Collected tax not actually payable forms assessable value; suppression of such collections supports extended limitation and penalty.

Amounts collected from buyers as sales tax, though not actually payable on the second sale and not remitted to the tax department, were treated as extra realisation forming part of the assessable value and not as a deductible tax component. The fact that input-stage tax had been paid by another seller did not create any deduction entitlement. On limitation, non-disclosure of the collection and retention of the amount, without informing the revenue, amounted to suppression and misstatement with intent to evade duty, so the extended period was available. Penalty was upheld in principle, but its quantum was reduced.

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Issues: (i) Whether sales tax collected from buyers but not paid to the sales tax department on second sale of compressed oxygen was deductible from assessable value or constituted additional consideration; (ii) Whether invocation of the extended period of limitation and imposition of penalty were justified.

Issue (i): Whether sales tax collected from buyers but not paid to the sales tax department on second sale of compressed oxygen was deductible from assessable value or constituted additional consideration.

Analysis: The amount collected as sales tax was not actually payable by the appellants on the second sale, because the second sale was exempt. The appellants nevertheless recovered the amount from customers and retained it without remitting it to the sales tax department. An amount which is not payable as tax, but is nevertheless collected from the buyer, has the character of an extra realization flowing to the assessee and cannot be treated as a deductible tax component. The input-stage tax paid by the seller of liquid oxygen also did not create any deduction entitlement in the appellants' hands.

Conclusion: The collected amount was includible in the assessable value as additional consideration and no deduction was admissible.

Issue (ii): Whether invocation of the extended period of limitation and imposition of penalty were justified.

Analysis: The appellants did not separately disclose the collection of the amount described as sales tax, did not pay it to the tax department, and did not place the material facts before the revenue. On the facts found, the conduct amounted to suppression and misstatement with intent to evade duty, so the extended period was available. As regards penalty, the liability was maintainable, but the quantum was considered excessive and was reduced.

Conclusion: Invocation of the extended period was upheld, and the penalty was sustained only in reduced form.

Final Conclusion: The valuation dispute was decided against the appellants, the limitation plea failed, and only the penalty amount was moderated.

Ratio Decidendi: Amounts collected from buyers as tax but not actually payable or remitted are part of the assessable value as additional consideration, and deliberate non-disclosure of such collections justifies the extended period of limitation.

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