Embedded sales tax may be excluded from turnover, while sales of empty gunnies remain taxable under sales-tax principles.

Sales tax embedded in the sale price was treated as excludible from taxable turnover where price lists and billing practice showed the tax component was part of the consideration and intended to be borne by purchasers. The exclusion was upheld because the collection was shown to be sales tax collected as such, even though the bills did not separately state it. Turnover from sales of empty gunnies was includible in taxable turnover, as the controlling sales-tax principle applied notwithstanding the contention that the assessees were not dealers in empty gunnies or that the sales were outside the course of business. The revenue position prevailed on the empty-gunnies issue.

---

---

Issues: (i) whether sales tax collections included in the sale price were liable to be excluded from the taxable turnover; (ii) whether the turnover from sales of empty gunnies was liable to be included in the taxable turnover.

Issue (i): whether sales tax collections included in the sale price were liable to be excluded from the taxable turnover.

Analysis: The assessees sold goods under price lists and Government-controlled prices that were stated to be inclusive of sales tax. Although the sale bills did not separately show the tax component, the Board's instructions directed that sales tax collected as such should not be included in total turnover. The controlling question was whether the amount represented sales tax actually collected from buyers as part of the price structure. On the facts, the price lists and billing practice showed that the tax element formed part of the price paid by purchasers and was intended to be passed on.

Conclusion: The exclusion of the sales tax element from the taxable turnover was upheld.

Issue (ii): whether the turnover from sales of empty gunnies was liable to be included in the taxable turnover.

Analysis: The Tribunal had excluded the turnover on the view that the assessees were not dealers in empty gunnies and that such sales were not in the course of business. That approach could not stand in view of the controlling Supreme Court authority holding that sales of empty gunnies were taxable in similar circumstances. The nature of the transaction did not prevent inclusion of the turnover.

Conclusion: The turnover from sales of empty gunnies was held to be taxable and was directed to be included in the taxable turnover.

Final Conclusion: The assessee succeeded on the sales-tax collection issue, but the Revenue succeeded on the empty-gunnies issue, leaving the revision petitions only partly allowed.

Ratio Decidendi: Where the price structure shows that sales tax is embedded in the consideration and is in fact intended to be borne by the purchaser, the tax element is deductible from taxable turnover under the governing administrative instruction; sales of empty gunnies are includible in turnover when taxable on the applicable sales-tax principle.

---