TMI Blog2017 (5) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... ises for consideration in this revision is as to whether the amount paid by the dealer as Entry Tax for bringing the goods within the local area would form part of the turnover of assessee for the purposes of payment of VAT or not? 2. The assessee is engaged in the trading of paper. It is alleged that the assessee has a manufacturing unit at Chhatisgarh and for the assessment year 2008-09, it transferred stock to U.P., amounting to ₹ 6,65,59,816/- and disclosed turnover of sales of paper at ₹ 6,88,66,891.48/- and thereby admitted liability to pay tax under the U.P. VAT Act amounting to ₹ 27,54,675/-. The assessee in respect of such stock also paid Entry Tax at the rate of 1% amounting to ₹ 6,88,66,891.48/-. During the course of assessment proceedings, a question arose as to whether the amount of Entry Tax, noticed above, would constitute part of the 'sale price' and thereby included in turnover of sales for the purposes of payment of tax under the U.P. VAT Act. According to the revisionist, this amount of Entry Tax was apparently collected from the purchaser and was clearly reflected in the sale invoice and thus was not liable to be included, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der this Act, nor shall a registered dealer collect any amount by way of tax or purporting to be by way of tax at a rate or rates exceeding the rate or rates specified in a notification issued under Section 3. (2) No dealer shall collect any amount by way of tax or purporting to be by way of tax in respect of the entry of any goods on which no tax is payable by him under the provisions of this Act. It cannot be disputed that when a registered dealer is authorised to collect any amount by way of tax, that tax shall not form part of turnover. It has been so decided by this Court in 'M/s. Anand Swarup Mahesh Kumar v. Commissioner of Sales Tax' [1980 (4) SCC 451], as is clear from the following discussion contained in the said judgment: 13. The argument urged on behalf of the appellant is that when a dealer who in this case happens to be a commission agent is permitted by law to collect the market fee which he is liable to pay to the market committee from the purchaser, such market fee cannot form part of the consideration for sale and, therefore, cannot be included in the turnover of purchases for purposes of levy of tax under the Act. But on behalf of the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealer is authorised by law to pass on any tax payable by him on the transaction of sale to the purchaser, such tax does not form part of the consideration for purposes of levy of tax on sales or purchases but where there is no statutory provision authorising the dealer to pass on the tax to the purchaser, such tax does form part of the consideration when he includes it in the price and realizes the same from the purchaser. The essential factor which distinguishes the former class of cases from the latter class in the existence of a statutory provision authorising a dealer to recover the tax payable on the transaction of sale from the purchaser. It is on account of the above distinction that this Court held in Joint Commercial Officer, Division II, Madras-2 v. Spencer Co. that the sales tax which a seller of foreign liquor was liable to pay under Section 21A of the Madras Prohibition Act, 1937 did not form part of the turnover on which sales tax could be levied under the Madras General Sales Tax Act, 1959 because the seller was entitled to recover the sales tax payable by him from the purchaser. The relevant part of Section 21-A of the Madras Prohibition Act, 1937 referred to abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied legislative cognisance, that the dealer is not prohibited from passing on the tax to the other party to the sale. Such a usage is implicit in S. 46 of the Act although what is explicit in the provision is that nothing shall be collected by way of tax in respect of sale of any goods exempted under S.5 and no registered dealer shall exact by way of tax any sum exceeding what is payable under the Act. Of course, one who is not a registered dealer, cannot collect any sum by way of tax from any other person. In short, there is a triple taboo writ into S.46. This prohibitory project is made operational, as stated earlier, by two other provisions, one sounding in criminal and the other in departmental proceedings. In view of the aforesaid position in law, when it is found that the appellant is a registered dealer, it would entail him to collect the entry tax and such an entry tax cannot be treated as forming part of the turnover. 7. The provisions under the Karnataka Tax on Entry of Goods Act permits the amount of entry tax to be passed on to the purchaser. There is no corresponding provision in the U.P. Tax on Entry of Goods into Local Areas Act. Section 4(1) of the Act o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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