Excise duty constitutes turnover, court adjusts gross profit estimate, tax revision case partly allowed

The High Court held that excise duty paid by the assessee constituted part of the turnover, as it was paid by the assessee and formed part of the circulating capital. The court rejected the argument that the excise duty did not reach the assessee's coffers. The estimate of gross profit at 35% was adjusted to only include the sale price and excise duty paid, resulting in a reduced turnover of Rs. 57,895. The court partly allowed the tax revision case, with each party bearing their own costs.

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Issues:
1. Whether the excise duty paid by the assessee constitutes part of the turnover.
2. Whether the estimate of gross profit at 35% on the total purchase value, including excise duty, is justified.

Analysis:

Issue 1:
The case revolved around the inclusion of excise duty of Rs. 32,895 in the turnover of the assessee. The Commercial Tax Officer rejected the assessee's claim that the excise duty did not form part of the sale price. The Tribunal upheld the assessment, stating that the excise duty was paid by the assessee, not directly by the buyer. The High Court agreed, emphasizing that the payment was made in the assessee's name, indicating the real nature of the transaction. The court found that the excise duty was part of the turnover, as the assessee obtained an advance from the buyer to pay the duty, which was later adjusted in the sale-bill. The court dismissed the argument that the excise duty did not reach the assessee's coffers, stating that the transaction was recorded and formed part of the circulating capital.

Issue 2:
Regarding the estimate of gross profit at 35%, the court found that the turnover for assessment should only include the sum of the sale price and the excise duty paid, amounting to Rs. 57,895, instead of the initially assessed Rs. 75,295. The court noted that there was no evidence to suggest the assessee charged any profit on the excise duty. Therefore, the court directed the assessment to be restricted to Rs. 57,895. The tax revision case was partly allowed, with each party bearing their own costs.

In conclusion, the High Court upheld the inclusion of excise duty in the turnover, emphasizing the real nature of the transaction and the recording of the transaction in the assessee's accounts. Additionally, the court adjusted the assessment to include only the sale price and excise duty in the turnover, reducing it to Rs. 57,895.

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