JUDGMENT
P.V. Dixit, C.J.
1. This judgment will also govern the disposal of Miscellaneous Civil Case No. 62 of 1967.
2. In these two references under Section 44(1) of the Madhya Pradesh General Sales Tax Act, 1958 (hereinafter referred to as the Act), at the instance of the assessee M/s. Delhi Cloth and General Mills Co. Ltd., Sarafa Bazaar, Lashkar, the common question referred to us for decision is :
In the facts and circumstances of the case is the sales tax recovered by the petitioner a part of the sale price as denned in Clause (o) of Section 2 of the Madhya Pradesh General Sales Tax Act, 1958 ?
Miscellaneous Civil Case No. 61 of 1967 arises out of assessment proceedings for the period from 1st April, 1962, to 31st March, 1963. The other Miscellaneous Civil Case, namely, No. 62 of 1967, arises out of assessment proceedings for the period from 1st April, 1961, to 31st March, 1962.
3. In the assessment proceedings for the aforesaid periods the assessee sought to exclude from its turnover the amount of sales tax recovered by it from’ the purchasers. The Assistant Commissioner of Sales Tax disallowed the exclusion holding that sales tax recovered by the assessee formed part of its turnover. The order of the Assistant Commissioner of Sales Tax was upheld in first appeal by the Deputy Commissioner of Sales Tax, Indore, and also by the Sales Tax Tribunal in second appeal.
4. Section 2(o) of the Act defines “sale price” thus :
‘Sale price’ means the amount payable to a dealer as valuable consideration for the sale of any goods, less any sum allowed as cash discount according to ordinary trade practice but including any sum charged for anything done by the dealer in respect of the goods at the time of or before delivery thereof other than the cost of freight or delivery or the cost of installation when such cost is separately charged and the expression ‘purchase price’ shall be construed accordingly.
The definition of “turnover” given in Section 2(t) is in the following terms :?-
‘Turnover’ used in relation to any period means the aggregate of the amount of sale prices received and receivable by a dealer in respect of any sale or supply or distribution of goods made during that period, whether or not the whole or any portion of such turnover is liable to tax but after deducting the amount, if any, refunded by the dealer to a purchaser, in respect of any goods purchased and returned by the purchaser within the prescribed period.
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It will be seen that if the amount of sales tax paid by a buyer while purchasing an article is included in the sale price, then the amount of sales tax cannot be excluded from the computation of turnover. Now, the definition of the expression “sale price” clearly shows that it includes the amount of sales tax which a person has to pay to a dealer for purchasing an article. “Sale price” means the amount payable to a dealer as valuable consideration for the sale of any goods. When an article is subject to sales tax, the tax becomes part of the price which the buyer has to pay for obtaining possession of the article. He cannot get the article unless he pays the price expressed as a certain amount plus the sales tax amount. So far as the purchaser is concerned, he pays for the goods what the seller demands, namely, price including sales tax. This is the entire valuable consideration for the sale and, therefore, the whole amount paid by the purchaser to the seller would be the sale price of the article sold.
5. Shri Dabir, learned counsel for the assessee, however, contended that the definition given in Section 2(o) of “sale price” contained a specific provision for including in it “any sum charged for anything done by the dealer in respect of the goods at the time of or before delivery thereof other than the cost of freight or delivery or the cost of installation when such cost is separately charged” and nowhere said that it included the amount of sales tax and consequently the sale price could not be taken as including the sales tax amount. We are unable to accept this contention. The flaw in the contention lies in assuming that the expression “valuable consideration for the sale of any goods” in its ordinary meaning does not include the amount of .sales tax as part of the consideration for the sale. If, as we think, in its ordinary meaning “valuable consideration for sale” includes the amount of sales tax, then there is no necessity of widening the scope of the ordinary meaning of “valuable consideration” by specific enumeration of sales tax amount as included in it. The fact that in the definition of “sale price” given in Section 2(o) there is no specific enumeration for the inclusion of sales tax amount does not in any way curtail the ordinary meaning of the expression “valuable consideration” as including the amount of sales tax. There is no specific provision in the Act or the Rules made thereunder for the exclusion of sales tax amount in the computation of “sale price” and “turnover”.
6. The matter is really concluded by the decisions of the Supreme Court in George Oakes (Private) Ltd. v. State of Madras [1961] 12 S.T.C. 476, George Oakes (Private) Ltd. v. State of Madras [1962] 13 S.T.C. 98 and State of Kerala v. N. Ramaswami Iyer and Sons [1966] 18 S.T.C. 1. In the first case while considering the question whether the sales tax charged by the dealer could be included in the turnover under the Madras General Sales Tax Act, 1939, the Supreme Court observed:
Under the definition of turnover the aggregate amount for which goods are bought or sold is taxable. This aggregate amount includes the tax as part of the price paid by the buyer. The amount goes into the common till of the dealer till he pays the tax. It is money which he keeps using for his business till he pays it over to Government. Indeed, he may turn it over again and again till he finally hands it to Government. There is thus nothing anomalous in the law treating it as part of the amount on which tax must be paid by him. This conception of a turnover is not new. It is found in England and America and there is no reason to think that when the Legislatures in India denned ‘turnover’ to include tax also, they were striking out into something quite unknown and unheard of before.
The same proposition was reiterated in George Oakes (Private) Ltd. v. State of Madras [1962] 13 S.T.C. 98. In that case the Supreme Court said :-
In the earlier appeals ending with the decision of this Court in Messrs George Oakes case [1962] 13 S.T.C. 98, 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 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 State of Kerala v. N. Ramaswami Iyer and Sons [1966] 18 S.T.C. 1, it was pointed out that the observations made by the Supreme Court in George Oakes (Private) Ltd. v. State of Madras [1961] 12 S.T.C. 476, were not made in the context of any special statute. That being so, it must be taken that the decisions of the Supreme Court lay down a proposition of law that sales tax collected is ordinarily a part of the sale price and, therefore, of the turnover unless there is any specific provision in the relevant Sales Tax Act or the Rules made thereunder for the exclusion of such sales tax in the computation of sale price and turnover.
7. On the basis of these decisions of the Supreme Court it has been very recently held by a Division Bench of this Court in Frontier Boot House, Lashkar v. Commissioner of Sales Tax, M.P. Misc. Civil Case No. 1 of 1967, decided on 2nd May, 1967 ; page 414 supra, that sales tax collected separately by a dealer from purchasers is a part of the sale price. The Nagpur High Court also took the same view in Jethalal Virajlal v. State of M.P. [1953] 4 S.T.C. 125. In that case it was held that the amount recovered by a dealer from his purchasers in respect of sales tax must, under the definition of “sale price” in Section 2(h) of the C.P. and Berar Sales Tax Act, 1947, be regarded as part thereof and has to be taken into account while arriving at a dealer’s taxable turnover. It must be noted that Section 2(h) of the C.P. and Berar Sales Tax Act, 1947, defined “sale price” in the same terms as Section 2(o) of the M.P. General Sales Tax Act, 1958, does.
8. For these reasons, the questions referred to us for decision in both the references are answered in the affirmative. In each case,, the assessee shall pay to the Commissioner of Sales Tax the costs of the reference. Counsel’s fee in each case is fixed at Rs. 100.
