GEORGE OAKES PRIVATE LIMITED ADDISON AND COMPANY PRIVATE LIMITED RANE MADRAS LIMITED Vs. STATE OF MADRAS

JUDGEMENT

(1.) THE following Judgment of the court was delivered by :

(2.) THESE five appeals on certificates granted by the High court of Madras were consolidated and heard together. They arise out of proceedings against the appellants under the Madras General Sales Tax Act, 1939. The appellants are three Companies carrying on business of sale of motor cars, motor car spare parts, and other goods, Messrs. George Oakes (Private) Ltd., have filed Civil Appeals Nos. 1 to 3 of 1961 questioning a part of the sales tax imposed on them for the years, 1950-51, 1951-52 and 1952-53. Civil Appeals Nos. 4 and 5 of 1961 have been filed respectively by Messrs. Addison and Co. (Private) Ltd., and Messrs. Rane (Madras) Ltd., questioning similarly a part of the tax imposed on them for the year ending 31/03/1952. The common question which has been raised by the appellants arises in the following circumstances.

(3.) THE question that is now raised and which alone survives, is' whether the .additional tax can be included in the. turnover relating to the special goods and the resultant sum taxed at 6 pies for every rupee. In the earlier appeals ending with the decision of this court in Messrs. George Oakes case, 1961-12 STC 476: (AIR 1962 SC 10.37) above mentioned, it was contended that the inclusion of the tax in the turnover would amount to the levy of a tax on tax, and that the power to levy the tax extended only to the levy of the tax on the price paid for the goods by the purchaser, which price did not include the tax paid separately. It was pointed out by this court that the word "price" in so far as the purchaser is concerned, includes the tax also, and that in laws dealing with sales tax, turnover has, in England and America also, been held to include the tax. THE reason for such inclusion is stated to be that the dealer who realises the tax does not hand it over forthwith to government but keeps it with him, and turns it over in his business before he parts with it. Thus, the tax becomes, for the time being, a part of the circulating capital of the tradesman, and is turned over in his business. Again, it was <PG>1355</PG> said that the price paid by the purchaser was not so much money for the article plus tax but a composite sum. THErefore, in calculating the total turnover, there is nothing wrong in treating the tax as part of the turnover, because "turnover" means the amount of money which is turned over in the business. In the case to which we have referred, the Validating Act was declared valid and constitutional. In the present appeals, we are required to work out the result of the Validating Act in respect of the additional tax, because in so far as the collection of tax at 3 pies for every rupee of turnover is concerned, no difficulty presents itself.