1951 (7) TMI 13 - HC - VAT and Sales Tax

Summary

Issues:
- Application under Section 11 of the Sales Tax Act for direction to Revising Authority to state a case and refer questions of law.
- Applicability of Sales Tax Act to a licensee already paying excise duty.
- Whether imposition of excise duty and sales tax simultaneously is constitutionally permissible.
- Calculation of sales tax without deduction of licence fee from turnover.

Analysis:
The judgment pertains to an application under Section 11 of the Sales Tax Act requesting the Revising Authority to state a case and refer certain legal questions to the Court. The applicant, a business man holding licences for liquor, drug, and opium shops, contested the imposition of sales tax in addition to the excise duty already paid to the State Government. The Sales Tax Officer, the appellate authority, and the Revising Authority had all ruled against the applicant's contention, leading to the present application before the Court.

The Court deliberated on the legality of imposing both excise duty and sales tax simultaneously. It was observed that there is no constitutional prohibition against levying both taxes concurrently. The distinction between excise duty, imposed on manufacturing, and sales tax, levied on transactions, was highlighted. The Court cited precedent to establish that the State Legislature is empowered to levy both taxes under specific entries of the Constitution. The Court clarified that the policy decision of whether it is just to impose both taxes simultaneously falls outside its purview.

Another issue raised was the calculation of sales tax without deducting the licence fee from the turnover. The Court referred to Rule 44 under the Act, which mandates that the tax shall be computed on the net turnover, with specified amounts to be deducted if included in the gross turnover. However, the licence fee did not fall under any deduction category outlined in the rule. Consequently, the Court dismissed the argument regarding the deduction of the licence fee from the turnover for sales tax calculation.

In conclusion, the Court held that the application lacked merit and dismissed it with costs. The applicant was directed to pay a fee to the learned standing counsel. The judgment underscores the legality of imposing excise duty and sales tax concurrently, as well as the specific rules governing the calculation of sales tax on net turnover without deducting the licence fee.