Excise duty collected from manufacturer not part of sale consideration or purchase turnover under sales tax law.

Rubber cess under section 12 of the Rubber Act, 1947 remained a duty of excise on rubber production, but the post-amendment collection scheme required payment from the manufacturer under the Rules. The Kerala HC held that this statutory collection mechanism did not make the manufacturer's payment part of the producer's sale consideration, because the producer was not the person liable in substance and the payment did not discharge the producer's obligation. The cess was therefore excluded from purchase turnover under the Kerala General Sales Tax Act, 1963, and the contrary view was disapproved.

---

---

Issues: Whether the rubber cess paid by a manufacturer under the Rubber Act, 1947 and the Rules forms part of the manufacturer's purchase turnover under the Kerala General Sales Tax Act, 1963.

Analysis: The cess under section 12 of the Rubber Act, 1947 is a duty of excise on rubber produced in India. After the 1960 amendment, section 12(2) authorised collection in accordance with the Rules either from the estate owner or from the manufacturer, and rule 33-D specifically required collection from the manufacturer. The majority held that the levy itself remained an excise duty in relation to manufacture or production, but the statutory scheme, read as a whole, showed that the producer was not liable to pay the cess and that the manufacturer's payment was not a discharge of the producer's obligation. On that footing, the amount paid by the manufacturer could not be treated as part of the consideration for the producer's sale of rubber, and therefore did not enter the purchase turnover under section 2(xxvii) of the Kerala General Sales Tax Act, 1963.

Conclusion: The rubber cess paid by the manufacturer does not form part of the purchase turnover and the contrary view was disapproved.

Final Conclusion: The connected tax revisions, writ appeal and original petition were disposed of by applying the above rule in favour of the assessee and against inclusion of the cess in purchase turnover.

Ratio Decidendi: A cess which remains a duty of excise on production, but is by statute collected only from the manufacturer and not from the producer, is not part of the sale consideration of the producer and cannot be included in the purchaser's turnover.

---