Case: Joint Commercial Officer, Division Ii,Madras-2 Etc Vs. Spencer &amp; Co. Etc. Etc

The appeals have three different assessees as respondents and relate to different assessment years concerning each assessee, ranging from 1959-60 to 196465.2. The assessees are dealers in foreign liquor, among other goods. They have been assessed to sales tax as dealers on sales or purchases of other goods under Section 3 (1) of the Madras General Sales Tax Act, 1959. Sec. 3 (1) is the charging section providing generally that a dealer whose total turnover for a year is not less than the specified amount, shall pay a tax for each year at the specified rate. Turnover is defined in sec. 2 (r) of the Act. The relevant part of the definition is as follows:"Turnover means the aggregate amount for which goods are bought or sold or supplied or distributed, by a dealer, either directly or through another, on his own account or on account of others whether for cash or for deferred payment or other valuable consideration. . . ..." Total turnover is defined in Sec. 2 (q) of the Act as "the aggregate turnover in all goods of a dealer at all places of business in the State, whether or not the whole or any portion of such turnover is liable to tax".

Reasoning: 3. It is clear from Sec. 21-A of the Madras Prohibition Act, 1937 that the sales tax which the section requires the seller of foreign liquor to collect from the purchaser is a tax on the purchaser and not on the seller. This is what makes the authorities on which counsel for the appellants relied inapplicable to the cases before us. Under S. 21-A the tax payable is on the price of the liquor and that tax is to be paid by the purchaser, the seller is required to collect the tax from the purchaser which he has to pay over to the Government. Section 21-A makes the seller a collector of tax for the Government, and the amount collected by him as tax under this section cannot therefore be a part of his turnover. Under the Madras General Sales Tax Act, 1959 the dealer has no statutory duty to collect the sales tax payable by him from his customer, and when the dealer passes on to the customer the amount of tax which the former is liable to pay, the said amount does not cease to be the price for the goods although "the price is expressed as X plus purchase tax" Paprika Ltd. v. Board of Trade (1944) 1 All ER 372. But the amounts collected by the assesses concerned in these appeals under a statutory obligation cannot be a part of their taxable turnover under the Madras General Sales Tax Act, 1959.