Excise duty forms part of sale price when statute deems it included, even if paid by the purchaser

Section 2(29) read with Explanation I of the Bombay Sales Tax Act deems excise duty levied under the Bombay Prohibition Act to form part of the sale price, regardless of whether the duty is paid by the seller, purchaser, or another person. A circular allowing C.L. II licence holders to remit duty was treated only as a convenient payment mechanism and did not shift the legal incidence of duty from the manufacturer. Non-disclosure of the duty in invoices or books did not alter the statutory definition of sale price, and the purchaser-payment arrangement did not exclude the duty from taxable consideration.

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Issues: Whether State excise duty paid directly by C.L. II licence holders on country liquor supplied by the petitioners forms part of the sale price for the purposes of sales tax under the Bombay Sales Tax Act, 1959.

Analysis: Section 2(29) read with Explanation I deems duties levied or leviable under the Bombay Prohibition Act, 1949 to be part of the sale price, irrespective of whether such duty is paid by the seller, purchaser, or any other person. The circular of the Commissioner of State Excise permitting C.L. II licence holders to remit duty merely provided a convenient mode of payment and did not shift the primary legal burden of duty from the manufacturer to the purchaser. The fact that the duty was not shown in the invoices or books of account did not alter the statutory definition of sale price. The authorities relied on by the petitioners were distinguished in view of the wider statutory language and the controlling principle that the mode of collection does not determine whether excise duty enters the sale consideration.

Conclusion: State excise duty paid by C.L. II licence holders was correctly included in the sale price, and the challenge to the demand failed.

Ratio Decidendi: Where the sales tax statute expressly deems excise duty to form part of the sale price, payment of that duty by the purchaser under a facility or collection arrangement does not exclude it from the taxable sale consideration.

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