STATE OF KERALA Vs. KAKKU BHAI AND CO

JUDGEMENT

(1.) This appeal is by the State Government, and is directed against a decree for the refund of sales tax said to have been collected illegally from the plaintiff, a registered dealer, pursuant to Ext. P 1, the assessment order for the year 1950-51. The assessment was made partly on what was referred to in Ext. P 1 as the "net turnover" representing the aggregate of the sale price of goods sold and partly on the aggregate of the amounts collected by way of sales tax from customers, by the plaintiff. That sales tax so collected is not turnover as defined in S.2(k) of the Travancore - Cochin General Sales Tax Act, 1125, had been held by a Division Bench in Agricultural Income tax and Rural Sales tax Officer, Perumbavoor v. C. E. Velayudhan, 5 STC 285. As stated in the judgment therein, the bench was not concerned "with a registered dealer charging a composite or 'tax included' price". This decision is authority for holding that turnover as defined did not include sales tax collected as sales tax and not as part of the price from the customers. In this suit also, the appellant had no case in the lower court, that the sales tax collected formed part of the sale price or that it was collected as anything else than sale tax, which the plaintiff was competent to pass on to his customers.

(2.) The learned Government Pleader relied on the observations of the Supreme Court in George Oakes (Pr.) Ltd. v. State of Madras, AIR 1962 SC 1037 , that sales tax so collected can be part of the turnover as defined. The question that directly arose for decision before Their Lordships, concerned the vires of the definition of turnover so as to include sales tax collected, introduced by the Madras General Sales tax (Definition of Turnover and Validation of Assessment) Act, 1954, as falling outside the scope of Entry 54 in the State List in the 7th schedule of the Constitution. In examining this contention observations were made that sales tax collected can be treated as the price of goods sold, and that there is no immutable distinction in that Act or in the Madras General Sales tax Act, 1939 which it amended, between sale price and sales tax. The correctness of the decision of the Madras High Court in Dy. Commissioner v. Krishnaswami AIR 1954 Mad. 856 , which was also relied on in the bench decision of the Travancore - Cochin High Court referred to above was however left open. The observations of the Supreme Court can only mean, that sales tax collected by a dealer may in a proper case be deemed to be part of the sale price and to form part of the turnover within the meaning of the definition even without the amendment. In ray view, these observations do not rule out the possibility that such sales tax need not in fact form part of the price. I do not understand Their Lordships as laying down a proposition of law that the sales tax collected shall in all such cases be deemed to be part of the sale price and therefore of the turnover. This must depend on the facts and circumstances of the particular case.

(3.) In the present case, as stated above, the State Government had no case at the trial, that the sales tax collected was part of the sale price and whatever indication is available from Ext. P 1 is to the contrary. My attention was invited to the decision of a single Judge of this court in A. S. 686 of 1958, 1963 KLT 212 in which it was held that the observations of the Supreme Court though obiter must be held to overrule impliedly the bench decision above referred to. In my view, the decision of the Single Judge is distinguishable on the ground that the State Government had a case properly pleaded that the sales tax collected was part of the sale price.