HEADNOTE

In Andhra Pradesh, Sales tax is levied under the authority of sections 5 and 5A of the A.P. General Sales Tax Act, 1957 on the ’turnover’ of a dealer. The expression ’turn- over’ has been defined in section 2(s) inter alia to include the total amount set out in the bill of sale or the total amount charged as consideration for the sale or purchase of goods whether such sales includes any other sum charged by the dealer whatever be the description, name or object thereof. Whether or not sales tax collected by the dealers from the buyers would fall under the inclusive part of aforesaid definition is the question raised in these ap- peals. It has arisen in the context of two categories of cases, namely:

(i) wherein the sales tax has been separately set out in the bill of sale and is collected by the seller at the time of sale immediately after or at the time of delivery of the goods.

(ii) wherein the sales tax is not mentioned in the bill at all but simultaneously collected with the delivery of the goods separately under debit notes whereby the exact amount of sales tax due is collected from the purchaser by the seller but the said amount is kept in the suspense account.

The submissions urged by the appellants before the High Court in their Writ Petitions were:

1. That where the amount is collected specifically as ’tax’, it cannot be deemed to be a part of the consideration for the sale of the goods and as such it cannot form part of the turnover within the meaning of section 2(s) of the Act.

2. Inasmuch as the Act does not prohibit the dealer to pass on the sales tax component of the sale price to the purchaser, the dealer should he deemed to he an agent, of the Government for collecting the sales tax amount.

The High Court repulsed the plea of the assessees that the amount of sales tax so collected from the buyers was not includible in the turnover for the purposes of computing the sales tax liability of the assessees. The concerned asses- sees have approached the Supreme Court by way of the present group of appeals by Special Leave. Dismissing the appeals, the Court, HELD: 1.1 The sales tax component of the sale price charged by the vendor to the vendee is not collected by him as an agent of the Revenue (State Government). [ 953D-E] 1.2 Some of the salient features of the A.P. General Sales Tax, 1957 are:-

(1 ) There is no provision in the Act which imposes a legal obligation on the vendor of the goods to recover sales tax on the goods sold to the vendee. For instance the vendor is not prohibited from selling the goods withont recovering the sales tax from the vendee. The seller may not charge or recover the sales tax from the buyer. He will not he violat- ing any provision of the Act or incurring any penal conse- quence by doing so. In other words the collection of the sales tax from the buyer is a matter of his choice. He may or may not do so. If he does not do so he does not expose himself to any penal consequence or legal liability.

(2) There is no legal obligation imposed by the Act on the buyer of the goods to pay sales tax at the time of the purchase of the goods. If the vendor does not insist on such payment and if the buyer does not pay the tax he does not violate any provision of the law or incur any legal liability.

(3) There is no provision in the Act which casts any legal duty on the vendor to mention in the bill or the voucher issued to the buyer that sales tax has been recovered from the buyer. Nor is then any obligation on him to show that sales tax is included in the price charged or to specify the amount of sales tax separately in the bill or voucher.

(4) Nothing in the Act requires the dealer to set apart the amount recovered from the vendee by way of sales tax. He is neither bound to keep a separate account of the amount so recovered nor to keep it in a separate cash box. He can treat it as his own money, keep it in his own cash box, and use it as flit were his own property. If the amount is stolen or is misap