Central Sales Tax paid by a controlled stock-holder under the Iron and Steel (Control) Notification does not form part of the sale price and is deductible from the gross turnover.

Judgement

SIKRI, J. : These appeals by special leave are directed against the judgement of the Orissa High Court in a reference made to it under S. 24 (1) of the Orissa Sales Tax Act, 1947. The following questions were referred:

"1. Whether in the facts and circumstances 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 for 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 Orissa Sales Tax Act, 1947 (hereinafter called the Act) as it stood prior to the amendments made in 1958. In the Act, the definitions of the expressions "sale price" and "turnover" in Sections 2 (h) and 2 (i) omitting immaterial portions were as follows:

"2 (h)- sale price means the amount payable to a dealer as valuable consideration for-

(i) the sale or supply of any goods, less any sum allowed as cash discount according to ordinary trade practice, but including any sum charged for anything done by the dealer in respect of the goods at the time of, or before, delivery thereof, other than the cost of freight or delivery or the cost of installation when such cost is separately charged:..........

2 (i)- Turnover means the aggregate of the sale prices and tax, if any, received or receivable by a dealer, in respect of the sale or supply of goods or carrying out of any contract effected or made during a given period."

"Taxable turnover" was defined in Section 5 (2) of the Act as follows:

"5 (2). In this Act, the expression taxable turnover means that part of a dealer s gross turnover during any period which remains after deducting therefrom-

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(b) the tax, if any, paid by the purchaser to the dealer."

3. These appeals are concerned with the assessments for the quarter ending September 30, 1957, and for the quarter ending December 31, 1957, but it would be sufficient if facts relating to the assessment for the quarter ending September 30, 1957, are given, because apart from figures there is no difference in the relevant facts. For the quarter ending September 30, 1957, the respondent, M/s. Utkal Distributors (P) Ltd., hereinafter referred to as the assessee, claimed to deduct from its gross turnover the sum of Rs. 3874.49 on the ground that it had paid this sum on the purchases made by it as Central Sales Tax. The Sales Tax Officer disallowed the claim. On appeal, the Collector of Sales Tax, Orissa, affirmed the order of the Sales Tax Officer. The Sales Tax Tribunal, Orissa, in second appeal, however, came to the conclusion that there was no justification to disallow the deduction claimed by the appellant. The Tribunal held that the Central Sales Tax realised by the assessee from its customers was not part of the price charged by it, and, therefore, it did not fall within the definitions of sale price and taxable turnover . The Tribunal relied on the fact that the assessee was a controlled stock-holder under the Iron and Steel (Control) Notification, dated Calcutta, the 18th October, 1958, and by virtue of condition No. 4 (ii) of the Notification, the Central 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 Stock-holder the Central Sales Tax incurred by the Controlled Stock-holder in obtaining the material and also pay such additional Central Sales Tax, if any, incurred on the sale to the Customer."

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 t