TMI Blog1994 (9) TMI 315X X X X Extracts X X X X X X X X Extracts X X X X ..... 50 and Rs. 18,67,206.77 respectively. The assessing officer held that the sales tax collected formed a part of the turnover of the assessee and was liable to turnover tax under section 5(2A) of the Kerala General Sales Tax Act, 1963. The assessing officer held that the proviso to section 5(2A) would not exclude the sales tax collected from the levy of turnover tax. The Deputy Commissioner (Appeals) concurred with these findings in appeal which was filed by the assessee. The Tribunal however, in further appeal, has come to the conclusion that by virtue of the proviso to section 5(2A) of the said Act, the sales tax collected by a dealer and shown separately in the bills has to be excluded while determining the taxable turnover for the purpose of levying turnover tax. Being aggrieved by these findings of the Tribunal, the department desires that the following questions of law be decided by us: "1. Whether, in the facts and circumstances of the case, the Tribunal was right in finding that no turnover tax can be levied under section 5(2A) of the Kerala General Sales Tax Act, 1963, on the tax collected by the assessee? 2.. Whether, in the facts and circumstances of the case, the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dealer is liable to pay tax after deducting such amounts as are provided for by law. It will also exclude from the levy of tax the turnover of purchase or sale in the course of inter-State trade or commerce or in the course of export of goods or in the course of import of goods. 4.. Section 5(1) deals with levy of sales tax on sale or purchase of goods. It provides, inter alia, that every dealer whose total turnover for a year exceeds Rs. 1 lakh shall pay tax on his taxable turnover for that year, (i) in the case of goods specified in the First or Second Schedule, at the rates and only at the points specified against such goods in the said Schedules. We are not concerned with the remaining clauses of sub-section (1) which impose sales tax on certain other transactions set out therein. Sub-section (2) of section 5 provides that every dealer other than a dealer referred to in sub-section (1) whose total turnover for a year in respect of the goods specified in the First or Second or Fifth Schedule or goods involved in the execution of works contract specified in the Fourth Schedule is not less than Rs. 1 lakh shall pay tax at the rate and only at the point or points specified ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereunder. We are not concerned with the goods so specified, except for the purpose of noting that in respect of the goods which are the subject-matter of the tax revision cases before us, there is no dispute that the turnover tax is payable. The dispute relates to the interpretation of the proviso to section 5(2A). At the relevant time, it was as follows: "Provided that no tax under this sub-section shall be payable on that part of such turnover,- (1) on which tax is leviable on such dealer under sub-section (1) or subsection (2)." In other words, under section 5(2A), turnover tax is payable on the turnover of specified goods, except that in respect of such part of the turnover on which tax is leviable under sub-section (1) or sub-section (2), no turnover tax shall be payable. 6.. The question is what is excluded by the proviso. On a plain reading of the proviso, it appears that the turnover on which sales tax is leviable under section 5(1) or 5(2) is not subject to turnover tax. Now section 5(1) and section 5(2) levy sales tax on turnover which constitutes either the first sale or last purchase of certain specified goods, by the dealer. The term "turnover" by definition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liquor was obliged to collect from the purchaser sales tax, the Supreme Court after considering the scheme of the Madras Prohibition Act, 1937, came to the conclusion that under the said Act, the sales tax was payable by the purchaser. It was payable on the price of the liquor. Under the scheme of the Act, a seller was a collector of tax from the purchaser for the Government. The amounts of sales tax so collected by the seller on behalf of the Government under a statutory obligation cannot be a part of his taxable turnover under the Madras General Sales Tax Act, 1959. The Supreme Court endorsed the stand that ordinarily, when a dealer has no statutory duty to collect sales tax payable by him from his customer and the dealer passes on the amount of tax he is liable to pay on the customer, such amount does not cease to be the price for the goods although the price is expressed as X plus tax. However, it considered the scheme of the Madras Prohibition Act, 1937, under which an obligation was cast on the seller to collect sales tax from the purchaser. Under the scheme the seller was merely an agent of the Government for the purpose of collection of tax. It, therefore, excluded such tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealer should be included in the turnover. So far as the purchaser is concerned, he pays for the goods what the seller demands, i.e., price even though it may include tax. Under the Kerala General Sales Tax Act, there is no statutory obligation or duty on the dealer to collect the sales tax payable by him from his customers. The dealer is merely enabled to pass on the tax to the customers. Therefore, the amounts so collected forms part of the purchase price. It is entirely because of the specific provision in rule 9(1) of the Kerala General Sales Tax Rules that the tax so collected is excluded from the taxable turnover for the purposes of section 5. In the light of this observation, we have no hesitation in holding that turnover for the purposes of turnover tax would also include sales tax which may have been collected by a dealer from his customer, along with the price for the goods so sold or purchased. In fact, the definition of "turnover" under section 2(xxvii) clearly provides that turnover means the aggregate amount for which goods are either bought or sold. The aggregate amount would clearly include the sales tax also. Section 5(2A) which levies turnover tax forms part of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st purchases. On such turnover, which would necessarily include the sales tax collected on it, no turnover tax is payable. Therefore, what is excluded is the entire turnover which is subjected to sales tax under section 5(1) and 5(2) and not only a part of it which is taxable. In other words, it is the second and third sales of goods under Schedules I and V which would be subjected to turnover tax because they are not subjected to sales tax. The intention of the Legislature to bring under the ambit of turnover tax transactions of sale and purchase not subjected to sales tax, is clear from the budget speech of the Finance Minister which accompanies the introduction of Finance Bill, 1987, by which turnover tax was introduced in the Kerala General Sales Tax Act, 1963. While we cannot look at the budget speech for the purpose of interpretation of section 5(2A), it can be looked at as throwing light on the circumstances in which the said provision was introduced. While dealing with turnover tax, the speech in paragraph 115 states: "There are a large number of registered dealers, handling goods at the point of second or third sale and therefore not liable to sales tax. All those persons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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