Tax remittance and purchase-turnover levy under sales tax law: only lawfully collected tax is payable, and purchase-point taxation was upheld.

Amounts retained by a dealer from payments to non-resident principals were not payable to Government under the remittance provision because section 11(2) applied only to sums collected as tax that were lawfully leviable under the Act; amounts withheld under a mistaken view of liability were refundable. The Court also held that tax could validly be levied on purchase turnover of goods bought in the State and exported outside it, because the charging scheme and rules authorised purchase-point taxation and did not require a subsequent resale of the same goods. The remittance issue was resolved for the appellant, while the purchase-turnover levy was sustained.

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Issues: (i) Whether amount retained by the dealer out of payments to non-resident principals could be treated as tax payable to the Government under section 11(2) of the Hyderabad General Sales Tax Act, 1950. (ii) Whether tax was lawfully leviable on the purchase turnover of goods purchased in the State but exported outside the State, under the Act and the Rules.

Issue (i): Whether amount retained by the dealer out of payments to non-resident principals could be treated as tax payable to the Government under section 11(2) of the Hyderabad General Sales Tax Act, 1950.

Analysis: Section 11(2) was construed as applying to amounts collected by way of tax that were lawfully leviable under the Act. The definition of tax under section 2(1) was relied upon, together with the scheme of sections 4 and 10, to hold that only amounts collected as tax within the statutory levy could be remitted to Government. Amounts retained under a mistaken apprehension of liability, but not representing tax lawfully leviable, were held not to fall within section 11(2).

Conclusion: The retained sum was not remittable to the Government and was refundable to the appellant's principals; the appellant succeeded on this issue.

Issue (ii): Whether tax was lawfully leviable on the purchase turnover of goods purchased in the State but exported outside the State, under the Act and the Rules.

Analysis: The charging scheme of the Act was read with sections 4 and 5(1), section 10, section 2(e), section 2(m), and rule 5(2) of the Hyderabad General Sales Tax Rules, 1950. The Court held that the Act authorised levy on purchase turnover where the Rules so provided, and that liability did not depend on a subsequent sale of the same goods. The phrase "series of sales" was treated as not restricting the State's power to levy tax at the purchase point, and the constitutional competence under Item 54 of List II was also recognised.

Conclusion: Tax on the purchase turnover was upheld; the appellant failed on this issue.

Final Conclusion: The appeal succeeded only to the extent of the amount wrongly directed to be remitted, while the assessment of tax on the purchase turnover was sustained.

Ratio Decidendi: Under the Act, only amounts lawfully collected or leviable as tax are payable to Government under the remittance provision, and the State may validly impose tax at the purchase point where the charging provisions and rules so provide, without requiring a subsequent resale of the same goods.

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