TaxTMI 
TaxTMI 
2004 (12) TMI 84
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....see's business income for the relevant assessment year? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee was merely a trustee in respect of the collections of Central sales tax from its customers?" At the relevant time, the assessee was carrying on the business of purchase and sale of cotton and used to maintain accounts on mercantile basis. During the period from October 18, 1971, to November 4, 1972, the assessee collected Rs. 59,025.04 from the customers on account of Central sales tax but neither deposited the same into the Government exchequer nor refunded it to the customers. By an ex parte order dated June 3, 1975, passed under section 143(2) of the Income....
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....ealer. (2) Similarly, when we make a sale outside the State of Haryana liability arises under the Central Sales tax Act and what we collect from our outside purchasers or effect the Central sales, we credit the Central sales tax collected or provided to a Central sales tax account. From the financial year 1967-68, we are crediting this account according to the collections made or provided on account of the Central sales tax and this account is debited when these payments were made on finalisation of assessments. The Central sales tax collected is our liability today the Government and is not a trading receipt. (3) That the assessee has collected Rs. 59,025.04 paise as Central sales tax and the payments made were as under during this y....
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....ddition of Rs. 59,025 was deleted. The Tribunal dismissed the appeal filed by the Revenue by observing that similar addition made in the income of the assessee in relation to the assessment year 1972-73 had been deleted vide order dated November 5, 1977, passed in I.T.A. No. 256 of 1976-77 and there was no tangible reason to take a different view. For the sake of reference, the relevant extract of order dated September 16, 1981, passed by the Tribunal is reproduced below: "For the assessment year 1972-73, the dispute travelled to the Chandigarh Bench of the Tribunal by way of second appeal from the assessee and decided in its. favour vide order November 5, 1977, in I.T.A. No. 256 of 1976-77. Making the said order as the basis, we dismiss....
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....R 542 and Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363 (SC) and a large number of decisions of the High Courts including this court and laid down the following propositions: "As already noticed, the sales tax amount received by an assessee forms part of the trading receipt and if the assessee is liable to pay tax, the amount will be allowed as a deduction according to the accounting system adopted by the assessee. It is also beyond dispute that if ultimately it is found that an assessee, who has paid the amount and got the deduction, gets the sales tax by way of refund, the amount has to be added as a trading receipt in the relevant accounting year. Similarly, if an assessee who is following the mercantile accounting system and ....
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..... v. CIT [1973] 87 ITR 542 was also considered by a Division Bench of the Calcutta High Court in Chowringhee Sales Bureau P. Ltd. v. CIT [1977] 110 ITR 385, Sabyasachi Mukharji J. (as his Lordship then was), after considering the judgments of the Supreme Court in Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363 and Chowringhee Sales Bureau P. Ltd. v. CIT [1973] 87 ITR 542 held as under: "That the amounts collected by the assessee as sales tax formed part of its trading receipts. However, the liability to pay sales tax arises the moment a sale or purchase is effected and an assessee who maintains accounts on the mercantile system is entitled to deduction of his estimated liability to sales tax, even though they had not been paid to t....