Sales tax collected under statutory obligation is excluded from turnover and cannot be taxed again

Sales tax collected by a registered dealer under a statutory obligation does not form part of turnover for further sales tax under the Travancore-Cochin General Sales Tax Act. Section 2(k) defines turnover as the aggregate amount for which goods are bought or sold, and the explanation for sums charged for work done by the dealer does not extend to sales tax collections. Section 3(4) requires turnover to be computed under the prescribed rules, and Rule 7(1) directs deduction of sales tax collected by the dealer in arriving at net turnover. The dealer acts for and on behalf of the State and has no beneficial interest in those amounts.

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Issues: Whether sales tax collected by a registered dealer forms part of his turnover so as to be subjected to further sales tax under the Travancore-Cochin General Sales Tax Act.

Analysis: Section 2(k) defines turnover as the aggregate amount for which goods are bought or sold, and the explanation relating to sums charged for anything done by the dealer does not cover sales tax collected by him under a statutory obligation. Section 3(4) requires turnover to be determined according to the prescribed rules. Rule 7(1) provides that tax under the Act is leviable only on the net turnover, and specifically directs that all amounts of sales tax collected by the dealer shall be deducted in arriving at net turnover. The collection is made for and on behalf of the State, and the dealer has no beneficial interest in it.

Conclusion: Sales tax collected by the dealer is not liable to further sales tax and must be excluded in computing net turnover.

Final Conclusion: The levy made on the sales tax collected by the petitioner was without authority and was quashed.

Ratio Decidendi: Amounts collected as sales tax by a dealer under a statutory obligation are deductible in computing net turnover and cannot themselves be subjected to further sales tax.

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