TMI Blog1954 (6) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... ving the contention of the State in O.P. No. 69 of 1952. The reasoning adopted by the learned Judge has since been quoted with approval by a Division Bench of the Madras High Court in Deputy Commissioner of Commercial Taxes, Coimbatore Division v. Krishnaswami Mudaliar Sons(1), wherein it was held that the amount collected by a registered dealer from a purchaser by way of sales tax did not form part of his turnover and was not liable to be taxed under the corresponding provision of the Madras General Sales Tax Act, 1939. (1) [1954] 5 S.T.C. 88. 2.. Our attention has been drawn to the fact that the decision of the High Court of Madras has apparently been accepted as correct by that State by its choice of legislative action to confine t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining the net turnover, the amounts specified in clauses (a) to (k) shall, subject to the conditions specified therein, be deducted from the gross turnover of a dealer." In the sub-rule as it originally stood the tax collected by a registered dealer was not one of the permitted items of deduction but by a notifica- tion dated the 31st March, 1951, the following clause was added as clause (1) to the said sub-rule: "All amounts of sales tax collected by the dealer." The amendment does not in terms apply to the present case as the period with which we are concerned in anterior to the date of the amend- ment; but it was contended by the State that the introduction of the amendment would itself indicate that but for such amendment the tax collec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or collects any amount by way of tax under this Act on or after the date prescribed under the proviso to sub-clause (1) shall pay over to Government all amounts so collected by him if they are in excess of the tax, if any, paid by him for the period during which collections were made; and in default of such payment, the amounts may be recovered as if they were arrears of land revenue" and sub-rules (8), (9) and (10) of rule 8 read as follows: "(8) A registered dealer may collect amounts by way of tax or taxes under the Act subject to the following conditions: (i) He shall not collect any amount or amounts by way of tax or taxes under the Act at a rate or rates exceeding the rate or rates specified in Section 3 or 5 or notified under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee reported cases other than the judgments under appeal and of the Madras High Court in Deputy Commissioner of Commercial Taxes, Coimbatore Division v. Krishnaswami Mudaliar Sons(1), in which the question of liability to tax on tax arose for consi- deration. The earliest is Bata Shoe Co., Ltd. v. Board of Revenue, West Bengal(2), where the question arose under the Bengal Finance (Sales Tax) Act, 1941. There is no provision like Section 11 of the Travancore- Cochin General Sales Tax Act, 1125, in that enactment and the con- clusion of the Calcutta High Court was that the sales tax collected in such circumstances only augments the price of the article sold by the amount payable as tax on such a sale and that the total amount which a purchaser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obligation imposed by the State upon transactions of sale which liability is to be borne by the purchaser and the amount is to be collected by the seller not because he is entitled to it in his capacity as seller but because an obligation has been enjoined upon him to make the collection under the statute." 10.. The primary liability to pay the sales tax to the State in a case like this is that of the dealer and what the statute does is not to enjoin a duty to collect but to extend a privilege of so collecting and a dealer will be well within his rights if he decides to waive the privilege and bear the tax. As to whether the mere factum of collection without any reference to the attendant circumstances will compel him to pay all the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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