1978 (5) TMI 110 - HC - VAT and Sales Tax

Court upholds sales tax assessment despite low sales, as purchases exceed threshold.

The High Court of Allahabad upheld the assessment of a dealer under section 18 of the U.P. Sales Tax Act, despite sales being below Rs. 1,000, as ... Definition of 'turnover' including purchases - average monthly turnover for a dealer commencing business - liability to tax under section 18(3) of the U.P. Sales Tax ActDefinition of 'turnover' including purchases - average monthly turnover for a dealer commencing business - liability to tax under section 18(3) of the U.P. Sales Tax Act - Whether the dealer was assessable under section 18 of the U.P. Sales Tax Act when his purchases amounted to Rs. 5,360 between 20th December, 1968 and 31st March, 1969. - HELD THAT: - Section 2(i)'s definition of 'turnover' includes the amount for which goods are bought as well as sold. Section 18(2) requires computation of the average estimated monthly turnover for the remainder of the year to test liability, and section 18(3) permits assessment where that average monthly turnover meets the statutory threshold. Applying the statutory definition, the assessee's purchases of Rs. 5,360 in the period from 20th December, 1968 to 31st March, 1969 yield an average monthly turnover in excess of the threshold of Rs.1,000; accordingly the assessing authority was empowered to bring the dealer to tax under section 18(3). The Court answered the referred question in the affirmative in favour of the department and against the assessee.The dealer was assessable under section 18 of the U.P. Sales Tax Act on the basis of the average monthly turnover computed by including purchases.Final Conclusion: Reference answered in the affirmative: in view of the statutory definition of 'turnover' (which includes purchases) and the requirement of section 18, the assessee's average monthly turnover for the stated period exceeded the prescribed threshold and he was liable to be assessed under section 18. The High Court of Allahabad ruled that a dealer was assessable under section 18 of the U.P. Sales Tax Act, as his purchases exceeded Rs. 1,000 on average per month, despite sales being less than Rs. 1,000. The assessment was upheld, and the reference was answered in favor of the department. (Case citation: 1978 (5) TMI 110 - ALLAHABAD HIGH COURT)