Sales tax deduction from taxable turnover is available where records clearly show the amount collected included tax.

Sales tax collected from customers may be excluded from taxable turnover where the record shows that the realised amount included a tax component, even if each sale bill does not separately itemise the tax. The Kerala General Sales Tax Rules require separate showing of tax in bills, but that requirement is directed to preventing tax collections from being treated as part of turnover, not to defeat deduction where the tax element is otherwise clearly identifiable. If the sale bills and accounts together demonstrate bifurcation between sale price and sales tax, the deduction is allowable.

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Issues: Whether the assessee was entitled to deduction of sales tax collected while computing taxable turnover, even though the tax was not separately shown in the sale bills.

Analysis: Rule 9(1) of the Kerala General Sales Tax Rules, 1963 permits deduction of sales tax collected by the dealer if shown separately in the bills, but the provision is intended to ensure that amounts collected as sales tax do not form part of taxable turnover. Section 22 of the Kerala General Sales Tax Act, 1963 recognises that sales tax may be passed on to the customer. The sale bills in this case specifically stated that the amounts were "including sales tax", and the accounts reflected a bifurcation between sale price and tax. The record therefore showed that the amount collected represented both the price of goods and the sales tax component, and the tax element was clearly discernible from the materials on record.

Conclusion: The assessee was entitled to the deduction of sales tax collected, and the revision by the Revenue failed.

Ratio Decidendi: Deduction of sales tax collected is allowable when the record clearly shows that the amount realised includes sales tax, even if the tax is not separately itemised in each sale bill.

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