Inter-State sales excluded from gross turnover for U.P. Sales Tax liability under the State minimum turnover rule

Inter-State sales are excluded from gross turnover for determining liability under the U.P. Sales Tax Act because gross turnover covers only sales taxable under that Act or sales that would be taxable but for an exemption under it. The statutory minimum turnover threshold therefore cannot be crossed by including transactions outside the State's taxing competence, and the constitutional bar on taxing inter-State sales supports their exclusion. On that basis, inter-State sales remain outside the computation used to trigger State sales tax liability.

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Issues: Whether inter-State sales are includible in the gross turnover for determining liability under the U.P. Sales Tax Act.

Analysis: Under the charging provision, tax liability depends on turnover for the assessment year, but the Act exempts dealers below the prescribed minimum turnover. Gross turnover, though not defined, means the aggregate of sales which are taxable or would be taxable but for an exemption under the Act. Inter-State sales are not taxable under the U.P. Sales Tax Act; their exclusion flows from the constitutional bar and the separate scheme of sales tax legislation, not from any exemption under the State Act. Such sales are therefore outside the purview of the State Act and cannot be counted for crossing the minimum taxable limit.

Conclusion: Inter-State sales are not includible in gross turnover for the purpose of determining liability under the U.P. Sales Tax Act. The question is answered in favour of the assessee and against the Revenue.

Final Conclusion: The assessee's turnover had to be computed without including inter-State sales, with the result that the State sales tax liability could not be sustained on the footing adopted by the revising authority.

Ratio Decidendi: Gross turnover under the State sales tax law comprises only sales taxable under that Act or sales that would be taxable but for an exemption under that Act, and sales excluded from the State's taxing competence cannot be counted for the statutory minimum turnover threshold.

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