tax must be determined based on the gross turnover, including all sales made directly or through commission agents. The court referred to rules 8 and 44 of the Sales Tax Rules, which distinguish between gross turnover for determining liability and net turnover for computing the payable tax. The court concluded that the sales of sugar through commission agents should be included in the gross turnover to determine the liability to tax. Conclusion: The court answered the referred question in the negative, holding that the sales of khandsari sugar made through commission agents should be included in the gross turnover of the assessee for determining the liability to tax. The judgment was in favor of the department and against the assessee, with no order as to costs due to the absence of representation for the assessee. The reference was answered in the negative.
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