A registered dealer is authorized to collect entry tax, and such tax should not form part of the turnover for sales tax assessment.

ORDER :

The appellant herein is engaged in the business of manufacture and sale of paints and is registered as a dealer under the provisions of Karnataka Sales Tax Act, 1957 (hereinafter referred to as 'KST Act'). It has been paying entry tax under the provisions of Karnataka Tax on Entry of Goods Act, 1979 (hereinafter referred to as 'KTEG Act') as well. In relation to the sales tax assessment under the provisions of KST Act for the periods 1992-1993 and 1993-1994, the appellant had claimed that entry tax amounts collected separately from the customers in the sale bills and paid to the Government will not form part of turnover so as to be subjected to levy of sales tax under the KST Act.

2. This contention of the appellant was not accepted and the entry tax so collected by the appellant from the customers was treated as part of turnover and, on that, sales tax was also levied by the Assessing Officer. This view taken by the Assessing Officer was upheld by the High Court as well in the impugned judgment.

3. For proper understanding of the matter, we reproduce the provisions of Section 3A of the KTEG Act which reads as under:

"Section 3-A. Collection of tax by registered dealer -

(1) A person who is not a registered dealer shall not collect any amount by way of tax or purporting to be by way of tax under this Act, nor shall a registered dealer collect any amount by way of tax or purporting to be by way of tax at a rate or rates exceeding the rate or rates specified in a notification issued under Section 3.

(2) No dealer shall collect any amount by way of tax or purporting to be by way of tax in respect of the entry of any goods on which no tax is payable by him under the provisions of this Act."

4. For Appellant(s) Ms. Chinmayee Chandra, Adv. Mrs. Nandini Gore, Adv. For Respondent(s) Mr. K.N. Bhat, Sr. Adv. Mr. V. N. Raghupathy, Adv. Mr. Parikshit P. Angadi, Adv. It cannot be disputed that when a registered dealer is authorised to collect any amount by way of tax, that tax shall not form part of turnover. It has been so decided by this Court in 'M/s. Anand Swarup Mahesh Kumar v. Commissioner of Sales Tax' [1980 (4) SCC 451], as is clear from the following discussion contained in the said judgment:

"13. The argument urged on behalf of the appellant is that when a dealer who in this case happens to be a commission agent is permitted by law to collect the market fee which he is liable to pay to the market committee from the purchaser, such market fee cannot form part of the consideration for sale and, therefore, cannot be included in the turnover of purchases for purposes of levy of tax under the Act. But on behalf of the State Government, it is urged that all sums paid by a purchaser to a seller or to a commission agent for the purchase of the goods including any tax or fee payable by him form the consideration for the purchase and, therefore, are liable to be included in the turnover of purchases. Reliance is placed by the State Government on M/s. George Oakes (P) Ltd. v. State of Madras' in which this Court while interpreting a similar provision in the Madras General Sales Tax Act, 1939 observed that the expression 'turnover' meant the aggregate amount for which goods were bought or sold whether for cash or deferred payment or other valuable consideration and when a sale attracted purchase tax and the tax was passed on to the consumer what the buyer had to pay for the goods included the tax as well and the aggregate amount so paid would fall within the definition of turnover. In the above case, the court was construing the meaning of the expression 'turnover' appearing in a statute in which there was no provision authorising the seller to recover the sales tax payable by him from the purchaser although the price of the goods realised by him included the sales tax payable by him and thus he had passed on his liability to the purchaser. The next decision on which reliance was placed by the State Government is Delhi Cloth and General Mill