Turnover tax on a broken period is fixed by the full accounting year's aggregate turnover, not the isolated interval

For turnover-tax rate fixation on a broken period created by a change in accounting year, the relevant turnover is that of the whole accounting year to which the period belongs, not the isolated broken period. The rate under section 6B(3) of the Bengal Finance (Sales Tax) Act, 1941 depends on the aggregate gross turnover for that year, and a later approval of a change in accounting year cannot retrospectively validate an earlier effective date after the year has expired. The reference to consolidated accounts under section 210 of the Companies Act, 1956 did not alter the statutory basis for rate determination. On that basis, the higher turnover-tax rate applied.

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Issues: Whether, for a broken period of four months arising out of a change in accounting year, turnover tax under section 6B(3) of the Bengal Finance (Sales Tax) Act, 1941 had to be levied at 1 per cent or 1.5 per cent on the basis of the turnover of the whole year to which that period belonged.

Analysis: The rate under section 6B(3) depended on the aggregate gross turnover under the Bengal Finance (Sales Tax) Act, 1941 and the West Bengal Sales Tax Act, 1954 during the year in respect of which or part of which the tax was levied. A broken period does not stand isolated for rate determination; the relevant turnover is that of the whole accounting year of which the broken period forms a part. The change of accounting year could take effect only with previous permission under section 2(j) of the Bengal Finance (Sales Tax) Act, 1941, and the approval granted later could not retrospectively validate an earlier effective date after the year had already expired. The company's broken period from 1 July 1987 to 31 October 1987 was part of the accounting year ending 30 June 1988 for turnover-tax purposes, and the aggregate turnover for that year exceeded the threshold for the higher rate. The reference to consolidated accounts under section 210 of the Companies Act, 1956 did not alter the statutory basis for rate fixation under the sales tax law.

Conclusion: The higher rate of 1.5 per cent was correctly applied to the broken period, and the assessment was valid.

Ratio Decidendi: For turnover-tax rate fixation on a broken period, the aggregate turnover of the entire accounting year to which the broken period belongs must be taken into account, and a later approval of a change in accounting year cannot retrospectively shift the legal basis of that rate.

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