Judgment

HIDAYATULLAH, J. : These five appeals on certificates granted by the High Court of Madras were consolidated and heard together. They arise out of proceedings against the appellants under the Madras General Sales Tax Act, 1939. The appellants are three Companies carrying on business of sale of motor cars, motor car spare parts, and other goods. Messrs. George Oakes (Private) Ltd., have filed Civil Appeals Nos. 1 to 3 of 1961 questioning a part of the sales tax imposed on them for the years, 1950-51, 1951-52 and 1952-53. Civil Appeals Nos. 4 and 5 of 1961 have been filed respectively by Messrs. Addison & Co. (Private) Ltd., an Messrs. Rane (Madras) Ltd., questioning similarly a part of the tax imposed on them for the year ending March 31, 1952. The common question which has been raised by the appellants arises in the following circumstances.

2. Under the Madras General Sales Tax Act, 1939, "turnover" is defined inter alia as-

"the aggregate amount for which goods are either bought by or sold by a dealer whether for cash or for deferred payment or other valuable consideration . ... . .. ." Sales tax is levied on the dealers on their total turnover for each year of account at the rate of 3 pies for every rupee of turnover. This is laid down by S. 3(l)(a) and (b) of the Act. Under the second sub-section of S. 3, an additional tax of 6 pies for every rupee is leviable on the turnover relating to certain classes of goods. The section (omitting unnecessary portion) may be quoted here for further reference:

"3. Levy of taxes on sales of goods.-

1. Subject to the provisions of this Act

(a) every dealer shall pay for each year a tax on his total turnover for such year and

(b) the tax shall be calculated at the rate of three pies for every rupee in such turnover.

2. Subject as aforesaid, the sale of any of the goods mentioned below shall be subject to a tax at the rate specified in respect thereof, at such single point in the series of sales by successive dealers as may be prescribed; and the tax shall be paid by the dealer concerned on his turnover in each year relating to such goods, and shall be in addition to the tax to which he is liable under sub-section (1) on his total turnover for the year:-

Description of the goods Rate of tax for every rupee in the turnover relating to such goods.

(1) Motor vehicles including motor cars, motor taxi-cabs, motor cycles and cycle combinations, motor scooters, motorettes, motor chassis of motor vehicles. Six pies"

3. In Deputy Commissioner of Commercial Taxes v. M. Krishnaswami Mudaliar & Sons, 1954-5 STC 88: , the Madras High Court held that amounts collected by a registered dealer from consumers by way of sales tax and paid over to the Government could not be included in the turnover of the registered dealer as part of the sale price of goods sold by him, and were not liable to be taxed again. The Madras Legislature then passed the Madras General Sales Tax (Definition of Turnover and Validation of Assessments) Act, 1954 (Act 17 of 1954). Section 2 of that Act provided that:

"In the case of sales made by a dealer before the 1st April, 1954, amounts collected by him by way of tax under the Madras General Sales Tax Act, 1939 (Madras Act IX of 1939) (hereinafter referred to as the principal Act), shall be deemed to have formed part of his turnover."

4. The business of the three appellants included sales of goods described in the second sub-section of S.3 of the Madras General Sales Tax Act as well as sales covered by the first sub-section. The Deputy Commercial Tax Officer included in the total turnover the tax chargeable, and then levied the tax on the turnover relating to goods liable to the additional tax, at the rate of 9 pies, and on the remaining turnover, at 3 pies for every rupee. The inclusion of the tax in the total turnover was objected to by these tradesmen. They appealed to the Special Commercial Tax Officer, but were unsuccessful. The Sales Tax Appellate Tribunal on further appeal, he