STATE OF KERALA Vs. POTHAN JOSEPH AND SONS

JUDGEMENT

(1.) This is an appeal by certificate from a judgment of the Kerala High court in a tax revision petition.

(2.) The assessee had been registered as dealer under the central Sales Tax Act, 1956 (74 of 1956) , hereinafter called the Act. In respect of the I year 1960-61 the assessee claimed a deduction on account of excise duty paid amounting to Rs. 2,17,744.20. The assessee also sought a deduction of commission amounting to Rs. 50,047.66. It further claimed that calculation of central sales tax at 7% on the turnover of Rs. 27,382. 01 was not correct. The departmental authorities as also the Appellate tribunal decided against the assessee on all the aforesaid matters. The High court held that in view of the ratio of the decision of this court in State of Mysore v. Yaddalam Lakshminarasimhiah Setty and Sons the turnover represented by the excise duty was liable to be deducted. As regards the matter relating to discount or commission, it was conceded that the decision on the first point must govern that point as well. Counsel on behalf of the department conceded on the third point that the C Form produced would be sufficient to grant the exemption claimed and that tax could be imposed only at the rate of 1% in relation to the turnover covered by the C Form. The High court therefore allowed the revision petition and directed that such modifications as were necessary should be made in the assessment. The learned Attorney-General for the appellant has canvassed the question relating to deduction of excise duty paid by the assessee from the turnover for the purpose of levy and imposition of sales tax. There is no dispute that for the period of assessment (1960-61) no such deduction could be claimed under the central Sales Tax (Registration and Turnover) Rules, 1957, hereinafter called the rules, made under section 13 (1) of the Act. Clause (b) of section 13 (1) enables the central government inter alia to make rules providing for the deductions which may be made in the process of determination of the turnover of the sale of any goods under the Act. Section 2 (j) of the Act defines "turnover" as meaning the aggregate of the sale price received and receivable by any dealer liable to tax under the Act in respect of sales of any goods in the course of inter-State trade or commerce made during any prescribed period and determined in the prescribed manner. It may be mentioned that rule 11 (2) was as substituted by a notification dated 2/06/1961, and gives the amount which shall be deducted from the aggregate of sale price but even that does not include the deduction on account of payment of excise duty. Further the substituted sub-rule (2) is not relevant for our purposes as the controversy, in the present case, relates to a period prior to 2/06/1961.

(3.) The contention of the learned Attorney-General is that the provisions of the Act were admittedly applicable to inter-State transactions of the nature which were entered into by the assessee and it would be the rules which would equally govern the determination of the taxable turnover and since rule 11 (2) did not provide for any deduction on account of payment of excise duty the assessee could not invoke the provisions contained in the general sales tax law of the State or the rules framed thereunder for computation of the turnover and claim deduction.