Turnover deduction for amounts treated as sales tax: dealer's deposit collections were excluded from taxable turnover.

Amounts collected by a dealer from customers, when in substance representing sales tax payable to the revenue, were deductible from taxable turnover under the Kerala sales tax regime. The Court treated the sums as amounts recovered in connection with sales and held that the turnover-deduction rule required their exclusion once they were shown to represent sales tax already realised for the revenue. The assessments were therefore set aside to the extent they included those deposit amounts in turnover, and the petitions succeeded.

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Issues: Whether amounts collected from customers as deposits, which in substance represented sales tax, were deductible from the dealer's total turnover for assessment under the Kerala sales tax law.

Analysis: The amounts collected as deposits were found to have been in fact recovered by the dealer in connection with sales, and the parties accepted that the amounts collected towards freight and excise duty were includible in turnover. On that basis, the deposits were treated as sales tax recovered by the dealer and payable to the revenue. Rule 9(1) applied where amounts recovered by the dealer and found to represent sales tax had already been realised by the revenue, requiring their exclusion from the dealer's turnover for assessment.

Conclusion: The amounts collected as deposits were deductible from the total turnover and could not be included for sales tax assessment.

Final Conclusion: The assessments were set aside to the extent they included the deposit amounts in turnover, and the petitions succeeded.

Ratio Decidendi: Amounts recovered by a dealer which are in substance sales tax payable to the revenue must be excluded from taxable turnover under the applicable turnover-deduction rule.

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