Separately collected sales tax is excluded from sale price under the Bombay Sales Tax Act, 1959.

Separately collected sales tax shown in an invoice is treated as distinct from the price of goods under the Bombay Sales Tax Act, 1959. The statutory definition of "sale price" had to be read with the provisions restricting unauthorised tax collection and with Rule 46-A, which allowed a registered dealer either to exclude separately collected tax from sale price or to apply the prescribed formula where tax was not separately collected. On that construction, tax recovered separately by agreement with the purchaser did not form part of the sale price.

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Issues: Whether sales tax separately collected by a dealer from customers and shown separately in the invoice forms part of the "sale price" under the Bombay Sales Tax Act, 1959.

Analysis: The definition of "sale price" as the valuable consideration paid or payable to the dealer had to be read with the provisions prohibiting unauthorised collection of tax and providing penalties and forfeiture for excess collection. Those provisions showed that the Act contemplated a dealer being entitled to recover tax separately from the purchaser, by agreement, and that such recovery was distinct from the price of the goods. Rule 46-A reinforced this position by expressly permitting a registered dealer either to exclude separately collected tax from the sale price or to compute the taxable price by the prescribed formula where tax was not separately collected. On that construction, the amount recovered as tax and shown separately in the invoice could not be treated as part of the sale price.

Conclusion: Separately collected sales tax does not form part of the sale price under the Bombay Sales Tax Act, 1959, and the issue was answered in favour of the assessee.

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