Gross turnover for sales tax liability includes commission-agent sales; assessment deductions apply only when computing tax quantum.

Sales made by an assessee as a commission agent were held includible in gross turnover for determining liability under the U.P. Sales Tax Act. The court distinguished between turnover used to test taxability and turnover used to compute the amount of tax: gross turnover governs liability, while net turnover after statutory deductions governs assessment of tax quantum. Because deductions operate only at the assessment stage, they did not justify excluding the commission-agent sales from turnover for determining whether the dealer was liable to tax.

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Issues: Whether sales made by an assessee in the capacity of a commission agent are to be included in gross turnover for determining liability to sales tax under the U.P. Sales Tax Act.

Analysis: Liability to pay sales tax and the computation of the amount of tax are distinct concepts under the Act. The turnover relevant for deciding whether a dealer is liable to tax is the turnover of the previous year as determined under the charging provisions, while the quantum of tax, once liability is attracted, is computed on the basis of net turnover after the deductions contemplated by the Act and the Rules. The scheme of the Act and the Rules shows that gross turnover is used for determining taxability and net turnover is used for assessing the amount of tax. There was no basis to exclude the commission-agent sales from turnover for the purpose of determining liability merely because different deductions may apply at the stage of assessment.

Conclusion: The commission-agent sales were includible in gross turnover for determining liability to tax, and the question was answered in the affirmative against the assessee.

Final Conclusion: The reference was decided in favour of the taxing authority on the point of includibility of the sales in gross turnover for purposes of liability.

Ratio Decidendi: The turnover relevant for deciding liability to sales tax is distinct from the turnover relevant for computing the amount of tax, and deductions applicable at the assessment stage do not govern the determination of taxability.

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