Statutory authority to collect entry tax keeps it outside turnover for sales tax purposes.

Entry tax separately collected by a registered dealer under the Karnataka Tax on Entry of Goods Act, 1979 was held not to form part of turnover for sales tax purposes under the Karnataka Sales Tax Act, 1957. The controlling principle was that a tax the dealer is statutorily authorised to recover from the purchaser does not become part of the sale consideration or turnover. Because section 3A permitted the registered dealer to collect entry tax, subject to the notified-rate restriction, the amount collected could not be included in turnover. The issue was therefore answered in favour of the assessee.

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Issues: Whether entry tax collected separately by a registered dealer under the Karnataka Tax on Entry of Goods Act, 1979 could be treated as part of turnover for levy of sales tax under the Karnataka Sales Tax Act, 1957.

Analysis: Section 3A of the Karnataka Tax on Entry of Goods Act, 1979 permits a registered dealer to collect entry tax, subject to the statutory restriction against collection in excess of the notified rate. A tax which the dealer is legally authorised to recover from the purchaser does not become part of the consideration forming turnover. The controlling principle is that the existence of statutory authority to pass on the tax distinguishes such cases from those where no such authority exists. Since the appellant was a registered dealer entitled to collect entry tax, the amount so collected could not be included in turnover.

Conclusion: The issue is answered in favour of the assessee. The collected entry tax was not includible in turnover for sales tax purposes.

Ratio Decidendi: Where a dealer is statutorily authorised to collect a tax from the purchaser, the amount so collected does not form part of the dealer's turnover or sale consideration for levy of sales tax.

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