Sales tax collected as part of sale consideration counts in turnover; later exclusion applied only prospectively

Sales tax collected by a dealer from customers was treated as part of the sale consideration and therefore includible in turnover under the General Sales Tax Act, as the statutory definition covered the aggregate amount for which goods were sold. The earlier Travancore-Cochin view was treated as displaced by the later Supreme Court position. The subsequent amendment excluding sales tax collections from net turnover was held to operate only from its commencement date, because there was no express retrospective intent and the tax liability for earlier sales had already become complete. The assessment was upheld and the exclusion was denied.

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Issues: (i) Whether sales tax collected by a dealer from customers formed part of his turnover under the General Sales Tax Act, XI of 1125; (ii) Whether the amendment excluding amounts of sales tax collected by the dealer from computation of net turnover applied retrospectively to sales effected before the amendment.

Issue (i): Whether sales tax collected by a dealer from customers formed part of his turnover under the General Sales Tax Act, XI of 1125.

Analysis: The definition of "turnover" under Section 2(k) covered the aggregate amount for which goods are bought or sold. The amount paid by the purchaser to the seller, even when separately described as sales tax, formed part of the consideration for the sale. The later Supreme Court view treating tax passed on to the consumer as part of the price was applied, and the contrary Travancore-Cochin decisions were treated as impliedly overruled.

Conclusion: The sales tax collected by the dealer was includible in turnover and the assessment was valid.

Issue (ii): Whether the amendment excluding amounts of sales tax collected by the dealer from computation of net turnover applied retrospectively to sales effected before the amendment.

Analysis: The exclusion introduced by the notification came into force only from 1st April, 1951. The liability relating to sales made during the earlier period had already become complete before the amendment. In the absence of any express retrospective operation, the rule and notification were treated as prospective only.

Conclusion: The amendment did not apply retrospectively and the dealer could not claim the exclusion.

Final Conclusion: The assessment was upheld, the suit was dismissed, and the appeal succeeded.

Ratio Decidendi: Tax collected by a dealer as part of the price paid by the purchaser forms part of turnover unless the governing law expressly excludes it, and an exemption or exclusion introduced later operates prospectively in the absence of clear retrospective intent.

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