Sales tax collections as trading receipts and deduction allowed only on actual payment under amended sales tax law

Retrospective amendment under section 11(1) of the Andhra Pradesh General Sales Tax Act, 1957 rendered sales tax collected by commission agents on jaggery sales legally recoverable for the relevant assessment years, so the amounts realised formed part of the sale price and were treated as business receipts. Because the collections had not been remitted to the sales tax authorities, no deduction was available merely on the basis of collection; the deduction arose only in the year of actual payment.

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Issues: Whether the sales tax collected by commission agents on jaggery sales for the relevant assessment years constituted taxable trading receipts, and whether such amounts were deductible as sales tax payable only on actual payment.

Analysis: Under section 11(1) of the Andhra Pradesh General Sales Tax Act, 1957, as retrospectively amended by the Andhra Pradesh General Sales Tax (Amendment) Act, 1970, the collection made by commission agents during the relevant period was rendered legally recoverable and had to be treated in the light of the amended law. The amount realised as sales tax formed part of the sale price and, therefore, partook of the character of business receipts. Since the amounts had not been paid over to the sales tax authorities, no deduction could be claimed merely on the basis of collection; deduction would arise only in the year in which actual payment was made.

Conclusion: The sales tax collections were taxable as trading receipts and were not allowable as deductions until paid to the sales tax authorities.

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