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TMI Blog1972 (9) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... ndhra Pradesh) Rules, 1957, in respect of the turnover of inter-State sales. The total turnover of inter-State sales of butter and ghee for that year was Rs. 2,15,902.34. In the sale bills, the assessee certified that "the turnover mentioned in item 'S' of this bill is liable to tax at our end and will be included in the return of turnover due to be submitted by us to the commercial tax authorities". The assessee, at the time of filing the monthly returns, remitted the sales tax to the State Government along with C forms. In the course of the assessment proceedings, the assessee claimed the exemption of the turnover of its inter-State sales in respect of butter and ghee on the ground that it had not collected tax from its buyers. The Commercial Tax Officer, relying upon the conduct of the assessee in returning the turnover and paying the tax thereon and in issuing certificates to the effect that the turnover of the goods in the bills are liable to tax at their end and will be included in the return of turnover due to be submitted by them to the commercial tax authorities, rejected the claim of the assessee holding that the non-collection of tax from the buyers was not on the grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or such part of the turnover relating to such sale. (2) For the purposes of sub-section (1), the burden of proving that no tax was collected under the principal Act in respect of any sale referred to in sub-section (1) or in respect of any portion of the turnover relating to such sale shall be on the dealer effecting such sale." Before examining the scope and application of section 10 of the amending Act, it is profitable to indicate the scheme and object of the amending Act. Prior to the decision of the Supreme Court in State of Mysore v. Lakshminarasimhiah Setty and Sons(1), there was a conflict of opinion amongst several High Courts about the liability of inter-State sales to be taxed under the Central Sales Tax Act. Such controversy was put an end to by the Supreme Court in Lakshminarasimhiah Setty's case(1). Therein the transactions in respect of powerloom and handloom textiles not liable to be taxed under the Mysore sales tax law were held to be also not liable to be assessed under the Central Sales Tax Act. The expression "levied" in section 9(1) of the Central Act and in section 5(3)(a) of the State Act was given one and the same interpretation on the ground that no dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax in certain cases. It is, no doubt, the assessee that should bring his case within the provisions of section 10(1) of the Act in order to take benefit of the exemption provided therein. That apart, sub-section (2) to section 10 of the Act makes it abundantly clear that the onus to prove that no tax was collected under the principal Act in respect of any sale referred to in section 10(1), shall be on the dealer effecting such sale. In order to avail the exemption provided under section 10(1) of the Act, the dealer has to establish the following ingredients: (i) the transaction of any sale of goods must be in the course of inter-State trade or commerce; (ii) the transactions or sales should have been effected during the period between 10th November, 1964, and 9th June, 1969; (iii) the dealer effecting such sale or transaction has not collected any tax under the principal Act; (iv) the ground for noncollection of the tax under the principal Act must be that no tax could have been levied or collected in respect of such sale or any portion of the turnover relating to such sale; and (v) no such tax could have been levied or collected if the amendments made in the principal Act by the O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the ground that such tax was not liable to be paid. That apart, the conduct of the assessee cannot be a basis to make him liable to pay sales tax on the transactions which are not assessable to tax as per the provisions of the statute. Mere admission or conduct of a dealer cannot be a valid ground for the levy of sales tax. The basis for the levy of sales tax or any tax under a fiscal statute must be in accordance with the provisions of the charging section or sections. Where a sale transaction is not assessable to tax under the charging provisions of the statute, the State is not entitled either to levy or collect tax on such sales. The right to levy and collect tax must be justified under a valid enactment. The State cannot take advantage of the conduct or wrong impression of a citizen in levying or collecting tax under a fiscal enactment. A citizen, who on an erroneous impression that he was liable to pay certain amount and pays the same, is certainly entitled to have a refund of such amounts as the State is not entitled to retain such amounts. Hence, we are not impressed with the submission of the counsel appearing for the sales tax department. We shall now turn to the subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit of exemption of tax provided therein. This view of ours gains support from a decision of the Mysore High Court in Rallis India Ltd. v Commercial Tax Officer, Bellary[1970] 26 S.T.C. 36., wherein a dealer in cotton collected sales tax on sales of cotton in inter-State transactions effected during 10th November, 1964, and 1st March, 1968. Subsequently, the amounts of sales tax illegally collected has been refunded to its customers. The sales tax authorities sought to collect Central sales tax by virtue of the substituted provisions of section 9 of the Act and the question whether the dealer therein was or was not entitled to the exemption under section 10(1) of the Act fell for decision before a Division Bench of the Mysore High Court. The claim of the dealer for exemption under section 10(1) of the Act was upheld. The contention advanced on behalf of the sales tax authorities that the tax had been collected and the refund of the amount subsequently by the dealer to its customers would not in any way entitle the dealer to have the benefit of section 10(1) of the Act was negatived. The learned Govinda Bhat, J., who spoke for the court, observed at page 38 as follows: "If the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. Such a differentiation would be unconstitutional." We shall now turn to Tata Iron & Steel Co. Ltd. v. The State of Bihar[1958] 9 S.T.C. 267 (S.C.). , Love v. Norman Wright (Builders) Ltd.[1944] 1 K.B. 484. and Spencer & Co. Ltd. v. The State of Mysore(4) relied upon by the counsel appearing on behalf of the State. In Tata Iron & Steel Co. Ltd. v. The State of Bihar[1958] 9 S.T.C. 267 (S.C.)., the contention raised by the Attorney-General that sales tax is an indirect tax on the consumer did not find favour with the majority view expressed by the Supreme Court. The liability to pay sales tax is on the seller. The seller or registered dealer is entitled to collect tax from its customers on the sales effected by him. But he may or may not charge sales tax. None prevents him from not collecting the sales tax if he so pleases or chooses not to collect tax from the customers for some reason or other. He may find it profitable to sell his goods at a competitive price and to retain his customers, even at the sacrifice of sales tax. But his liability to pay sales tax to the State will not in any way be affected. This case does not render any assistance to the plea advanced on beh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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