TMI Blog1982 (11) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... registered dealer by issuing to their vendors a certificate in form 16 to the effect that the goods were being purchased by them for the purpose of resale. In those cases where the applicants were liable to pay both sales tax and general sales tax to the Government, the amount payable by them by way of such taxes was charged separately in the bills. One of such bills on record as a specimen shows the amount so charged as: "3 per cent sales tax. 3 per cent general sales tax." In those cases where, however, the applicants were liable to pay only general sales tax, they recovered from their customers not only the amount of general sales tax which was payable by them to the Government but also a certain amount on account of sales tax. The bills issued by the applicants in respect of these sales do not appear to be uniform in pattern. One of the bills which is a part of the statement of the case in Sales Tax Reference No. 10 of 1978 shows the relevant items as follows: "3 per cent surcharge on account of sales tax. 3 per cent general sales tax." Another bill which is on record and which is part of the statement of the case in Sales Tax Reference No. 42 of 1979, however, shows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Tax held that the entire sum of Rs. 17,720.91 was collected in contravention of section 46 of the Act and forfeited the entire amount of Rs. 17,720.91. A second appeal to the Tribunal against the said order of the Assistant Commissioner failed. The reference made at the instance of the applicants in respect of this judgment and order of the Tribunal is Sales Tax Reference No. 10 of 1978. In this reference, the Tribunal has referred only the following question to this Court for its determination: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that an amount of Rs. 17,720.91 collected by way of surcharge on account of sales tax was tax within the meaning of that word under section 46(2) of the Bombay Sales Tax Act, 1959?" The applicants have taken out a notice of motion being notice of motion No. 70 of 1978 in the said Sales Tax Reference No. 10 of 1978 for raising an additional question which they had asked the Tribunal to refer and which the Tribunal refused to do. That question is as follows: "Whether, on the facts and in the circumstances of the case, there was any evidence for the Tribunal to hold that the amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aler liable to pay tax from collecting any sum by way of tax on the sale of any goods, and (3) a prohibition against a registered dealer from collecting any amount by way of tax in excess of the amount of tax payable by him in respect of a transaction of sale or purchase. The third prohibition set out above would be violated when a registered dealer collects tax in respect of a transaction of sale of goods at a rate higher than the rate of tax attracted to the sales of this particular class of goods, for the dealer has then collected an amount by way of tax in excess of the amount of tax payable by him. Such prohibition would also be violated if in the case of a particular transaction of sale only sales tax is payable but the registered dealer collects amounts by way of sales tax as also general sales tax on such transaction of sale. It would also be violated where, by reason of certain exemptions, no tax is payable on a particular type of sale and the registered dealer collects amounts by way of tax on it.............." The short question which falls for determination is whether in the facts and circumstances of this case, the amount collected by the applicants by way of surchar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as thus a clear violation of section 46(2) and the amount so collected was, therefore, liable to be forfeited under section 37(1) and was thus rightly forfeited. This is, however, not the end of the matter. Because, admittedly in respect of sales during the periods in question the applicants have not issued stereotyped bills. For instance, in Sales Tax Reference No. 42 of 1979 the bill which is on the record as a specimen describes the surcharge as "surcharge on account of sales tax paid by us". Now, sales tax is not paid to the Government before a transaction of sale takes place. When the applicants have referred to this amount as being on account of sales tax paid by them it could only refer to the amount which was paid by them to their vendors in respect of the amount of sales tax which their vendors became liable to pay to the Government. There is nothing on the record to show that in respect of the entire period covered by Sales Tax Reference No. 10 of 1978 or Sales Tax Reference No. 42 of 1979 the applicants have issued in respect of the concerned sales bills only of the types of the specimen bill that we find on the record of each of these cases. The matter will, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act and the Rules made thereunder permit a seller to recover from his purchaser the amount which he would have to pay to the Government by way of tax does not convert the amount collected by the seller into a tax. If a purchaser from whom his seller has so recovered the amount of tax recoups such amount paid by him from his own purchaser when he comes to resell the goods, he is not prohibited by the Act from doing so, so long as he does not represent to his own purchaser that this is the amount of tax which he was liable to pay by way of tax. In thus recouping himself he is really increasing his sale price with a view to reimburse himself for an extra item of cost. There is no prohibition under the Act against a reseller thus reimbursing himself by increasing his selling price and in our opinion whether he does so by increasing the selling price or by showing the amount by way of tax collected from him by his own vendor as a separate item in the bill makes no difference. So long as the purchaser is not led to believe that the amount charged to him is the amount which the seller would be liable to pay as tax to the Government when he is not liable to pay it, there would be no con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terpretation of the relevant provisions of the Mysore Sales Tax Act, 1957, and the Rules framed thereunder and has no relevance to the point which we have to decide. The second case was the decision of the Madras High Court in M.A.R. Arunachalam Chettiar Co. v. State of Tamil Nadu [1979] 44 STC 8. Under the Tamil Nadu General Sales Tax Act, 1959, a transaction in jaggery was taxable only at the point of purchase and not at the point of sale. The assessee who had purchased jaggery sold it to his customers from whom he charged tax as an independent amount. The court held that this amount was liable to be forfeited. It does not appear from this judgment how the amount was described in the bill and whether the purchaser on resale was entitled under the Tamil Nadu Act to recover the amount of tax which his vendor was liable to pay and which such vendor had collected from him. This decision, therefore, does not also serve any useful purpose, so far as we are concerned. In view of the conclusion we have reached, it is not possible for us to answer either in the affirmative or negative the question referred to us as also the additional question which we have allowed to be raised on ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
