Entry tax recoverability determines VAT turnover, and unrecoverable entry tax forms part of sale price under the U.P. VAT Act.

Entry tax paid for bringing goods into a local area was held to form part of turnover of sale and sale price under the U.P. VAT Act where the taxing statute does not authorise the dealer to recover that levy from the purchaser. The governing test is whether the statute permits pass-through of the tax; if it does, the amount is excluded from turnover and sale price, but if it does not, the tax becomes part of the transaction price structure. Distinguishing the cited entry-tax decisions, the court noted that the U.P. Tax on Entry of Goods into Local Areas Act, 2007 contains no provision allowing recovery from the purchaser, so the entry tax remains liable to VAT.

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Issues: Whether entry tax paid for bringing goods into a local area, where there is no statutory provision authorising its recovery from the purchaser, forms part of the turnover of sale and sale price for levy of VAT under the U.P. VAT Act.

Analysis: The relevant test is whether the taxing statute authorises the dealer to collect the levy from the purchaser. Where such authority exists, the amount collected does not form part of turnover or sale price. The provisions relied upon in the cited entry-tax cases were distinguishable because the U.P. Tax on Entry of Goods into Local Areas Act, 2007 does not contain any provision permitting the dealer to recover entry tax from the purchaser. Once the dealer is not legally entitled to pass on the levy, the amount paid towards entry tax is part of the price structure of the transaction and falls within the definition of turnover of sale under Section 2(aq) and sale price under Section 2(ad), read with Explanation 5, of the U.P. VAT Act.

Conclusion: The amount paid as entry tax constitutes part of the turnover of sale and is liable to VAT under the U.P. VAT Act.

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