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Rallis India Limited Vs. the State of Andhra Pradesh - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAndhra Pradesh High Court
Decided On
Case NumberTax Revision Case No. 19 of 1979
Judge
Reported in[1983]53STC267(AP)
ActsCentral Sales Tax Act - Sections 2, 8A and 8A(1); Central Sales Tax Rules - Rule 11(2)
AppellantRallis India Limited
RespondentThe State of Andhra Pradesh
Appellant AdvocateS. Dasaratharama Reddi, Adv.
Respondent AdvocateGovernment Pleader for Commercial Taxes
Excerpt:
.....the turnover of..........for attracting the formula contained in section 8a the dealer must establish that the aggregate sale price is inclusive of sales tax. otherwise, it observed, it will have the effect of reducing the sale price, which is not the intention behind the provision. this view of the tribunal is challenged in this tax revision case. 3. mr. s. dasaratharama reddi, learned counsel for the petitioner, contends that the formula contained in section 8a(1) does not expressly say that the 'aggregate of sale price' mentioned therein should be shown to include central sales tax. he contends that whether the assessee establishes that the sales price includes central sales tax or not, the formula should be applied and net turnover determined, after deducting the central sales tax component. he submits.....
Judgment:

Jeevan Reddy, J.

1. This tax revision case arises from the order of the Sales Tax Appellate Tribunal affirming the orders of the Assistant Commissioner, Commercial Taxes, Guntur, whereunder the assessee's claim for deduction of a sum of Rs. 2,23,439 under section 8A of the Central Sales Tax Act was disallowed.

2. For the assessment year 1970-71, the assessee-petitioner entered into several inter-State transactions of sale of cotton. With respect to a turnover of Rs. 9,50,201.57, it showed the Central sales tax collected by it separately in the bills. The authorities have, in the light of the proviso to section 8A(1), taken into account only the net turnover for the purpose of levying the Central sales tax. With respect to the turnover of Rs. 76,71,405.75 however the petitioner did not show the Central sales tax separately to its bills, but claimed deduction on account of Central sales tax in accordance with the formula contained in section 8A(1). Its contention was that irrespective of the fact whether the turnover is shown to be inclusive of Central sales tax or not, it is entitled to such deduction. This has been negatived by the authorities including the Tribunal. The Tribunal observed that the object behind section 8A is to avoid tax on tax and for that purpose Central sales tax collected by a dealer is deducted for the purpose of determining the turnover upon which alone Central sales tax will be levied and collected. It observed that for attracting the formula contained in section 8A the dealer must establish that the aggregate sale price is inclusive of sales tax. Otherwise, it observed, it will have the effect of reducing the sale price, which is not the intention behind the provision. This view of the Tribunal is challenged in this tax revision case.

3. Mr. S. Dasaratharama Reddi, learned counsel for the petitioner, contends that the formula contained in section 8A(1) does not expressly say that the 'aggregate of sale price' mentioned therein should be shown to include Central sales tax. He contends that whether the assessee establishes that the sales price includes Central sales tax or not, the formula should be applied and net turnover determined, after deducting the Central sales tax component. He submits that a taxing statute should be literally construed and that there is no room either for equity or for supplying words which are not there in the statute.

Section 8A(1), in so far as it is relevant for the present purpose, reads as follows :

'8A, Determination of turnover. - (1) In determining the turnover of a dealer for the purposes of this Act, the following deductions shall be made from the aggregate of the sale prices, namely :-

(a) the amount arrived at by applying the following formula :-

rate of tax x aggregate of sale prices-------------------------------------------100 plus rate of tax. Provided that no deduction on the basis of the above formula shall be made if the amount by way of tax collected by a registered dealer in accordance with the provisions of this Act has been otherwise deducted from the aggregate of the sale prices .........................'

4. Section 8A was introduced by Amendment Act No. 28 of 1969 with retrospective effect from 5th January, 1957. Earlier to the Amendment Act, rule 11(2) of the Central Sales Tax Rules provided for a similar deduction.

5. Before we deal with the principle underlying section 8A(1), it would be appropriate to refer to the definitions of 'sale price' and 'turnover' as defined in clauses (h) and (j) respectively of section 2 of the Central Sales Tax Act. They read as follows :

'(h) 'sale price' means the amount payable to a dealer as consideration for the sale of any goods, less any sum allowed as cash discount acording to the practice normally prevailing in the trade, but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof other than the cost of freight or delivery or the cost of installation in cases where such cost is sepaately charged.'

'(j) 'turnover' used in relation to any dealer liable to tax under this Act means the aggregate of the sale prices received and receivable by him in respect of sales of any goods in the course of inter-State trade or commerce made during any prescribed period and determined in the prescribed manner.'

6. Considering similar definitions in the State Acts, the Supreme Court has held [see Hindustan Sugar Mills Limited v. State of Rajasthan : [1979]1SCR276 that the sale price or the turnover, as the case may be, included inter alia sales tax, since turnover includes sales tax component, levy of sales tax on such turnover involves tax on tax. It is a avoid that that section 8A provides for deducting Central sales tax from the aggregate turnover. After such deduction, the turnover arrived at is called the net turnover, upon which Central sales tax is levied and collected. For the purpose of separating or deducting, as it may be called, the Central sales tax component from the aggregate sale price, in cases where the Central sales tax is not otherwise deducted, section 8A prescribed a formula viz.,

rate of tax x aggregate of sale prices----------------------------------------100 plus rate of tax.

7. The proviso makes it clear that the above formula shall not apply if the amount collected by way of Central sales tax by a dealer has been otherwise deducted from the aggregate of sale price.

8. The language as well as the object underlying the formula makes it clear that it applies only where Central sales tax forms part of the aggregate sale price and has, therefore, to be separated. Thus, this formula has no application where the aggregate sale price does not include Central sales tax.

9. Mr. S. Dasaratharama Reddi contends that there are no words in the formula which limit its application only to cases where the dealer establishes that he has collected Central sales tax. His contention is whether the dealer collects the tax or not, he is liable to pay the same and if so, he argues, the tax component must necessarily be deducted from the aggregate of the sale price, without selling upon the assessee to establish that he has as a fact collected Central sales tax. It is not possible to agree with this contention. While it is true that Central sales tax is payable irrespective of the fact whether the dealer collects the same or not from his purchaser, it does not follow therefrom that Central sales tax should be deducted even where it is not collected, for such a course would result in, as rightly pointed out by the Tribunal, reducing the sale price, a result not contemplated or permissible by the Act. And nobody is in a better position than the dealer to show whether he has collected the Central sales tax or not.

10. For the above reasons, we are of the opinion that the formula in section 8A(1) applies only in cases where Central sales tax is shown in have been collected by the dealer and forms part of the aggregate of sale price. Where, of course, Central sales tax has been otherwise shown to have been deducted from the aggregate of the sale price, there is no occasion for applying the formula.

11. This is not a case where we are adding any words or reading any words of our own into the statute. Even in the case of a taxing statute, as in the case of any other statute, the object of interpretation is to find out the intention of the Parliament or the legislature, as the case may be having regard to the language employed. Judged from this angle, we see an ground to accept the interpretation urged by Mr. Dasaratharama Reddi. We are of the opinion that the Tribunal was right in holding that inasmuch as the petitioner has failed to prove that the turnover of Rs. 76,71,405.75 includes Central sales tax, the formula contained in section 8A cannot be applied.

12. For the above reasons, this tax revision case fails and is accordingly dismissed. In the circumstances, there shall be no order as to costs. Advocate's fee Rs. 250.


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