Satish Chandra, J. - The question of law referred to us whether the amount of Rs. 29,763/- being purchase tax collected by the assessee was or was not the trading receipt of the assessee. The question has been referred in respect of the assessment year 1967-68. The Tribunal held that the assessee firm was under S. 3-D(2) of the U.P. Sales Tax Act liable to pay the purchase tax. The amount collected by it as purchase tax from its constituents was kept by it in trust either for payment to the Government or for being refunded to the constituents in case they furnished certificates from the sales tax authorities. It was hence not the trading receipt of the assessee.
2. The question has now been settled by the Supreme Court in Chowringhee Sales Bureau (Private) Ltd. vs. Commissioner of Income-tax, West Bengal. It was held that the sums realised by the dealer as sales tax formed part of its trading or business receipts. It was further held that the fact that the assessee had credited the receipts as sales-tax under the head sales tax collection account did not make any material difference. It is the true nature and quality of the receipt and not the head under which it is entered in the account books which will be decisive. If a receipt is a trading receipt, the fact it is not so shown in the account books of the assessee would not prevent the assessing authority from treating it as trading receipt. It was also observed that the assessee would, of course, be entitled to claim deduction of the amount as and when it paid it to the Government. This view was reaffirmed by the Supreme Court in its subsequent decision in Sinclair Murray & Co. (Pvt.) Ltd. vs. Commissioner of Income-tax,. It was held that the amount collected by the appellant as sales tax constituted its trading receipt and had to be included in its total income and that if and when the appellant paid the amount collected to the State Government or refunded any part thereof to the purchaser, the appellant would be entitled to claim deduction of the sum so paid or refunded. It was also held that this position would continue to obtain even in cases where the dealer was not liable to pay sales tax but was compelled to deposit the amount in the State exchequer.
3. Initially the facts on which the question of law was referred to us were not clear. This Court by an order dated November 30, 1973 directed the Tribunal to furnish a supplementary statement giving relevant facts with respect to the receipts in question. The Tribunal has submitted a supplementary statement in which it has been clarified that the assessee was carrying on the business of selling agents. The goods were received by the assessee on consignment basis for sale. When the sale price was received, the entire amount was not credited to the account of its constituents whose goods were sold. A number of deductions like assessees commission, brokerages, Dharmada, godown charges were made and only the balance of the sale price was credited to the constituents account. The deductions were then credited in separate accounts maintained by the assessee. The amount in question was entered in the account of purchase tax. On these facts, it is clear that the receipts in question were trade receipts even though it may have been charged on the footing that the assessee was liable to pay purchase tax to the Government.
4. We, therefore, answer the question referred to us in the negative in favour of the Department and against the assessee. The Department will be entitled to costs which are assessed at Rs. 200/-.