TaxTMI 
TaxTMI 
1973 (5) TMI 92
X X X X Extracts X X X X
X X X X Extracts X X X X
....1,30,045. The Income-tax Officer treated the sum of Rs. 1,30,045 as the assessee's Income for the assessment year in question and levied tax thereon. On appeal, the Appellate Assistant Commissioner of Income-tax, relying upon a decision of the Income-tax Appellate Tribunal in the case of the assessee for the assessment year 1959-60, held that the surplus of Rs. 1,30,045 in the sales tax account did not constitute revenue receipt and remitted the tax levied thereon. The Income-tax department went up in appeal before the Income-tax Appellate Tribunal. The Tribunal had dismissed the appeal, but at the instance of the Commissioner of Income-tax has submitted the following question for our opinion: "Whether, on the facts and in the circumstan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch collections could be treated to be the assessee's income. The short question that we have to answer is as to whether the view taken by the Tribunal is right. Section 3 of the U.P. Sales Tax Act is the charging section. It imposes tax on every dealer on the turnover of sales during an assessment year. The liability to pay sales tax is, therefore, on the dealer which term has been defined to mean a person carrying on business of buying or selling goods. There Is no liability cast upon the purchasers to pay sales tax. Under section 8-A(2)(b) of the U.P. Sales Tax Act, a registered dealer has been given the right to recover from his customers an amount equivalent to sales tax payable by him but he is not obliged to do so. If he does not c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ral Mills Co. Ltd. v. Commissioner of Sales Tax[1971] 28 S.T.C. 331 at 334 (S.C.); A.I.R. 1971 S.C. 2216., a question arose before the Supreme Court as to whether the sales tax realised by a dealer was a part of the price of goods sold by him. The Supreme Court observed in paragraph 8; "Under section 4 the liability to pay tax is that of the dealer. The purchaser has no liability to pay tax. There is no provision in the Act from which it can be gathered that the Act Imposes any liability on the purchaser to pay the tax imposed on the dealer. If the dealer passes on his tax burden to his purchasers he can only do it by adding the tax in question to the price of the goods sold. In that event the price fixed for the goods including t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... need not, if he so pleases or chooses, collect the tax from the purchaser and sometimes by reason of competition with other registered dealers he may find it profitable to sell his goods and to retain his old customers even at the sacrifice of the sales tax. This also makes it clear that the sales tax need not be passed on to the purchasers and this fact does not alter the real nature of the tax which, by the express provisions of the law, is cast upon the seller. The buyer is under no liability to pay sales tax in addition to the agreed sale price unless the contract specifically provides otherwise." In our opinion, the position under the U.P. Sales Tax Act is precisely the same. The next question which has to be considered is as to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed, whether by purchase tax, customs duty or excise duty, the tax becomes part of the price which ordinarily the buyer will have to pay. The price of an ounce of tobacco is what it is because of the rate of tax, but on a sale there is only one consideration, though made up of cost plus profit plus tax. So, if a seller offers goods for sale, it is for him to quote a price which includes the tax if he desires to pass it on to the buyer; if the buyer agrees to the price, it is not for him to consider how it is made up, or whether the seller has Included tax or not." It is thus clear that the tax charged by the dealer from his customer is in reality a part of the price of the goods sold and, as such, it would be a revenue receipt. Of course,....