1982 (12) TMI 163 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of Section 8A of the Central Sales Tax Act regarding deduction of Central sales tax from aggregate sale prices.

Analysis:
The judgment of the High Court of Andhra Pradesh involved the interpretation of Section 8A of the Central Sales Tax Act regarding the deduction of Central sales tax from aggregate sale prices. The case arose from the disallowance of an assessee's claim for deduction of a sum of Rs. 2,23,439 under Section 8A by the Sales Tax Appellate Tribunal. The assessee had entered into inter-State transactions of sale of cotton and claimed deduction on account of Central sales tax for a turnover of Rs. 76,71,405.75. The Tribunal held that the deduction under Section 8A applies only if the dealer establishes that the aggregate sale price includes Central sales tax. The petitioner contended that the formula in Section 8A should be applied regardless of whether Central sales tax is shown to be collected or not.

The Court referred to the definitions of "sale price" and "turnover" under the Central Sales Tax Act, emphasizing that turnover includes the sales tax component. The purpose of Section 8A is to avoid tax on tax by deducting Central sales tax from the aggregate turnover. The formula in Section 8A is applicable only when Central sales tax forms part of the aggregate sale price and needs to be separated. The proviso clarifies that the formula does not apply if Central sales tax has already been deducted.

The Court rejected the petitioner's argument that Central sales tax should be deducted regardless of collection, stating that such deduction would reduce the sale price, which is not intended by the Act. The Court held that the formula in Section 8A applies only when Central sales tax is shown to have been collected and forms part of the aggregate sale price. Since the petitioner failed to prove inclusion of Central sales tax in the turnover, the formula could not be applied. The Court affirmed the Tribunal's decision, dismissing the tax revision case.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing that the formula in Section 8A of the Central Sales Tax Act applies only when Central sales tax is shown to have been collected and forms part of the aggregate sale price. The judgment clarifies the application of the deduction provision and highlights the importance of establishing the inclusion of Central sales tax in the turnover for claiming the deduction under Section 8A.