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1987 Supreme(Cal) 66
High Court Of Calcutta
Suhas Chandra Sen
JADUNATH SAHA - Appellant
Versus
COMMISSIONER OF COMMERCIAL TAXES - Respondent
Civil Order 16978 (W) Of 1985
Decided On : 03/03/1987
The gross turnover for the purpose of levy of turnover tax under Section 6b of the Bengal Finance (Sales Tax) Act, 1941 includes the entire turnover of a dealer without any deduction, including sales of goods declared tax-free under Section 6.
Headnote:
BENGAL FINANCE (SALES TAX) ACT, 1941 - SECTION 6, 6B - TURNOVER TAX - INCLUSION OF TAX-FREE GOODS IN GROSS TURNOVER - INTERPRETATION.
Fact of the Case:
Petitioners, dealers in various notified commodities, challenged the inclusion of transactions relating to kerosene oil, high-speed diesel oil, mobil oil, and vegetable oil in their turnover for the purpose of levy of turnover tax under Section 6b of the Bengal Finance (Sales Tax) Act, 1941. They argued that since these commodities were excluded from taxable turnover under Section 6, they should not be considered in calculating turnover tax liability.
Finding of the Court:
The court held that the petitioners' argument was not tenable. It found that Section 6b imposed an additional tax on dealers whose aggregate gross turnover exceeded a certain limit, and that the gross turnover included the entire turnover of a dealer without any deduction.
Issues: Whether the sales of tax-free goods should be included in the gross turnover for the purpose of computation of turnover tax under Section 6b of the Bengal Finance (Sales Tax) Act, 1941.
Ratio Decidendi: The court interpreted Section 6b of the Act to mean that turnover tax is levied on that part of the gross turnover of a dealer which remains after deducting therefrom his turnover on certain specified categories of sales, including sales of goods declared tax-free under Section 6. The court held that the definition of "gross turnover" in the Act is broad and includes the entire turnover of a dealer without any deduction.
Final Decision: The court dismissed the writ petition, holding that the petitioners were liable to pay turnover tax on the sales of tax-free goods.
( 1 ) THE petitioners, Jadunath Saha and Shyamendralal Saha, carry on Business in partnership under the name and style of M/s. Nityananda Bhandar. The petitioners are registered dealers under the West Bengal Sales Tax Act, 1954, the Bengal Finance (Sales Tax) Act, 1941 and also under the Central Sales Tax Act, 1956. There is no dispute that the petitioners are dealers in various notified commodities, like flour, suji, atta, soap, sugar, detergent powder, turmeric, fertiliser, etc. , for which the petitioners are liable to pay sales tax. The petitioners also carry on business of purchase and sale of various commodities like kerosene oil, high speed diesel oil, mobil oil and vegetable oil which are not liable to be included in the "taxable turnover" of the petitioners for the purpose of computation of sales tax liability. The dispute, in the case, is about the includibility of the transactions relating to kerosene oil, high speed diesel oil, mobil oil and vegetable oil in the turnover of the petitioners for the purpose of levy of turnover tax. It has been contended on behalf of the petitioners that since the turnovers in respect of these commodities are not to be included in the taxable turnover of the petitioners, turnover tax should not be calculated by taking into consideration these items which have been specifically kept out of the purview of the Bengal Finance (Sales Tax) Act, 1941 by the Schedule annexed to the Act read with Section 6 of the Act.
( 2 ) THE charging section of the Bengal Finance (Sales Tax) Act, 1941 is Section 4 which lays down that every dealer whose gross turnover in a given year exceeded the taxable quantum shall be liable to pay tax under that Act on all sales effected during the year. "taxable quantum" has been defined in Section 4 (5) to mean, in relation to any dealer who imports for sale any goods into West Bengal, Rs. 20,000, in relation to any dealer who manufactures or produces any goods for sale, Rs. 50,000 and in relation to any other dealer, Rs. 1,00,000. "gross turnover" has not been defined in the Act. "turnover" has, however, been defined by Section 2 (1) to mean the aggregate of sale prices or parts of sale prices receivable during any given period. There are some special cases also mentioned in that definition which are not material for the purpose of this case.
( 3 ) SECTION 5 lays down the rate of tax and provides that the tax payable by a dealer shall be levied on his "taxable turnover" at the rates specified therein. Section 5 (2) defines "taxable turnover"-In the case of a dealer who is liable to pay tax under Section 4 or under Section 8 (3), that part of his gross turnover during any period which remains after deducting therefrom various categories of turnover enumerated in that sub-section.
( 4 ) SECTION 6 (1) is important for the purpose of this case and it lays down "no tax shall be payable under this Act on the sale of goods specified in the first column of Schedule I, subject to the conditions and exceptions, if any, set out in the corresponding entry in the second column thereof. "
( 5 ) THE scheme of the Bengal Finance (Sales Tax) Act is to levy tax on "all sales effected" of all commodities except which have been specified as tax-free in the first column of Schedule I to the Act subject to the conditions and exceptions set out therein. Entry 17 of the Schedule deals with inferior grade of kerosene oil and entry 50 refers to kerosene oil other than the inferior grade of kerosene oil referred to in entry 17.
( 6 ) SECTION 6b creates the liability to pay turnover tax and lays down the rates thereof. Section 6b provides : 6b. Liability to payment of turnover tax and rate thereof.- (1) Notwithstanding anything contained elsewhere in this Act,- (a) every dealer, whose aggregate of the gross turnover under this Act and the gross turnover under the West Bengal Sales Tax Act, 1954 (West Ben. Act IV of 1954) during the last year ending on or before the 31
