N S PANDARIA PILLAI Vs. STATE OF MADRAS

JUDGEMENT

(1.) THE question that arises for consideration in this case is as to whether the collections to the extent of Rs. 5, 817. 41 made by the assessee as mahimai at the rate of half per cent. of the net sale price from his purchasers will form part of his taxable turnover. It was contended by the assessee before the authorities below that the said mahimai collection has been made only from his selling agents, that it is a contribution by the purchasers only for renovation of a vinayagar temple, and that the said sums collected as mahimai were not part of the sale proceeds. But his contention was overruled on the ground that the amounts collected were part of the sale consideration and that, therefore, they formed part of the taxable turnover, as there is no provision either in the Act or in the Rules giving a deduction for that amount. It is not in dispute that the amounts collected as mahimai formed part of the sale invoices issued by the assessee, though they were shown separately.

(2.) ACCORDING to the assessee, the definition of "turnover" in section 2 (r) of the Tamil Nadu General Sales Tax Act will not include the collections of this kind, as this was not the subject-matter of a bargain between the parties, and it is a voluntary payment made by the purchasers for certain charitable and religious object. The learned counsel for the assessee, in support of the said contention, referred to some of the decisions dealing with the scope of section 2 (r ).

(3.) A Division Bench of the Andhra High Court in Possarla sambamurthi v. State of Andhra while construing the definition of "turnover" in section 2 (i) of the Madras General Sales Tax Act, 1939, as amended by the Andhra Amending Act of 1954 held that as per the amended definition, the turnover included all sums charged by the dealer whatever be the description, name or object thereof, and, therefore, the sums collected by the dealer such as dharmam, valtar and katha cooly would clearly form part of the turnover. In Government of Andhra v. East India Commercial Co. Ltd. the same extended definition of turnover was considered by a Full Bench of the andhra Pradesh High Court. Dealing with the effect of the amendment it was observed : "the ultimate economic incidence of the sales tax is on the consumer or the last purchaser and whatever he pays for the goods is paid only as price, that is to say, as consideration for the purchase. The statutory liability, however, for payment of sales tax is laid on the dealer on his total'turnover'whether or not he realises the tax from the purchasers. Generally speaking, the price charged by the dealer would be inclusive of sales tax, for, it is to his interest to pass the burden of the tax to the purchasers. So far as the dealer is concerned, the payment of a sum covering the tax made by a purchaser on the occasion of sale, is really part of the price which the purchaser pays for the goods."