DEPUTY COMMISSIONER OF AGRICULTURAL INCOME TAX AND SALES TAX SOUTH ZONE QUILON Vs. ALUMINIUM INDUSTRIES LIMITED

JUDGEMENT

(1.) These appeals are brought by special leave from the judgment of the Kerala High court in Tax Revision Cases Nos. 10 and 11 of 1967 decided on 23/07/1968.

(2.) The Aluminium Industries Ltd. is the respondent in both the cases. In the first case, the respondent was finally assessed for the year 1960-61 under the central Sales Tax Act, 1956, by the Sales Tax Officer by his order dated 18/10/1962. For the assessment year 1961-62 the respondent was assessed under the same Act by the Sales Tax Officer on 29/10/1962. In both these assessments, the respondent made a claim for deduction of the trade discount paid to its customers from its gross turnover in determining the taxable turnover. This claim was allowed by the Sales Tax Officer. The Deputy Commissioner of Agricultural Income-tax and Sales Tax took the view that the claim was not admissible under law. Accordingly, he took action under section 15 (1) of the General Sales Tax Act, 1125, and revised the orders of the Sales Tax Officer by disallowing the above claim. The assessee took the matter in appeal before the Appellate tribunal which held that the irregularity sought to be rectified was one relating to escaped turnover and that the order passed by the Deputy Commissioner on 23/06/1966, was clearly beyond four years from the assessment year 1960-61 and was barred by limitation. The Appellate tribunal did not decide the other question, namely, whether the trade discount was an allowable deduction and therefore no turnover had escaped assessment. The Deputy Commissioner took the matter in revision to the High court and argued that the Appellate tribunal was not justified in holding that the irregularity sought to be rectified was assessment of escaped turnover and as such the same was barred by limitation. The High court did not decide the question as to whether the order impugned was barred by limitation. On the other band, the High Court examined thequestion raised by the assessee on the merits as to whether the "trade discount" was a permissible deduction in assessments under the central Sales Tax Act. The High court held that in view of section 9 (3) of the central Sales Tax Act read with rule 7 (1) (a) of the General Sales Tax Rules, 1950, "all deductions allowed under the State law to be made from the gross turnover in determining the net turnover shall be liable to deduction in determining the taxable turnover under the central Sales Tax Act, 1956. " The High court accordingly dismissed the tax revision cases.

(3.) It is necessary at this stage to reproduce the relevant statutory provisions and rules. Section 8 (2) of the central Sales Tax Act, 1956, states: " (2) The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods in the course of inter-State trade or commerce not falling within Ss. (1) (a) in the case of declared goods, shall be calculated at the rate applicable to the sale or purchase of such goods inside the appropriate State; and (b) in the case of goods other than declared goods, shall be calculated at the rate of ten per cent. , or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher; and for the purpose of making any such calculation any such dealer shall be deemed to be a dealer liable to pay tax under the sales tax law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law. " Section 9 provides: " (1) The tax payable by any dealer under this Act on sales of goods effected by him in the course of inter-State trade or commerce whether such sales fall within clause (a) or clause (b) of section 3 shall be levied and collected by the government of India in the manner provided in subsection (3) in the State from which the movement of the goods commenced: Provided that, in the case of a sale of goods during their movement from one State to another being a sale subsequent to the first sale in respect of the same goods, the tax shall, where such sale does not fall within Ss. (2) of section 6, be levied and collected in the State from which the registered dealer effecting the subsequent sale obtained the form prescribed for the purposes of clause (a) of Ss. (4) of section 8 in connection with the purchase of such goods. (2) The penalty imposed upon any dealer under section 10a shall be collected by the government of India in the manner provided in subsection (3) (a) in the case of an offence falling under clause (b) or clause (d) of section 10, in the State in which the person purchasing the goods obtained the form prescribed for the purposes of clause (a) of Ss. (4) of section 8 in connection with the purchase of such goods ; (b) in the case of an offence falling under clause (c) of section 10, in the State in which the person purchasing the goods should have registered himself if the offence had not been committed. (3) The authorities for the time being empowered to assess, collect and enforce payment of any tax under the general sales tax law of the appropriate State shall, on behalf of the government of India and subject to any rules made under this Act, assess, collect and enforce payment of any tax, including any penalty, payable by a dealer under this Act in the same manner as the tax on the sale or purchase of goods under the general sales tax law of the State is assessed, paid and collected; and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State; and the provisions of such law, including provisions relating to returns, appeals, reviews, revisions, references, penalties and compounding of offences, shall apply accordingly: Provided that if in any State or part thereof there is no general sales tax law in force, the central government may, by rules made in this behalf, make necessary provision for all or any of the matters specified in this sub-section, and such rules may provide that a breach of any rule shall be punishable with fine which may extend to five hundred rupees; and where the offence is a continuing offence, with a daily fine which may extend to fifty rupees for every day during which the offence continues. "