TMI Blog1971 (10) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... nd held that the amounts included in the bills under the head "excise duty" did not form an allowable deduction in computing the taxable turnover and the assessment was made on that basis. The petitioner has sought to quash exhibit P-4 and has also prayed for a declaration that the Notification, exhibit P-5, dated 28th December, 1965, published by the State Government in the Kerala Gazette dated 29th December, 1965, amending the Kerala General Sales Tax Rules, 1963, by deleting clause (i) of rule 9 is illegal and ultra vires. 2.. Another head of deduction which the petitioner had claimed before the assessing authority was with respect to the freight charges incurred by the company for transporting the liquor to Ernakulam and that was also disallowed by the 2nd respondent in exhibit P-4. The petitioner challenges the legality of the action taken by the 2nd respondent in including in the taxable turnover amounts collected by him from his customers by way of such inward freight charges. 3.. Under section 5 of the General Sales Tax Act, 1963, hereinafter referred to as the Act, every dealer whose total turnover for a year is not less than ten thousand rupees, shall pay tax on his t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd any amount refunded in respect of articles returned by customers shall not be included in the turnover; and (iii) where for accommodating a particular customer, a dealer obtains goods from another dealer and immediately disposes of the same to the said customer, the sale in respect of such goods shall be included in the turnover of the latter dealer but not in that of the former." According to the above definition the aggregate amount for which goods are either bought or sold or supplied or distributed by a dealer will constitute his turnover for the purposes of the Act. Where the taxing point is the sale point, the aggregate amounts for which the goods are sold or supplied will be the turnover in respect of the transactions of sale. The expression "total turnover" has been defined as meaning the aggregate turnover in all goods of a dealer at all places of business in the State, whether or not the whole or any portion of such turnover is liable to tax, including the turnover of purchase or sale in the course of interState trade or commerce or in the course of export of the goods out of the territory of India or in the course of import of the goods into the territory of India. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourse of inter-State trade or commerce); and the tax under this Act shall be levied in addition to any tax levied under the Central Sales Tax Act, 1956 (Central Act 74 of 1956), or any other law for the time being in force." The petitioner's advocate sought to derive support for his contention from the last portion of the above section which states that the tax under this Act shall be levied in addition to any tax levied under the Central Sales Tax Act, 1956, or any other law for the time being in force. It is urged that the words "in addition to" must be understood as meaning "inclusive of" and that if construed in that manner the conclusion that should necessarily follow is, that in levying sales tax under this enactment the amount of "any tax levied under any other law for the time being in force" should not be included as part of the turnover of a dealer for the purposes of computing the sales tax. On this reasoning, counsel submitted that the assessing authority was bound to allow a deduction in respect of amounts paid by way of excise duty since the excise duty is a tax. 6.. I do not find it possible to uphold the above contention put forward by the petitioner's counsel b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e aggregate amounts for which the goods are sold or supplied by the petitioner will constitute his turnover and the entirety of it will form his taxable turnover except to the extent to which any portion thereof falls within the items of allowable deduction enumerated in rule 9. Since under the said rule, as it now stands, amount representing the excise duty paid to the Central Government is not a permissible item of deduction, it cannot be excluded in determining the taxable turnover for the purposes of the Act. It is true that originally the rule-making authority had incorporated in the Rules a provision in clause (i) of rule 9 authorising deduction in respect of amounts paid by way of excise duty. The fact that subsequently the rule has been amended by deleting the said provision is relied on by the petitioner as constituting the imposition of a new tax. This argument is clearly fallacious because what was done as per the amendment was only the withdrawal of an exemption. The very fact that an exemption had to be originally provided for necessarily implies that but for the said exemption that portion of the turnover was liable to be taxed under the Act. Hence, there is absolutel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S.C.)., where a contention had been taken that the levy of sales tax on the turnover of a dealer which included purchase tax paid by him and passed on to his customer was illegal. Rejecting that contention, their Lordships held that when a sale attracts purchase tax and the tax is passed on to the consumer, what the buyer has to pay for the goods includes the tax as well and the aggregate amount so paid would fall within the definition of turnover and was taxable. Their Lordships quoted with approval the dictum of Lawrence, J., in Paprika Ltd. and Another v. Board of Trade[1944] 1 All E.R. 372. , wherein the learned judge had said: "Whenever 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." Reference was also made to the decision of Goddard, Lord Justice, reported in Love v. Norman Wright (Builders) Ltd.[1944] 1 All E.R. 618., wherein the learned Lord said thus: "Where an article is taxed, whether by purchase tax, customs duty, or excise duty, the tax becomes part of the price which ordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13.. It now only remains to examine the further point raised by the petitioner, namely, that the company ought to have been allowed deduction in respect of the freight charges incurred by it for bringing the liquor to Ernakulam from the place of manufacture which amounts had been separately shown in the invoices relating to the transactions of sale included in the turnover. This subject is again directly covered by two decisions of the Supreme Court, one of which was rendered in a case where the petitioner himself was a party. The earlier decision is reported in Dyer Meakin Breweries Ltd. v. State of Kerala[1970] 26 S.T.C. 248 (S.C.)., wherein their Lordships held that the expenditure incurred by the dealer by way of freight and handling charges prior to the sale was a component of the price for which goods were sold and the dealer was not therefore entitled to deduction thereof under rule 9(f) of the Kerala General Sales Tax Rules, 1963. The same principle was restated and applied by the Supreme Court in D.C. Johar Sons (P.) Ltd. v. Sales Tax Officer, Ernakulam, and Another[1971] 27 S.T.C. 120 (S.C.)., which was a decision rendered in an appeal preferred by the petitionercompany ..... X X X X Extracts X X X X X X X X Extracts X X X X
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