TMI Blog1988 (10) TMI 266X X X X Extracts X X X X X X X X Extracts X X X X ..... oners is governed by the provisions of the Cement Control Order, 1982. Prices are fixed under this Order, which, inter alia, provides for a retention price admissible to the producer on f.o.r. destination price applicable to the sale by the producer, and permits addition of elements, like packing charges, excise duty as extra. The freight charges which form part of the f.o.r. destination price are not actually collected in respect of sales under the levy scheme, but the buyers remit the freight element to the carriers whereupon freight is deducted from the f.o.r. destination price. The freight element is credited to the Cement Regulation Account, if the receipt exceeds the retention price admissible to the producer. Shortfall is made good from the Cement Regulation Account. The impact of the Cement Control Order, 1982 on the scheme of exclusion provided under rule 6(c) of the Tamil Nadu General Sales Tax Rules, 1959 is a matter of continuous controversy. The respondents have been making assessments against the petitioners. The petitioners marketed about 2,000 metric tonnes of cement, therefore the petitioners are unable to stake any risk by refraining from providing for sales tax l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -82 dated 22nd April, 1983, the first respondent issued a show cause notice proposing to levy penalty under section 22 of the Tamil Nadu General Sales Tax Act, 1959. Simultaneously notices were issued proposing similar penalty in TNGST No. 115128/82-83 dated 26th April, 1983 for the months of April, 1982 to February, 1983. The petitioners filed detailed objections by DP: AC: ST: 4(2) dated 6th May, 1983. The petitioners challenged the jurisdiction of the first respondent to invoke the penal provision. The petitioners pointed out that the said section was not attracted since the sum collected as refundable deposit for a contingency cannot be styled as -collection by way of sales tax" for the purpose of section 22(1) of the Tamil Nadu General Sales Tax Act, 1959. The petitioners further undertook to refund the deposit and even stop further collection if only the respondents would give a letter or an assurance that the appeal before the Supreme Court against Ramco Cement's case [1982] 51 STC 171 (Mad.) will be withdrawn and that there will be no revision of assessments or reassessment subjecting the freight and packing charges to sales tax. The petitioners also explained the total c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er under the Tamil Nadu General Sales Tax Act, 1959. Collection of deposit by the petitioners is to safeguard themselves for any eventual liability, in view of the appeal preferred by the second respondent before the Supreme Court of India. Therefore the petitioners cannot be penalised by the first respondent who is an agent or servant of the second respondent. Learned counsel for the petitioners refers to the following passage in the State of Mysore v. Mysore Spinning and Manufacturing Co. Ltd. [1960] 11 STC 734 (SC) in support of his contention: "Where the assessee, a registered dealer, received certain amounts from its constituents merely by way of deposits on the express understanding or undertaking that the moneys would be refunded to the constituents if the assessee was held not liable to include the relevant sales in its taxable turnover, the assessee held the moneys as a mere custodian, and on the fulfilment of the condition became a trustee for the depositors. When once the tax authorities determined that the proceeds of the sales were not within the taxable turnover of the assessee, the beneficial ownership became vested in the depositors and the assessee ceased to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant turnover. On the facts of these appeals we are unable to hold that there has been any 'collection' by way of tax of any amount under section 11(2) of the Mysore Sales Tax Act, 1948." Learned counsel for the petitioners next argued that the amount received by the petitioners from the purchasers was only a deposit and not a collection of any tax and in support of this argument, he relies on the decision reported in Ganguli Sons (P.) Ltd. v. Secretary to Government [1976] 37 STC 549 (Mad.). It is held in this decision that the amount received by the appellant from the purchaser was only a deposit and not a collection of any tax and, therefore, the appellant was entitled to the exemption under the notification of the Pondicherry Government dated 21st November, 1967. As against the case put forward by the petitioners, Mr. R. Lokapriya, learned Government Advocate for Taxes, submitted the following on behalf of the respondents. Cement manufactured and marketed by the petitioners is governed by the provisions of the Cement Control Order, 1982. The petitioners have collected sales tax on "freight charges" as "sales tax deposit on freight" and "packing charges". No re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... express understanding or undertaking that the moneys would be refundable to the customers if the petitioners were held not liable for the tax. The petitioners are holding the moneys as a mere custodian and on the fulfilment of the condition become a trustee for the depositors. At this juncture, learned Government Advocate for Taxes, Mr. R. Lokapriya, invited the attention of this Court to the decision reported in Abdul Quader and Co. v. Sales Tax Officer, Second Circle, Hyderabad [1964] 15 STC 403 (SC), which also lays down that any amount collected by way of tax by any person otherwise than in accordance with the provisions of the Act, must be paid over to the Government and in default of such payment, the said amount would be recovered from such person as if it were arrears of land revenue. The said decision is also an authority for the proposition that if a dealer has collected anything from a purchaser which is not authorised by the taxing law, that is a matter between him and the purchaser, and the purchaser may be entitled to recover the amount from the dealer and that if the money so collected is not due as a tax, then the State cannot by law make it recoverable simpl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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