Sales tax collected from buyers forms part of turnover when it is part of the sale consideration

Sales tax collected by a liquor dealer from purchasers, whether shown separately in the bill or credited to a suspense account, was treated as part of the sale consideration and therefore includible in turnover under the Andhra Pradesh General Sales Tax Act. The Court applied the broad statutory meaning of turnover and held that, absent any provision authorising the dealer to collect the amount as a separate statutory payment outside turnover, the sum retained its character as part of the price. The constitutional challenge also failed: the levy remained a tax on turnover within State competence, and the fact that the burden was passed on to buyers did not make it invalid or infringe the right to carry on business.

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Issues: (i) Whether sales tax collected by a liquor dealer from purchasers, whether shown separately in the bill or taken into suspense account under debit notes, formed part of the dealer's turnover under the Andhra Pradesh General Sales Tax Act. (ii) Whether inclusion of such sales tax in turnover was unconstitutional as being beyond legislative competence or violative of the right to carry on business.

Issue (i): Whether sales tax collected by a liquor dealer from purchasers, whether shown separately in the bill or taken into suspense account under debit notes, formed part of the dealer's turnover under the Andhra Pradesh General Sales Tax Act.

Analysis: The statutory definition of turnover was construed broadly to include the total amount set out in the bill of sale and any other sums charged by the dealer for parting with the goods. The Court treated the amount realised from the purchaser at the time of sale, even when separately described as sales tax or kept in suspense account, as part of the consideration for sale. The decisive factor was that the dealer collected the amount while transferring title in the goods, and there was no statutory provision under the Act authorising the dealer to recover tax from the purchaser in a manner that would keep such amount outside turnover. The reasoning was supported by the line of authority that where tax is merely passed on as part of the sale price and does not arise under a statutory collecting agency scheme, it remains part of the sale consideration and enters the turnover.

Conclusion: The sales tax so collected was held includible in the dealer's turnover and taxable turnover, against the assessee.

Issue (ii): Whether inclusion of such sales tax in turnover was unconstitutional as being beyond legislative competence or violative of the right to carry on business.

Analysis: The Court held that the levy was a tax on turnover within the State's competence under entry 54 of List II. The fact that the dealer passed on the burden to purchasers did not convert the amount into a separate tax on tax; it remained part of the price and therefore part of turnover. The challenge under article 19(1)(g) was rejected because there is no fundamental right to carry on liquor trade, and the heavy incidence of tax did not by itself establish unconstitutional deprivation or lack of legislative power.

Conclusion: The constitutional challenge failed, against the assessee.

Final Conclusion: The collected sales tax formed part of the dealer's sale consideration under the Act, and the constitutional objections did not prevail; the proceedings were dismissed.

Ratio Decidendi: Where a sales tax amount is collected by a dealer from the purchaser at the time of sale, and the statute does not specifically authorise such amount to be kept outside turnover or to be collected as a statutory agency payment on behalf of the purchaser, the amount is part of the consideration for the sale and is includible in turnover.

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