CENTRAL WINES, HYDERABAD ETC. versus SPECIAL COMMERCIAL TAX OFFICER ETC.

Citation: [1987] 1 S.C.R. 945 · Decided: 09-01-1987 · Supreme Court of India · Bench: M.P. THAKKAR · Disposal: Dismissed
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Judgment (excerpt)

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CENTRAL WINES, HYDERABAD ETC. 
v. 
SPECIAL COMMERCIAL TAX OFFICER ETC. 
JANUARY 9, 1987 
[M.P.THAKKAR AND K.N. SINGH, JJ.] 
Andhra Pradesh General Sales .Tax Act, 1957. section 2(s)-:-
"Turnover"-Whether it includes sales tax charged from the buyer and 
shown in the Bill, by virtue of the expression 'any other sum charged by 
the dealer whatever be the description, name or object thereof' occur-
ring in the said definition in section 2(s) and as such the amount of Sales 
Tax either shown in the Bill or by Debit Voucher is includible in the 
turnover for the purposes of computing the sales tax liability of 
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assessees. 
In Andhra Pradesh, Sales tax is levied under the authority of 
sections 5 and SA of the A.P. General Sales Tax Act, 1957 on the 
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'turnover' of a dealer. The expression 'turnover' has been defined in 
section 2(s) inter alia to include the total amount set out in the hill of sale 
or the total amount charged as consideration for the sale or purchase of 
goods whether such sales includes any other sum charged by the dealer 
whatever he the description, name or object thereof. Whether or not 
sales tax collected by the dealers from the buyers would fall under the 
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inclusive part of aforesaid definition is the question raised in these 
appeals. It has arisen in the context of two categories of cases, namely: 
(i) wherein the sales tax has been separately set out in the bill of 
sale and is collected by the .seller at the time of sale imme-
diately after or at the time of delivery of the goods. 
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(ii) wherein the sales tax is not mentioned in the bill at all but 
simultaneously collected with the delivery of the goods sepa-
rately under debit notes whereby the exact amount of sales tax 
due is collected from the purchaser by the seller but the said 
amount is kept in the suspense account. 
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The submissions urged by the appellants before the High Court in 
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their Writ Petitions were: 
I. That where the amount is collected specifically as 'tax', it can-
not he deemed to he a part of the consideration for ttie sale of H 
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946 
SUPREME COURT REPORTS 
[1987] 1 S.C.R. 
the goods and as such it cannot form part of the turnover 
within the meaning of section 2(s) of the Act. 
2. Inasmuch as the Act does not prohibit the dealer to pass on the 
sales tax component of the sale price to the purchaser' the 
dealer should be deemed to be an agent, of the Government for 
collecting the sales tax amount. 
The High Court repulsed the plea of the assessees that the amount 
of sales tax so collected from the buyers was not includible in the 
turnover for the purposes of computing the sales tax liability of the 
assessees. The concerned assessees have approached the Supreme Court 
C by way of the present group of appeals by Special Leave. 
Dismissing the appeals, the Court, 
HELD: 1.1 The sales tax component of the sale price charged by 
the vendor to the vendee is not collected by him as an agent of the 
D Revenue (State Government). [ 9531>-E] 
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l.2 Some of the salient features of the A.P. General Sales T8ll, 
1957 are:-
( 1) There is no provision in the Act which imposes a legal obliga-
tion on the vendor of the goods to recover sales tax on the 
goods sold to the vendee. For instance the vendor is not pro-
hibited from selling the goods without recovering the sales tax 
from the vendee. The seller may not charge or recover the 
sales tax from the buyer. He will not be violating any. provi-
. on ~f the Act or incurring any penal consequence by doing 
so. In other words the collection of the sales l8ll from the 
buyer is a matter of his choice. He may or may not do so. Ube 
does not do so he does not expose himself to any penal conse-
quence or legal liability. 
(2) There is no legal obligation imposed by the Act on the buyer of 
the goods to pay sales tax at the time of the purchase of the 
goods. H the vendor does not insist on such payment and if the 
buyer does not .pay the tax be does not violate any provision of 
the law or incur any legal liability. 
(3) There is no provision in the Act which casts any legal dnty on 
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the ven~or to mention in the bill or the voucher is!med to the 
buyer that sales tax has been recovered from the buyer. Nor 
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CENTRAL WINES v_ COMMERCIAL TAX OFFICER 
947 
is there any obligation on him to show that sales tax is in· 
eluded in the price charged or to specify the amount ·of sales 
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tax separately in the bill or vouch
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