Ramashraya Stationery Mart vs The Additional Commissioner of Commercial Taxes

H.N. Nagamohan Das, J.—The appellant is a registered dealer under the Karnataka Value Added Tax Act, 2003 (for short, ''the Act''). For the assessment years 2005-2006, 2006-2007 and 2007-2008 (upto 31-8-2007) the appellant filed returns. The Assessing Authority processed the returns and passed an order of reassessment as per Annexures-F, G and H u/s 39(1) of the Act. The Assessing Authority held that the appellant in the cash bills had not separated the tax levied and the price of goods sold. In the cash bills a consolidated figure was shown. Since the appellant has not obtained prior permission as required u/s 16 of the Act and Rule 134 of the Karnataka Value Added Tax Rules, 2005, the Assessing Authority levied tax on the basis of invoice and also the penalty. Aggrieved by the order of assessment the appellants filed appeals before the Appellate Authority. The Appellate Authority passed the impugned order as per Annexure-K, dated 9-6-2008 disagreeing with the order of Assessing Authority and accepted the returns filed by the assessee and the tax offered by him. The Revisional Authority initiated suo motu proceedings u/s 64(1) of the Act. The Revisional Authority passed the impugned order disagreeing with the findings of the Appellate Authority and restoring the order of Assessing Authority. Therefore this appeal.

Though the appellant has raised several questions of law, we are of the considered opinion that the following question of law will be suffice for the purpose of this case.

Whether on the facts and circumstances of the case, the Revisional Authority is correct in law in holding that the appellant has not collected tax amount in respect of taxable sale covered by cash sales bills?

In identical circumstances, this Court in Spencer and Co. Vs. State of Mysore and Others, held as under:

The clause "all amounts collected by way of tax under the Act by a dealer" in Rule 6(4)(h) of the Karnataka Sales Tax Rules, 1957 and Section 18 of the Karnataka Sales Tax Act, 1957, in our opinion, means all amounts collected in the character of or as being tax, under the Act. The evidence concerning the transaction must show that the buyer had agreed to pay sales tax in addition to the price and the seller''s account books should disclose such amounts separately. Where there is absence of such evidence, it cannot be said that amounts were collected by the dealer in the character of or as being tax. Therefore, in our judgment, a dealer can be said to have collected the amounts by way of tax under the Act where from the facts and circumstances, it can be inferred that the seller intended to pass on the tax and the buyer had agreed to pay the sales tax in addition to the price and that in the accounts of the dealer he has shown such amounts separately. If the cash memo, or the invoice separately shows the sales tax passed onto the buyer, no difficulty arises. But even in the absence of evidence furnished in the cash memos or bills, it may be possible for a dealer to establish that he has collected the amounts by way of tax under the Act. There are dealers who publish catalogues which show the price exclusive of sales tax. The intending buyer can see from the catalogue what the price of the goods exclusive of sales tax is. If such a dealer shows a consolidated figure in the invoice or cash memo, he will be entitled to the deduction, provided in his accounts he has shown the collection separately. There are dealers who exhibit price lists of articles which are open to inspection by the customers. If the price list shows the price of the goods exclusive of sales tax, it is not necessary that the bill should show the price and sales tax separately. There may be correspondence between the parties and such correspondence may show the price of the goods exclusive of sales tax. If it is possible to find out from the accounts maintained and other documentary evidence that the dealer has fixed a price exclusive of sales tax for his goods and that the cash memos give a consolidated figure inclusive of sales tax, in such a case also, the dealer can be said to have collected the amount by way of sales tax under the Act. But if the dealer offers a price without specifically mentioning that it is exclusive of sales tax, the inference to be drawn is that the dealer does not intend to pass on the tax to the buyer and in that case he cannot claim any deduction.

In the instant case, the Mysore Sales Tax Appellate Tribunal and the authorities below have rejected the petitioner''s claim for deduction under Rule 6(4)(h) on the sole ground that the tax amount has not been shown separately in the bills. It was submitted by Sri R.N. Narasimha Murthy, petitioner''s learned Counsel, that the petitioner has maintained a price list showing the prices of different varieties of liquor exclusive of sales tax, the sales tax chargeable per bottle and the sum total of the price and the sales tax and that the cash memos were prepared on the basis of the said price list. Since the Tribunal has not examined the question in the manner it ought to have been done and its decision is entirely vitiated by the erroneous view of the law it has taken, we set aside the order of the Tribunal and remit the matter back to the Tribunal to rehear the appeal and dispose of the same in the light of his order. There will be an order accordingly. No costs.

Case remitted.

Learned Counsel for the appellants submit that the assess furnished books of accounts, invoices etc. The books of accounts furnished by the assessee specifies a detailed bifurcation of the sale prices of the goods and also the tax component. In the circumstances, the matter requires to be remanded to the Assessing Authority for processing the returns filed by the appellant keeping in view the observations made by this Court in the decision referred to supra. Accordingly, the question of law framed above is answered in favour of the assessee and against the revenue. Accordingly, the following.--

ORDER

(i) The appeal is hereby allowed.

(ii) The impugned order passed by the Revisional Authority dated 30-7-2009, the Appellate Authority dated 9-6-2008 and the order of assessment dated 30-7-2009 are hereby set aside.

(iii) The matter is remanded to the Assessing Authority for reconsideration in accordance with law.

(iv) Ordered accordingly.