1959 (2) TMI 20 - HC - VAT and Sales Tax

Inclusion of Excise Duty in Taxable Turnover Upheld Under Bihar Sales Tax Act

Dayabhai Gokulbhai Patel Versus. The State of Bihar

The court upheld the inclusion of Rs. 41,736 (excise duty) in the taxable turnover, considering it as part of the sale price under the Bihar Sales Tax ... - Issues Involved:1. Legality of including Rs. 41,736 (excise duty) in the taxable turnover.2. Availability of alternative remedies under the Bihar Sales Tax Act.3. Appropriateness of a writ under Article 226 of the Constitution.Detailed Analysis:1. Legality of Including Rs. 41,736 (Excise Duty) in the Taxable Turnover:The petitioner argued that the sum of Rs. 41,736, representing central excise duty paid by customers, should not be included in the taxable turnover. The petitioner contended that since the customers paid the excise duty directly into the treasury, it was not part of the consideration for the sale. However, the court held that under Section 2(h) of the Bihar Sales Tax Act, 'sale price' includes any sum charged for anything done by the dealer in respect of the goods at the time of or before delivery. The court noted that the excise duty was deposited by the customers in the treasury in the name of the petitioner, making the customers agents of the petitioner for this purpose. The legal liability to pay the excise duty was upon the petitioner under the Central Excise and Salt Act, 1944. Therefore, the payment of excise duty by the customers was considered part of the valuable consideration for the purchase of the goods, thus constituting part of the sale price within the meaning of Section 2(h) of the Bihar Sales Tax Act. Consequently, the amount was rightly included in the taxable turnover and assessed to sales tax.2. Availability of Alternative Remedies under the Bihar Sales Tax Act:The respondent argued that the petitioner had an alternative remedy under Section 25(2) of the Bihar Sales Tax Act, which he did not avail within the statutory time limit. Section 25(1) allows a dealer to require the Board of Revenue to refer any question of law to the High Court. If the Board refuses, Section 25(2) permits the dealer to apply to the High Court within 45 days against such refusal. The court emphasized that the Bihar Sales Tax Act provides an elaborate machinery for the determination of the liability of dealers to pay sales tax, including provisions for appeal, revision, and review under Section 24 and the referral of legal questions to the High Court under Section 25. The court found no sufficient cause for the petitioner's failure to follow the prescribed procedure, thereby rejecting the argument that a writ under Article 226 was the proper remedy in this case.3. Appropriateness of a Writ under Article 226 of the Constitution:The court reiterated that a writ under Article 226 is an extraordinary remedy, meant to be used in proper cases where no other adequate legal remedy exists. The court referred to precedents, including Allen v. Sharp and Raleigh Investment Co., Ltd. v. Governor-General in Council, which underscore that statutory remedies should be exhausted before seeking a writ. The court held that the petitioner had an effective remedy provided by the machinery of the Bihar Sales Tax Act and, having not availed himself of that remedy within the stipulated time, could not seek redress through a writ under Article 226. Even assuming the writ was appropriate, the court found no merit in the petitioner's claim for a refund of the tax amount.Conclusion:The court dismissed the application, holding that the amount of Rs. 41,736 was rightly included in the taxable turnover and assessed to sales tax. The petitioner failed to make out a case for the grant of a writ under Article 226 of the Constitution, and the application was dismissed with costs.