Tax exemption cannot be denied without proof of actual tax collection from buyers under the sale price

An exemption from sales tax could not be denied unless the authority proved actual collection of tax as tax from the buyer. The court noted that the assessee informed buyers that the goods were exempt, did not separately recover tax in invoices or books, and had no agreement or price-control arrangement showing tax was payable over and above the sale price. Mere parity of price between exempt and non-exempt goods, or printing MRP as inclusive of taxes, was insufficient to establish tax collection. On that basis, the exemption was sustained and the tax revision failed.

---

---

Issues: Whether inclusion of a tax component in the sale price or printing of MRP as inclusive of taxes amounts to collection of tax so as to deny sales tax exemption under the notification.

Analysis: The exemption notification denied benefit only where tax was actually collected on the relevant turnover. The material showed that the assessee informed buyers that the goods were exempt, did not separately recover tax in the invoices or books, and had no price-control arrangement or agreement showing that tax was to be paid in addition to price. Mere parity of price between exempt and non-exempt goods, or the statutory requirement of printing MRP inclusive of taxes, did not by itself establish collection of tax. The distinction drawn in binding precedent was between a dealer merely including tax burden in the price and a dealer collecting tax as such from the buyer.

Conclusion: The assessee had not collected tax within the meaning of the notification, and the exemption could not be denied on that ground.

Final Conclusion: The revision failed and the Tribunal's decision granting exemption to the assessee was upheld.

Ratio Decidendi: For denial of a tax exemption conditioned on non-collection, the authority must prove actual collection of tax as tax from the buyer; mere inclusion of a tax element in the sale price or use of an inclusive MRP does not amount to collection absent separate recovery or other evidence of passing on tax.

---