Taxable turnover includes purchase price where statute expressly provides a valid basis for sales tax computation.

The Bombay HC upheld the levy of sales tax on the purchase price of goods despatched outside the State under the proviso to rule I(ii) of section 6(3) of the Bombay Sales Tax Act, 1946. It treated "taxable turnover" as an artificial statutory concept and read the charging provision with the computation machinery, holding that the Legislature could validly include an amount equivalent to purchase price in taxable turnover for goods sent outside Bombay. The levy was therefore a permissible method of measurement, not an unlawful alteration of the incidence of tax.

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Issues: Whether the levy of sales tax on the purchase price of goods despatched outside the State under proviso (b) to rule I(ii) of sub-section (3) of section 6 of the Bombay Sales Tax Act, 1946 was valid in law.

Analysis: The expression "taxable turnover" was treated as an artificial statutory concept for computing the amount on which sales tax was payable. The charging section and the computation provisions were read together, and the proviso was held to be an authorised part of the machinery for ascertaining taxable turnover. The Court distinguished the earlier challenge to a rule made under a different statutory scheme, observing that in the present Act the Legislature itself had by legislation included an amount equivalent to the purchase price in taxable turnover where the goods were despatched outside Bombay. The levy was therefore not treated as an impermissible alteration of the incidence of taxation but as a valid legislative method of measuring sales tax.

Conclusion: The proviso was valid, and the levy of tax on the purchase price was upheld.

Ratio Decidendi: Where the Legislature, within its competence, expressly includes an amount equivalent to purchase price in the statutory definition or computation of taxable turnover, the levy is valid even if that amount would not otherwise form part of turnover in its ordinary sense.

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