TaxTMI 
TaxTMI 
1980 (9) TMI 238
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....he inclusion of the market fee and the commission (otherwise called "dami") payable to the commission agent operating within a market area established under the U.P. Krishi Utpadan Mandi Adhiniyam, 1964 (U.P. Act No. 25 of 1964) (hereinafter referred to as "the Adhiniyam"), in the turnover of purchases of the appellant for purposes of levy of sales tax under section 3-D of the Act. The assessment year in question is 1974-75. The appellant was granted leave to appeal to file the above appeal directly against the order of the Assistant Commissioner (judicial) since the question involved in this case had already been decided by the High Court of Allahabad in Durga Das Narain Das v. State of Uttar Pradesh Civil Misc. Writ Petition No. 301 of 1978 and connected cases decided on December 18, 1978 (Allahabad High Court)., upholding the inclusion of the market fee and the commission (dami) in the purchase turnover for purposes of levy of sales tax. It is necessary at the outset to refer to some of the relevant provisions of law bearing on the questions involved in the case in order to appreciate the contentions urged on behalf of the appellant. There is no dispute that the appellant ....
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....r liable to tax subject to the other provisions contained in that section. We shall hereafter refer to some of the provisions of the Adhiniyam and the Rules made thereunder. Clauses (b) and (e) of section 2 of the Adhiniyam define the expressions "broker" or "dalal" and "commission agent " or "arhatiya" respectively. "Broker" or "dalal" means a person who, in the ordinary course of business, negotiates or arranges contracts for the purchase or sale of agricultural produce, on behalf of his principal on payment of commission or remuneration, whether in cash or kind, but does not include the servant of such principal whether engaged in negotiating or arranging such contracts. "Commission agent" or "arhatiya" means a person who, in the ordinary course of business, makes or offers to make, a purchase or sale of agricultural produce, on behalf of the owner or seller or purchaser of agricultural produce, for arhat or commission. Section 10 of the Adhiniyam provides that as from the date to be notified by the State Government in the Gazette, no person shall, in a principal market yard or sub-market yard, levy, charge or realise, any trade charges, other than those prescribed by rule....
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....- (1) if the produce is sold through a commission agent, the commission agent may realise the market fee from the purchaser and shall be liable to pay the came to the committee; (2) if the produce is purchased directly by a trader from a producer the trader shall be liable to pay the market fee to the committee; (3) if the produce is purchased by a trader from another trader, the trader selling the produce may realise it from the purchaser and shall be liable to pay the market fee to the committee; and (4) in any other case of sale of such produce, the purchaser shall be liable to pay the market fee to the committee." Rule 79(1) of the Rules framed under the Adhiniyam for purposes of section 10 of the Adhiniyam provides that as from the date notified by the State Government under section 10, no person shall, in a principal market yard or sub-market yards, levy, charge or realise, in respect of any transaction of sale or purchase of the specified agricultural produce, any trade charges, other than those specified by the market committee under sub-rule (2) thereof. Sub-rule (2) of rule 79 of the Rules provides that the market committee shall specify in its bye-l....
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....cified therein. Since section 3-D of the Act is expressly mentioned in section &F, it has to be held that section 3-F overrides sub-section (4) of section 3-D and that additional tax can be collected even in respect of the turnover of-purchases of goods notified under section 3-D(1) notwithstanding sub-section (4) of section 3-D of the Act. It cannot be said that by enacting sub-section (4) of section 3-D, the State Legislature forfeited its power to levy any other tax under the Act on the goods notified under section 3-D(I) for ever. It is always open to the legislature to modify the effect of sub-section (4) of section 3-1) by a subsequent legislation. We do not, therefore, find any substance in the contention that additional tax levied under section 3-F cannot be levied in respect of the turnover of purchases of goods notified under section 3-D(1) of the Act. The first contention, therefore, fails. We shall now proceed to consider the question whether market fees paid on transactions of sale or purchase of specified agricultural produce in the market area established under the Adhiniyam can be included in the turnover of purchases for purposes of levy of tax under the Act.....
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....thorising the seller to recover the sales tax payable by him from the purchaser although the price of the goods realised by him included the sales tax payable by him and thus he had passed on his liability to the purchaser. The next decision on which reliance was placed by the State Government is Delhi Cloth and General Mills Co. Ltd. v. Commissioner of Sales Tax, Indore [1971] 28 S.T.C. 331 (S.C.); [1971] Supp. S.C.R. 945. In that case this Court held that the expression "sale price" as defined in section 2(o) of the Madhya Pradesh General Sales Tax Act, 1958, included the sales tax collected by a dealer from his purchaser as there was no provision in that statute imposing any liability on the purchaser to pay the tax imposed by it on the dealer and there was no law empowering the dealer to collect the tax from his buyer. In both the decisions referred to above, this Court relied upon Paprika Ltd. v. Board of Trade [1944] 1 K.B. 327; [1944] 1 All E.R. 372., and Love v. Norman Wright (Builders) Ltd. [1944] 1 K.B. 484 (C.A.)., in which it had been laid down that the price payable by a purchaser under a contract of (sic) goods for the purpose of certain penal provisions was the price....
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..... This is what makes the authorities on which counsel for the appellants relied inapplicable to the cases before us. Under section 21-A the tax payable is on the price of the liquor and that tax is to be paid by the purchaser; the seller is required to collect the tax from the purchaser which he has to pay over to the Government. Section 21-A makes the seller a collector of tax for the Government, and the amount collected by him as tax under this section cannot therefore be a part of his turnover. Under the Madras General Sales Tax Act, 1959, the dealer has no statutory duty to collect the sales tax payable by him from his customer, and when the dealer passes on to the customer the amount of tax which the former is liable to pay, the said amount does not cease to be the price for the goods although 'the price is expressed as X plus purchase tax' (Paprika Ltd. v. Board of Trade [1944] 1 K.B. 327; [1944] 1 All E.R. 372.). But the amounts collected by the assessees concerned in these appeals under a statutory obligation cannot be a part of their taxable turnover under the Madras General Sales Tax Act, 1959." We do not find any substantial difference between section 21-A of the Madr....
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....the profit of the dealer who in this case happens to be a commission agent and should, therefore, necessarily be considered as consideration for the sale of goods. The provisions contained in section 10 of the Adhiniyam and the Rules framed thereunder do not in any way affect the above conclusion reached by us. Section 10 of the Adhiniyam merely provides that as from the date to be notified by the State Government in the Gazette, no person shall, in a principal market yard or sub-market yard, levy, charge or realise, any trade charges other than those prescribed by rules or bye-laws made under the Adhiniyam, in respect of any transaction of sale or purchase of the specified agricultural produce and no court shall, in any suit or proceeding arising out of any such transaction, allow in any claim or counter-claim, any trade charges not so prescribed. It also provides that such charges shall be collected from the purchasers thereby barring the collection of such charges from the producers of agricultural produce who are ordinarily the sellers in a market area. Sub-rule (1) of rule 79 of the Rules framed under the Adhiniyam provides that as from the date notified by the State Gov....