Sales tax collected as part of trading receipts is taxable income when not kept as a separate deposit.

Sales tax collected from customers was treated as a trading receipt where it was received along with sale consideration, shown in the bills as part of the total amount, and accounted for as a liability without being kept in a separate deposit. The decisive factor was the character of the receipt at the time of collection: money mixed with the trader's own funds and used in business remains taxable income, even if a later obligation to remit or refund may arise. On these facts, the collection was not separately earmarked or placed beyond the trader's control, so it was includible in total income.

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Issues: Whether the amount collected by the assessee as sales tax, but not kept separately or deposited with the Government, was a trading receipt liable to be included in the assessee's total income.

Analysis: The amount was collected along with the sale consideration, shown in the bills as part of the total amount, and treated in the accounts as a liability rather than as a separate deposit. The decisive question was the character of the receipt at the time of collection. Where money received as tax is mixed with the trader's own funds and used in business, it assumes the character of a trading receipt even if there may later arise a duty to refund or deposit it. The Court distinguished cases where the assessee had kept the collection apart and placed it beyond his own reach, in which event the amount would be a deposit and not income. On the facts here, there was no finding that the amount was held as a deposit, no separate earmarking, and no basis to exclude it from commercial receipts.

Conclusion: The amount was held to be a trading receipt and was includible in the assessee's total income.

Ratio Decidendi: Sales tax collected from customers forms part of taxable trading receipts when, on the facts, it is received and dealt with as the trader's own money and not held as a separate deposit for remittance or refund.

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