1980 Supreme(SC) 411

SUPREME COURT OF INDIA
= 1980 Tax. L.R. 1789
(From : Asstt. Commr. (Judicial) Sales Tax, Meerut)*
15-9-1980.
P.N. BHAGWATI AND E.S. VENKATARAMIAH, JJ.
M/s. Anand Swarup Mahesh Kumar, Appellant
Versus
The Commissioner of Sales Tax, Respondent.
Civil Appeal No. 3345 of 1979, D/- 15-9-1980.

Headnote:(A) U.P. Sales Tax Act (15 of 1948), S.3D(1), S.3D(4) and S.3F - Goods notified under S. 3-D(1) - Levy of additional tax in respect of turnover of purchases thereof - S. 3-F overrides S. 3-D(4) - Demand of additional tax is valid.

       It is open to the assessing authority to demand additional tax under S. 3-F in respect of the turnover of purchases of goods notified under S. 3-D (1) of the Act. (Para 11)

       By enacting sub-section (4) of S. 3-D, the State Legislature has not forfeited its power to levy any other tax under the Act on the goods notified under S. 3-D (1) for ever. It is always open to the Legislature to modify the effect of sub-section (4) of Section 3-D by a subsequent legislation. (Para 11)

       Since S. 3-D of the Act is expressly mentioned in S. 3-F, it has to be held that S. 3-F overrides sub-s. (4) of S. 3-D and that additional tax can be collected even in respect of the turnover of purchases of goods notified under Section 3-D (1) notwithstanding sub.s. (4) of S. 3-D of the Act. (Para 11)

       (B) U.P. Sales Tax Act (15 of 1948), S.3D - Market fees payable to Commission Agent cannot be included in turnover of purchases.

       1979 Tax LR 1778(A11), Overruled.

       Judgment of Assistant Commissioner (Judicial) Sales Tax, Meerut in Appeal No. 1502 of 1978, D/- 31-7-1979, Reversed.

       The market fees payable under the U.P.Krishi Utpadan Mandi Adhiniyam, (25 of 1964) being a sum which can be collected from the purchaser by virtue of the provision contained in Section 17 (iii) (b) (1) of the Adhiniyam by the Commission Agent who is required to pay the same to the Market Committee, cannot be considered as forming part of the consideration paid or payable by the purchaser to the Commission Agent in respect of purchase of goods at an auction held within a market area established under the Adhiniyam and, therefore, it cannot be included in the turnover of purchases for purposes of levy of tax under Section 3-D of the Act. (Para 15)

       Where a dealer is authorised by law to pass on any tax payable by him on the transaction of sale to the purchaser, such tax does not form part of the consideration for purposes of levy of tax on sales or purchases but where there is no statutory provision authorising the dealer to pass on the tax to the purchaser, such tax does form part of the consideration when he includes it in the price and realizes the same from the purchaser. The essential factor which distinguishes the former class of cases from the latter class is the existence of a statutory provision authorising a dealer to recover the tax payable on the transaction of sale from the purchaser. 1979 Tax LR 1778 (A11), Overruled; AIR 1975 SC 1801, Rel. on; Judgment of Assistant Commissioner (Judicial) Sales Tax, Meerut in Appeal No. 1502 of 1978, D/- 31-7-1979, Reversed. (Para 15)

       (C) U.P. Sales Tax Act (15 of 1948), S.3D - Commission payable by purchaser to Commission Agent dealer - Can be included in turnover of purchases.

       The commission (dami) payable by a purchaser to a commission agent operating within a market area established 441 under the adhiniyam can be treated as forming part of the turnover of purchases for two reasons ( (i) the commission paid by the purchaser is not any tax or fee payable to a Government or statutory body which is not a party to the contract of sale and (ii) the commission is actually the profit of the dealer who also happens to be a commission agent and should, therefore, necessarily be considered as consideration for the sale of goods. (Para 16)

       The provisions contained in Section 10 of the Adhiniyam and the Rules framed thereunder do not in any way affect the above conclusion. A combined reading of Section 10 of the Adhiniyam , Rule 79 of the Rules made under the Adhiniyam and the bye-laws made by the Market Committee shows that a commission agent cannot realize any commission higher than what is prescribed by law. The commission chargeable by the commission agent is not a sum which he has in his turn to pay to an authority either by way of tax or by way of fee but is only a reward for the services rendered by him. (Para 17)