Tax collected under central sales tax law remained deductible where state turnover rules expressly excluded tax collections.

Under the Mysore sales tax law and the Central Sales Tax framework, tax collected by a dealer under the Central Sales Tax Act was not part of taxable turnover where the State rule expressly excluded amounts collected by way of tax. Section 9(3) required central sales tax to be assessed and collected in the same manner as under the State law, subject to the Central Rules, and Rule 11(2) of the Central Sales Tax (Registration and Turnover) Rules operated only as an additional deduction for returned goods. In the absence of direct repugnancy, the State deduction continued to apply, so the collected tax was deductible from turnover.

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Issues: Whether tax collected by a dealer under the Central Sales Tax Act was deductible from the taxable turnover while determining inter-State sales turnover under the Mysore sales tax law and the Central Sales Tax Rules.

Analysis: The definition of taxable turnover under the Mysore Act authorised deductions to be made in the manner prescribed, and rule 6(4)(h) expressly excluded amounts collected by way of tax under the Act from taxable turnover. Section 9(3) of the Central Sales Tax Act required assessment and collection of central sales tax in the same manner as under the State sales tax law, subject to the Central Rules. Rule 11(2) of the Central Sales Tax (Registration and Turnover) Rules, 1957, was not exhaustive of all deductions; it only added one further permissible deduction for returned goods. In the absence of any repugnancy between the Central Rules and the State rules, the State deduction excluding tax collected by the dealer continued to apply.

Conclusion: The tax collected under the Central Sales Tax Act was not includible in the taxable turnover, and the assessee was entitled to the deduction.

Final Conclusion: The revisions succeeded, and the assessment made by the Commercial Tax Officer was restored.

Ratio Decidendi: Where the Central Sales Tax Act adopts the State method of turnover computation subject to the Central Rules, a Central Rule that grants an additional deduction does not displace State rules allowing other deductions unless there is a direct repugnancy.

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