Sales tax deduction depends on actual tax collection, not only a separate bill entry or invoice disclosure.

Deduction under rule 6(4)(h) of the Mysore Sales Tax Rules, 1957, turns on whether the amount was actually collected in the character of tax, not merely on whether tax was separately shown in the bill. Unlike clause (f), clause (h) contains no express requirement of separate disclosure. Collection may be established from the contract of sale, invoice, cash memorandum, price list, correspondence, or other surrounding evidence showing that the price was fixed exclusive of tax and that the buyer agreed to pay tax in addition to price. Deduction is unavailable where there is no factual basis to infer tax was passed on to the buyer.

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Issues: Whether deduction under rule 6(4)(h) of the Mysore Sales Tax Rules, 1957, for amounts collected by way of tax under the Mysore Sales Tax Act, 1957, can be denied merely because the tax is not separately shown in the bill or cash memorandum, and what is required to establish such collection.

Analysis: Clause (h) of rule 6(4) contains no express condition that sales tax must be separately stated in the bill, unlike the separate requirement in clause (f) for freight and packing charges. Section 18 of the Mysore Sales Tax Act, 1957, permits a registered dealer to collect tax subject to prescribed conditions, and the object of the deduction provision is to ensure that tax is not levied again on tax collected. The expression "collected by way of tax" means amounts collected in the character of tax, and this may be shown not only by a separate entry in the bill but also by the contract of sale, invoice, cash memorandum, price list, correspondence, or other evidence showing that the price was fixed exclusive of tax and that the buyer agreed to pay tax in addition to the price. A dealer cannot claim deduction where there is no basis to infer that tax was intended to be passed on to the buyer.

Conclusion: Deduction cannot be refused solely because the tax was not separately shown in the bill, and the matter had to be examined on the totality of the evidence. The Tribunal's order was therefore set aside and the case remitted for fresh disposal.

Ratio Decidendi: For deduction of amounts collected by way of tax under rule 6(4)(h), the decisive question is whether the dealer in fact collected the amount in the character of tax, which may be proved by surrounding documentary and transactional evidence and not only by a separate bill entry.

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