TMI Blog1974 (11) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... der the Indian Income-tax Act, 1922. " The matter relates to the assessment year 1953-54, the corresponding accounting period for which ended on June 30, 1952. The assessee is a limited company with its head office at Calcutta. One of its activities was the purchase and sale of jute in the State of Orissa and for this purpose the assessee was a registered dealer under the Orissa Sales Tax Act, 1947. During the accounting year the assessee sold jute to M/s. McLeod Co. Ltd. for being used in two jute mills situated in Andhra Pradesh under the management of the purchaser-company. The assessee used to charge from the purchaser sales tax on the purchase of goods at the rate of one anna per rupee of the value of the goods. The sales tax was charged under a separate head in the bill. The words used in the bill in this respect were " sales tax buyers' account.. . . . at the rate of one anna per rupee to be paid to the Orissa Government ". The total amount shown as " liabilities for expenses " in the balance-sheet as on June 30, 1952, included a sum of Rs. 16,54,455: on account of sales tax. The said sum was, however, not paid to the State Government as the sales by the assessee to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trader from his customer, and is then utilised in his business, the tax so realised cannot but form part of the sale price. According to the High Court, the tax would be included in the trading receipt of the dealer and would become part. of his income as the money realised from the purchaser on account of tax was employed by the dealer for the purpose of making profit and was not separated from price simpliciter. The High Court in this context referred to the fact that the assessee did not earmark the amount realised as sales tax and did not put it in a different account or deposit it with the Government. It was further found that the assessee had treated the amount of sales tax as his own money. Reference was made in the High Court to subsection (3) of section 9B of the Orissa Sales Tax Act which reads as under : " 9B. (3) The amounts realised by any person as tax, on sale of any goods, shall, notwithstanding anything contained in any other provision of this Act, be deposited by him in a Government treasury within such period as may be prescribed, if the amount so realised exceeds the amount payable as tax in respect of that sale or if no tax is payable in respect thereof. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to this court, it is the true nature and quality of the receipt and not the head under which it is entered in the account books that would prove decisive. If a receipt is a trading receipt, the fact that it is not so shown in the account books of the assessee would not prevent the assessing authority from treating it as trading receipt. The court further observed that the appellant-company would be entitled to claim deduction of the amount as and when, it paid it to the State Government. The above decision, in our opinion, fully applies to this case arid, in view of it, there is no escape from the conclusion that the amount of Rs. 7,14,398 should be treated as trading receipt. Dr. Pal has tried to distinguish the decision of this court n the case of Chowringhee Sales Bureau P. Ltd. on the ground that there was no provision in the Bengal Finance, (Sales Tax) Act, 1941, under which the sales tax was realised by the appellant in that case corresponding to sub-section (3) of section 9B of the Orissa Sales Tax Act, 1947. This circumstance, in our opinion, hardly constitutes a sufficient ground for not applying the dictum laid down in the case of Chowringhee Sales Bureau P. Ltd. to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government as and when realised nor did the assessee refund it to the purchaser from whom the amount had been realised. The High Court has further found that the assessee-company mixed up the amount of sales tax with its own funds and treated the same as its own money. Nothing cogent has been brought to our notice to justify interference with the above findings. In the case of George Oakes (Private) Ltd. v. State of Madras the Constitution Bench of this court held that the Madras General Sales Tax (Definition of Turnover and Validation of Assessments) Act 1954, was not bad on the ground of legislative incompetence. In that context this court observed that when the seller passes on the tax and the buyer agrees to pay sales tax in addition to the price, the tax is really part of the entire consideration and the distinction between the two amounts-tax and price loses all significance. This court in that case relied upon the following observation of Lawrence J. in Paprika Ltd. v. Board of Tade : " Wherever a sale attracts purchase tax, that tax presumably affects the price which the seller who is liable to pay the tax demands, but it does not cease to be the price which the buyer h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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