Gross turnover under sales tax law excludes turnover already taxed in commission agents' hands for the principal.

Sales made through commission agents, where tax had already been paid by those agents on behalf of the principal, were excluded from the principal's gross turnover under the U.P. Sales Tax Act. Section 3 operates on gross turnover to test entry into the taxing net, but its explanation removes from the principal's taxable field turnover on which tax has been payable and paid by the commission agent. Because the agents were treated as dealers and had already been assessed on the disputed turnover, that turnover could not be added again in the principal's hands for the exemption threshold. The referred question was answered in the negative, in favour of the assessee.

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Issues: Whether sales made through commission agents on which sales tax had already been paid by the commission agents could be included in the principal's gross turnover for determining liability to tax under the U.P. Sales Tax Act.

Analysis: Section 3 is the charging provision, and its explanation excludes from the principal's tax field any turnover on which tax has been payable and paid by the commission agent on behalf of the principal. The scheme of the Act is that gross turnover is first examined to see whether the dealer enters the taxing net, while tax is then computed on net turnover. The definition of dealer and its explanation treat commission agents as dealers where they carry on business on behalf of principals, so turnover taxed in the commission agent's hands falls outside the principal's turnover for section 3 purposes. As the commission agents had been assessed and had paid tax on the disputed turnover, that turnover could not be added to the assessee's gross turnover for the exemption threshold.

Conclusion: The disputed turnover was not includible in the assessee's gross turnover, and the answer to the referred question was negative, in favour of the assessee.

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