TMI Blog1962 (11) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... s admittedly a person liable to pay sales tax. It submitted returns showing gross turnover of Rs. 2,36,432-14-9, which amount included a turnover of about Rs. 7,000 on account of sale of cloth purchased in U.P. Therefore, the net turnover on which it was liable to pay tax was, according to the returns, Rs. 2,29,579-12-6. During the assessment proceedings the Sales Tax Officer did not accept the figure of the gross turnover and estimated, according to his best judgment, at Rs. 2,60,000. This amount included Rs. 72,000 and odd on account of sale of the business but he assessed the assessee on Rs. 2,60,000 without excluding the sale proceeds of the business from the turnover. On appeal the Judge (Appeals) reduced the amount of the gross turnover from Rs. 2,60,000 to Rs. 2,00,000. He further held that sale proceeds of the business should not be included in the turnover on which tax was payable. But he fixed the amount of the turnover on which tax was liable at Rs. 2,00,000 instead of at Rs. 1,87,000 and odd. Why he deducted only Rs. 60,000 and not Rs. 72,000 and odd is not known. The assessee submitted itself to the order passed by the Judge (Appeals) but the Commissioner of Sales Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain goods from being taxed even though they are turnovers. The general provision in section 3 that a dealer shall pay a tax on his turnover is subject to these provisions, i.e., he is not required to pay a tax on the turnover in respect of the sales mentioned in them. Under section 24 of the Act the State Government have the power to make rules to carry out the purposes of the Act and in particular providing for all matters expressly required or allowed by the Act to be prescribed. Among the rules made by the State Government in exercise of this power is rule 44, the material portion of which is as follows: "The tax under section 3 shall be computed on the net turnover. In determining the net turnover the amounts specified below shall be deducted if they are included in the gross turnover: .................................................... (d) all amounts for which goods exempted under section 4(1)(a) of the Act are sold; (e) the sale proceeds of goods covered by an exemption certificate under section 4(1)(b), on condition that ..... (f) all amounts realised by a dealer on account of the sale of his business as a whole; and (g) all amounts realised by the sale of good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they do not have to make a rule exempting them from the tax; the notification issued by them is sufficient authority. What amounts to a turnover or what is to be included, or not to be included, in a turnover is one matter and how the amount of a turnover is to be determined or worked out, another matter. It is the latter matter, and not the former, that is entrusted to the State Government. The Legislature having itself determined what should be included and what should not be included in a turnover and having empowered separately the State Government to exempt certain goods from the tax would not have called upon the State Government to make rules laying down what sale proceeds should be included, and what should not be included, in a turnover. Providing that the tax shall, or shall not, be levied on goods is essentially a legislative function and cannot be validly delegated to the State Government. What can be delegated is the prescribing of the manner in which the assessment is done. Deciding that proceeds of sale of certain goods shall be included, or shall not be included, in a turnover was not within the rule-making power of the State Government; what they could do was only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If a dealer carrying on a business in certain goods sells the entire business, he has not to rely upon this clause and plead that the proceeds of the sale are to be "deducted" from the turnover for purposes of taxation; they are not to be included in the turnover at all. The heading of rule 44 is "deductions from turnover"; this means that whatever is to be deducted is a turnover. One cannot deduct from a turnover something which is not a turnover. Therefore, to say that proceeds of the sale of the dealer's entire business are to be deducted from his turnover is meaningless; they are not to be included in the turnover because they never came within its meaning. Even otherwise in interpreting clause (f), one should not be guided at all by the contents of other clauses, such as (d), (e) and (g), which deal with proceeds of sale on which no tax is payable at all under the Act itself. The various provisions of the Act exempting turnovers are independent of one another and no two of them are mutually exclusive. The question referred to us does not make much sense; when the business which the dealer is carrying on is itself sold, it is not goods and there cannot arise any question of it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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