MRP Inclusive of Taxes Did Not Prove Sales Tax Collection; exemption remained available on exempt packaged goods.

Inclusion of tax in the maximum retail price and the declaration "inclusive of all taxes" on packaged goods did not, by itself, amount to collection of sales tax so as to forfeit exemption under the Karnataka Sales Tax exemption notification. The notification denied benefit only where tax was actually collected, and the statutory packaging requirement to show an MRP inclusive of taxes could not be treated as an admission of separate tax collection, particularly where invoices described the goods as fully exempt and the sale proceeds were not split between price and tax. Uniform pricing across exempt and non-exempt units was also insufficient to establish collection of tax. The exemption therefore remained available.

---

---

Issues: Whether inclusion of a tax element in the maximum retail price and use of the declaration "inclusive of all taxes" on packaged goods amounted to collection of tax so as to defeat exemption under the sales tax exemption notification.

Analysis: The exemption notification denied benefit only to turnovers on which any tax was collected under the Karnataka Sales Tax Act, 1957. The packed goods were required by the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 to display a maximum retail price inclusive of all taxes. That statutory declaration could not be treated as an admission that sales tax had been separately collected, especially when the invoices themselves stated that the goods were fully exempt and the sale proceeds were not bifurcated into price and tax. Uniform maximum retail pricing across exempt and non-exempt units, adopted as a business model, did not by itself establish collection of tax. The decisions relied upon by the Revenue were distinguished on facts and on the statutory burden involved in those cases.

Conclusion: The declaration of MRP inclusive of taxes and the adoption of uniform pricing did not amount to collection of sales tax from the exempt unit, and the assessee remained entitled to the exemption.

---