1. These appeals by special leave are directed against the judgment of theOrissa High Court in a reference made to it under s. 24(1) of the Orissa ales Tax Act, 1947. The following questions were referred :
'1. Whether in the facts and circumstance of the case, the Tribunal is right in holding that the Central Sales Tax Paid by the opposite party at its purchase point and charged on to its customers does not form a part of the sale-price of the commodity sold so as to be taxable under the Orissa Sales Tax Act, 1947.
2. Whether, in the facts and circumstances, the allowance of the claim of the opposite party of deduction of Central Sales Tax collected from its customers is permissible under the provisions of the Orissa Sales Tax Act and the rules framed thereunder.'
2. Before we examine the facts and circumstances of the case, it is convenient to set out the relevant provisions of the Orissa Sales Tax Act, 947(hereinafter called the Act) as it stood prior to the amendments made in 1958.In the Act, the definition of the expressions 'sale price' and'turnover' in Sections 2(h) and 2(i) (omitting immaterial portions) wereas follows :
'2(h) - 'sale price' meansthe amount payable to a dealer as valuable consideration for -
(i) the sale or supply of anygoods, less any sum allowed as cash discount according to ordinary tradepractice, but including any sum charged for anything done by the dealer inrespect of the goods at the time of, or before, delivery thereof, other thanthe cost of freight or delivery or the cost of installation when such cost isseparately charged;.....
2(i) - 'Turnover' means theaggregate of the sale prices and tax, if any, received or receivable by adealer, in respect of the sale or supply of goods or carrying out of anycontract effected or made during a given period.'
3. 'Taxable turnover' was defined in s. 5 (2) of the Act asfollows :
'5(2) In this Act, theexpression 'taxable turnover' means that part of a dealer's grossturnover during any period which remains after deducting therefrom -
. . . . . .
(b) the tax, if any, paid bythe purchaser to the dealer'.
4. These appeals are concerned with the assessments for the quarter endingSeptember 30, 1957, and for the quarter ending December 31, 1957, but it wouldbe sufficient if facts relating to the assessment for the quarter endingSeptember 30, 1957, are given, because apart from figures there no differencein the relevant facts. For the quarter ending September 30, 1957, therespondent, M/s Utkal Distributors (P) Ltd., hereinafter referred to as theassessee, claimed to deduct from its gross turnover the sum of Rs. 3,874.49 onthe ground that it had paid this sum on the purchases made by it as centralsales tax. The Sales Tax Officer disallowed the claim. On appeal, the Collectorof Sales Tax, Orissa, affirmed the order of the Sales Tax Officer. The SalesTax Tribunal, Orissa, in second appeal, however, came to the conclusion thatthere was no justification to disallow the deduction claimed by the appellant.The Tribunal held that the central sales tax realised by the assessee from itscustomers was not part of the price charged by it, and, therefore, it did notfall within the definitions of 'sales price' and 'taxable turnover'. TheTribunal relied on the fact that the assessee was a controlled stock holderunder the Iron and Steel (Control) Notification, dated Calcutta, the 18thOctober, 1958, and by virtue of condition No. 4(ii) of the Notification, thecentral sales tax paid by the customer was not part of the price. Condition No.4(ii) was to this effect :
'The customer shall pay to the Controlled Stockholder the Central Sales Tax incurred by the Controlled Stockholder inobtaining the material and also pay such additional Central Sales Tax, if any,incurred on the sale to the Customer.'
5. This Notification was issued under the Iron and Steel Control Order,1956, which order was passed in exercise of the powers conferred by s. 3 of theEssential Commodities Act, 1955. Section 2 of the Control Order defined'Controlled Stockholder' as 'a stock holder appointed by theController to hold stocks of iron or steel under such terms and conditions ashe may prescribe from time to time.' It further appears that under theIron and Steel Control Order, read with the Iron and Steel (Control) Notification,a controlled stock-holder was not entitled to charge a price higher than thatfixed by the Government of India. As stated earlier, in view of theseprovisions, the Tribunal came to the conclusion that central sales tax paid orrealised by the assessee from the customers at the time of sale of iron andsteel goods to them could not be treated as sale price of goods and could notbe included in the taxable turnover. The Commissioner of Sales Tax beingdissatisfied with the order of the Tribunal sought a reference to the HighCourt and the Tribunal referred the case under s. 24(1) of the Act, formulatingtwo questions which have already been set out.
6. The High Court answered the questions in the affirmative. Before the HighCourt the counsel for the State urged that the expression 'tax'occurring in the definition of 'turnover' in s. 2(i) and in thedefinition of 'taxable turnover' in s. 5(2)(b) referred only to thesales tax paid under the Orissa Sales Tax Act and not to the tax paid under theCentral Sales Tax Act, and that this was part of the consideration, and,therefore, the assessee was bound to include the central sales tax in thetaxable turnover. Following The Deputy Commissioner of Commercial Taxes v. M.Krishanaswami Mudaliar & Sons 5 S.T.C. 88. and Bata Shoe Co. Ltd. v.Member, board of Revenue, West Bengal, 1 S.T.C. 193. the High Court held thatas the assessee was authorised as a controlled stock holder to realise centralsales tax from the customers by a special notification issued by the CentralGovernment, the case fell within the principle laid down in Deputy Commissionerof Commercial Taxes v. M. Krishnaswami Mudaliar & Sons 5 S.T.C. 88. Theprinciple, according to the Madras High Court in Krishnaswami Mudaliar's 5.S.T.C. 88. case was as follows.
'In our opinion, if we may say so with respect,this passage from the judgment of the learned Chief Justice of the CalcuttaHigh Court in Bata Shoe Co. case 1 S.T.C. 193. clearly brings out thedistinction between cases where the dealer is not authorised by law to collectthe tax but all the same adds it to the sale price in the bill of sale andcollects it from the customer and cases where the dealer is so authorised. Inthe former case it is undoubtedly part of the purchase price, as all thecollections made by the dealer from the purchaser must be treated asconstituting part of the sale price. If, however, under the law, the dealer isempowered to pass on the sales tax to the purchasers, to collect it and pay itto the Government, what he is permitted to so collect under the law wouldcontinue to retain its character as tax and it would never form part of thepurchase price.'
7. The High Court further observed that 'the Union Governmentthemselves fixed the price of iron material sold by him to his customers. Hewas not entitled to charge anything higher. In addition to that price he waspermitted to charge central sales tax which he was subsequently required tocredit to Government. Section 9 (A) of the Orissa Sales Tax Act says that anyamount collected by a registered dealer as sales tax from his purchasers shallbe deposited by him in the Government Treasury. It is true that by its ownforce this section would apply only to Orissa Sales Tax Act. But by virtue ofsub-section (2) of section 9 of the Central Sales Tax Act, 1957 (nowsub-section (3) in consequence of the amending Act of 1958) it would also applyto the Central Sales Tax collected by the Controlled Stockholder.' Thus,following the principles laid down in the Madras decision, the Orissa HighCourt held that the central sales tax could never form part of the 'sale price'as defined in the Orissa Sales Tax Act, and was rightly deducted whileestimating the taxable turnover.
8. We may mention that the respondent was not represented before us. Mr. O.P. Malhotra, learned counsel for the appellant urged the following pointsbefore us :
(1) That the expression'tax' in s. 2(i) and s. 5(2)(b) of the Orissa Sales Tax Act means thetax levied under the a Orissa Sales Tax Act and not under the Central Sales TaxAct;
(2) That the expression'valuable consideration' occurring in s. 2(h) of the Orissa Sales TaxAct includes the central sales tax realised by the assessee; and
(3) That the expression 'anysum charged for anything done by the dealer in respect of the goods at the timeof or before delivery thereof' included the central sales tax paid by theassessee at the purchase point.
9. As we have come to the conclusion that the expression 'valuableconsideration' and the word 'turnover' do not include thecentral sales tax paid by the assessee and that the answer to question No. 1must be in the affirmative, as held by the High Court, it is not necessary todeal with question No. 2.
10. It is not necessary to decide whether the word 'tax' in s.2(i) and s. 5(2)(b) of the Orissa Sales Tax Act means the tax levied under theOrissa Sales Tax Act and not the tax levied under the Central Sales Tax Act. Wewill, however, assume for the purpose of this case that the expression'tax' in s. 2(i) and s. 5(2)(b) of the Act does not include centralsales tax.
11. We have set out condition No. 4(ii) of the Iron and Steel (Control)Notification above. It seems to us that it is clear from this condition and thefact that the controlled stockholder was not entitled to charge a price higherthan that fixed by the Government of India, that the valuable consideration forthe sale was the price fixed by the Government of India and did not include thecentral sales tax which the customer had to pay to the assessee as controlledstockholder. We do not rely on the provisions of s. 9(A) of the Orissa SalesTax Act or the principle laid down in Deputy Commissioner of Commercial Taxesv. M. Krishnaswami Mudaliar & Sons 5 S.T.C. 88 No arguments were addressedto us on this aspect and we express no opinion whether the principle laid downin the Madras decision and s. 9(A) of the Orissa Sales Tax Act would apply toan authorisation to collect central sales tax under the provisions of the Ironand Steel Control Order, 1956, and the Iron and Steel (Control) Notification,dated October 18, 1958. In our opinion, the fact that the price which thestockholder was entitled to charge was statutorily fixed and the stockholderwas not entitled to and did not charge more are sufficient to enable us to cometo the conclusion that the central sales tax paid under the provisions of theIron and Steel (Control) Notification did not form party of the price paid bythe customer to the assessee.
12. There is no force in the contention that the central sales tax realisedby the assessee falls within the expression 'any sum charged for anythingdone by the dealer in respect of the goods at the time of or before deliverythereof.' The assessee by paying the central sales tax when he bought thegoods did not do anything to the goods, and the tax was paid in respect of thetransaction of purchase and not in respect of the goods.
13. In the result, agreeing with the High Court we answer question No. 1 inthe affirmative, and we do not consider it necessary to answer question No. 2.The appeals fail and are dismissed. No costs.
14. Appeals dismissed.