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Commissioner of Sales Tax v/s M.P. Auto House

    M.C.C. 470 of 1986

    Decided On, 28 February 1990

    At, High Court of Madhya Pradesh

    By, THE HONOURABLE CHIEF JUSTICE MR. S.K. JHA & THE HONOURABLE MR. JUSTICE D.M. DHARMADHIKARI

    For the Appearing Parties: B.S. Banthia, P.C. Naik, Advocates.



Judgment Text

(1.) BY an order dated May 28, 1986, statement of the case has been submitted by the Tribunal (Board of Revenue, M. P. , Gwalior), under Section 44 (1) of the M. P. General Sales Tax Act, 1958 (hereinafter referred to as "the Act"). The following question has been referred to this Court for its opinion :

"whether, under the facts and circumstances of the case, the entire amount received by the dealer because of sale of application forms for booking of scooters can be treated as taxable turnover or only the amount retained by the dealer should be so treated excluding the amount passed on by him to the principal ?"

(2.) THE relevant facts, as evidenced by the statement of the case itself, may be summed up thus :

M. P. Auto House, Hamidia Road, Bhopal, are dealers in scooters, three wheelers, cycles and their parts, etc. They were assessed to sales tax for the period November 1, 1981 to October 31, 1982, by the Regional Assistant Commissioner of Sales Tax, Bhopal, by order dated April 23, 1984. (Copy marked as annexure B). Being aggrieved by that order, the non-applicant dealer filed an appeal before the Appellate Deputy Commissioner of Sales Tax, Bhopal. He, by his order dated September 29, 1984, dismissed the appeal and raised the tax demand further by Rs. 9,657. 58 by increasing the taxable turnover at Rs. 1,06,376 on account of sale of application forms for booking scooters. (Copy of the first appellate order is annexure C). Being further aggrieved by this order, the non-applicant dealer filed a further appeal before the Tribunal who, by its order dated May 17, 1985, set aside the enhanced taxable turnover by the Appellate Deputy Commissioner and maintained the order of the assessing authority. The Tribunal observed that in the procedure prescribed by Bajaj Auto Ltd. , it was stipulated that every intending purchaser for scooter will submit an application in the prescribed form and will pay Rs. 5 which was the price of the form. Rs. 4 per application form sold had to be remitted to the principal-manufacturer, Bajaj Auto Ltd. , irrespective of the fact whether the purchaser had submitted the application form or otherwise or whether they had withdrawn the application form or otherwise. 26,594 forms were sold and 19,700 forms were received. About 17,000 applicants withdrew their deposits and only 2,200 applicants remained to whom the scooters were to be supplied. According to the Tribunal, out of Rs. 1,32,970 received, only a sum of Rs. 26,594 remained with the non-applicant and Rs. 1,06,376 was remitted to the principal-manufacturer and as such, the taxable turnover in the hands of the non-applicant was only Rs. 26,594. Accordingly the Tribunal reduced the taxable turnover by Rs. 1,06,376 which was remitted to the principal-manufacturer. (A copy of the order of the Tribunal has been marked as annexure D).

(3.) THE only question is as to whether the entire amount of Rs. 1,32,970 should be treated as a part of the turnover of the non-applicant assessee's business or only the amount which was retained by them at the rate of Re. 1 per application form would be so treated as incidental to the sale of the scooters, etc. , in question. By no stretch of imagination can it be held that Rs. 4 per application form which was remitted under a contractual obligation to the principal-manufacturer, Bajaj Auto Ltd. , formed a part of the turnover of the non-applicant's business. At best, only the sum representing Re. 1 per application form which was retained by the non-applicant dealer, could be included as incidental to the business of the non-applicant dealer. The Tribunal has so assessed the dealer.

(4.) LEARNED counsel for the Revenue has sought to argue that even the sum representing Rs. 4 per application form which was remitted to Bajaj Auto Ltd. , the principal-manufacturer, is concerned, it should also be deemed to be a part of the taxable turnover as being incidental to the business of the non-applicant assessee. We are unable to agree with the contention of the learned counsel.

(5.) IN the result, we do not find any infirmity in the order of the Tribunal. We accordingly answer the question referred to us in favour of the non-applicant dealer and against the Revenue and we hold that on the facts and in the circumstances of the case, only the amount retained by the d

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ealer should be treated as being business income, or being incidental to the business in question and not the entire amount received by the dealer. The amount of Rs. 4 per application form for booking of scooters cannot be treated as taxable turnover in the hands of the non-applicant dealer. The question is thus answered. The non-applicant assessee shall be entitled to costs Rs. 250. (6.) COPY of this judgment be forwarded to the Tribunal (Board of Revenue, M. P. , Gwalior).
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