1956 (4) TMI 39

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....ere liable to pay tax at the rate of Rs. 0-0-6 in the rupee under section 3(2)(iv) of the Act. The assessing authorities included in the taxable turnover of each of these dealers amounts collected by them by way of tax under section 8-B of the Act and assessed that part of their total turnover also at the rate of Rs. 0-0-9 in the rupee. In Krishnaswami Mudaliar's case(1), this Court held that the turnover made up of amounts collected by way of tax by a registered dealer could not be assessed at all to any tax under the Act. Subsequent to that, the Madras Legislature enacted Act XVII of 1954 to validate the levy of tax on amounts collected by a dealer by way of tax. The validity of that Act has been upheld by us in Sundararajan and Co., Ltd.....

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....ection 2(h) of the Act. It is with reference to these provisions, that we have to answer the question at issue, whether the amounts collected by way of tax by a dealer on the sale of goods that fell within the scope of section 3(2)(iv) of the Act are liable to pay the additional tax under section 3(2)(iv) of the Act. The Tribunal recorded, "tax collected by the dealer becomes part of his total turnover by reason of the Validation Act, and it follows that it will be subject only to the three pies rate under section 3(1)(b)." That the amounts collected by the dealer by way of tax became part of his turnover under section 2 of Act XVII of 1954 does not admit of any controversy at this stage. That it was part of the total turnover within the....

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.... the total that represented the consideration for the sale and as such the total of each of these sales constituted the turnover. Suppose the dealer had shown as separate items in his bill (i) his cost price, (ii) his profit, and (iii) the tax which as a dealer he had to pay under the Act, all of them together would still constitute the consideration for the sale, which the purchaser had to pay, and it is that total that would merge in the total turnover within the meaning of section 3(1) of the Act. The fallacy in the reasoning of the Tribunal, as we see it, was to interpret the expression "total turnover" in section 3(1)(a) divorced from the definition of "sale" and "turnover" in section 2 of the Act. They also overlooked the fact, that t....