Case: State Of Kerala Vs. Ramaswami Iyer &amp; Sons

what is the true and real extent of the transactions which are assessable; all these and other allied questions have to be determined by the appropriate authorities themselves; and so, we find it impossible to accept Mr. Sastris argument that the finding of the appropriate authority that a particular transaction is taxable under the provisions of the Act, is a finding on a collateral fact which gives the appropriate authority jurisdiction to take a further step and make the actual order of assessment. 10. The action of the taxing authority in Basappas case, 1964-15 STC 144 : (AIR 1964 SC 1873 ), in taxing transaction which he erroneously held were taxable was no more outside the Act than the action of the taxing authority in Kamala Mills case, AIR 1965 SC 1942 . If it be granted that the jurisdiction of the civil court may be excluded by express enactment or by necessary intendment arising from the scheme of the Act, Basappas case, 1964-15 STC 144 : (AIR 1964 SC 1873 ) must be regarded as wrongly decided. 11. It is true that even if the jurisdiction of the civil court is excluded, where the provisions of the statute have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure, the civil courts have jurisdiction to examine those cases: Secretary of State v. Mask and Co., 67 Ind App 222: (AIR 1940 PC 105 ). Counsel for the respondents urged that the case of the respondents fell within that exception, since the Sales tax Officer in imposing tax-liability acted in defiance of the mandatory provisions of the Act and in support of the argument he placed reliance upon R. 7 of the Rules framed under the Act and the definition of "turnover under the Act. Under the Act sales-tax is charged for the year at the prescribed rates on the total turnover of the dealer. The Government of Travancore-Cochin promulgated rules in exercise of powers under S. 24 of the Travancore-Cochin General Sales Tax Act, and R. 7 dealt with computation of "net turnover. In R. 7 (1) by Cls. (a) to (k) certain exemptions admissible in the computation of the net turnover were set out. By notification No. SRI-1643-51-RD dated March 31, 1951 it was directed that with effect from April 1, 1951, the following clause shall be added:"(1) all amounts of sales-tax collected by the dealer. By this amendment in the computation of the taxable turnover, the amounts of sales-tax collected by the dealer were not to be included. But this amendment was to have effect only from April 1, 1951, and in the proceeding in this appeal tax-liability for the assessment period ending March 31, 1951 fell to be determined. The exemption was therefore inoperative in the computation of taxable turnover for the assessment year in question. 12. Counsel for the respondents however contended that the effect of the amendment was merely to clarify what was implicit in the content of the expression "turnover. By S. 2 (k) "turnover means - insofar as the definition is relevant - "the aggregate amount for which goods are either bought by or sold by a dealer, whether for cash or for deferred payment or other valuable consideration* * * * ""Turnover being the aggregate amount for which goods are bought or sold, and normally the aggregate amount would include such amount as the purchaser pays to the dealer for the goods, the expression "aggregate amount for which goods are * * sold within the meaning of "turnover in S. 2 (k) would include the amount of sales-tax received by the dealer. There is no provision in the Act which may by implication suggest that from the connotation of the expression "turnover the sales-tax collected in the year of assessment ending March 31, 1951 was to be excluded. Exclusion prescribed by Cl. (1) of R. 7 (1) enacted with effect from April 1, 1951 is not clarificatory, but prescribes an additional head in the computation of net turnover. 13. This Court in George Oaks (Private) Ltd. v. State of Madras, AIR 1962 SC 1037 , in dealing with the question whether sales-tax charged by the dealer may be excluded within the meaning of the expression "turnover as used in the Madras General Sales Tax Act, 1939, observed:"Under the definition of turnover the aggregate amount for which goods are bought or sold is taxable. This aggregate amount "includes the tax as part of the price paid by the buyer. The amount goes into the common till of the dealer till he pays the tax. It is money which he keeps using for his business till he pays it over to Government. Indeed, he may turn it over again and again till he finally hands it to Government. There is thus nothing anomalous in the law treating it as part of the amount on which tax must be paid by him. This conception of a turnover is not new. It is found in England and America and there is no reason to think that when the legislatures in India defined turnover to include tax also they were striking out into something quite unknown and unheard of before. 14. Counsel for the respondents contended that these observations made in interpreting the terms of the Madras General Sales Tax (Definition of Turnover and Validation of Assessments) Act, 1954, have no bearing on the interpretation of the expression "turnover as used in the Travancore-Cochin General Sales Tax Act. But the observations made by the Court were not made in the context of any special statute. 15. There was in the Travancore-Cochin, General Sales Tax Act at the material time no express provision which obliged the taxing authority to exclude from the computation of taxable turnover the amount of sales-tax collected by the dealer. The argument of counsel for the respondents that the taxing authority has infringed a prohibition imposed upon him has therefore no substance. 16.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]The assessing authority invested with power under the Travancore-Cochin General Sales Tax Act is constituted by the Act a tribunal, which within the limits of its authority is competent to decide all questions of fact and law arising before him in the course of proceedings for assessment, and of his own jurisdiction as well. The Act sets up machinery for levy, assessment, and collection of tax. By S. 3 of the Act charge is imposed, subject to exemptions prescribed by Ss. 4, 5, and 6 upon every dealer to pay tax on his total turnover of each year. Duty to pay the tax is imposed by S. 11 (2) of the Act. Section 12 sets up the procedure of the assessing authority in making assessments and S. 13 deals with recovery of tax. A taxpayer aggrieved by an order of assessment may appeal under S. 14 against the order of assessment, and the decision of the appellate authority is by Cl. (4) subject to the power of revision conferred by S. 15 expressly declared final. Section 15 as it stood at the relevant time provided for the exercise of revisional jurisdiction by the Board of Revenue against the order of the taxing authorities - original as well as appellate. By S. 24 power is conferred upon the State Government to frame rules, setting up machinery for determination of the net chargeable turnover, for refund of tax collected in excess of true liability and for other incidental matters. The Act is therefore a complete code dealing with the levy, assessment and collection and refund of tax. It authorises investment of power in a hierarchy of authorities to administer the Act. For the purpose of making assessment of tax, the authorities have power to decide all questions arising before them, and the orders of the appellate authorities subject to the exercise of revisional jurisdiction under S. 15 are declared final. Liability to pay tax arises under and by virtue of the provisions of the Act, and the quantum of liability may be determined under the Act aloneThere was in the Travancore-Cochin, General Sales Tax Act at the material time no express provision which obliged the taxing authority to exclude from the computation of taxable turnover the amount of sales-tax collected by the dealer. The argument of counsel for the respondents that the taxing authority has infringed a prohibition imposed upon him has therefore no substance.