MC DOWELL & COMPANY LTD. ETC. versus COMMERCIAL TAX OFFICER, VII CIRCLE, HYDERABAD ETC.

Citation: [1977] 1 S.C.R. 914 · Decided: 25-10-1976 · Supreme Court of India · Bench: HANS RAJ KHANNA · Disposal: Appeal(s) allowed

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Judgment (excerpt)

A 
B 
c 
D 
E 
F 
G 
H 
914 
MC DOWELL & COMPANY LTD. ETC. 
v. 
COMMERCIAL TAX OFFICER, VII CIRCLE, HYDERABAD ETC. 
\. 
October 25. 1976 
(H. R. KHANNA AND JASWANT SINGH, JJ.] 
• 
A1ulhra Pradesh General Sales Tax Act, 1957-Excise mu! 
countervai/i•w 
duty paid by the buyers directly illlo the Treasury-Neither the invoice 
,;0~. 
books of the assessee (111a11ufact11rer) show the exci,e duty-Excise dwy..:._/f 
(.alls 111ul~r "any sums charged by the dealer" occurring in the dt,inition of 
turnover . 
Section 2 ( 1 )( s) of the Andhra Pradesh General Sales Tax Act 
defines 
··.turnover" to mean the total amount set out in, the bill of sale ~s the' considera-
tion for t~e sale or. purchase of goods including any sums charged by tile dealer 
for anythmg done m respect of goods sold at the time of or before the delivery 
of the goods. 
. The appellants in the first two sets of appeals are manufacturers of Indian 
liquors. A buyer of Indian liquor from the distilleries pays, in the first instance, 
the excise duty m the Treasury and obtains a distillery pass for the release of 
liquor. 
On presentation of the distillery pass an invoice is prepared by the 
manufacturers showing the price of liquor. 
Neither 
invoice nor the 
account 
\Jooks of the manufacturers show the excise duty paid by the purchasers. 
Under the system in vogue in the second set of appeals, the appellant who is 
the owner of a bonded warehouse prepares a bill for the liquor required by the · 
purchaser who pays the countervailing duty in the Treasury in his own name 
and obtains a pass from the excise authorities for the removal of the liquor 
from the warehouse. 
lll both the, cases the Sales Tax Authorities included the excise duty in the 
taxable turnover' of the appellants. 
The High Court dismissed tiJ0 writ petiti:m 
of the appellants impugning the orders of the Sales Tax Officers. 
~
Allowing the appeal, 
HELD : (I) Excise duty and countervailing duty paid directly by the buyers 
for the Indian liquors did not constitute a part of the turnovers of the appellants. 
[924 CJ 
(2) The phrase 'any sums charged by the dealer' occurring in the definition 
of 'turnover' has to be understood in its ordinary' popular sense. 
So construed, 
it means what is demanded and collected or received by the dealer. (923 BJ 
In the instant case the excise duty or the countervailing duty has not been 
charged or received by the dealer but has been charged by the excise :mthorites 
and deposited directly by the buyers of the liquor in the State exchequer. 
Tt 
cannot be said that the excise duty or the countervailing duty was charged by 
the appellants. 
In M /s. George Oakes (Private) Ltd. v. The State of Madras & Ors., this 
Court held in relation to the defintion of• tum-over that the aggregate am<;>unt 
includes the tax as part of the price paid by the bu:,:er;. the amount goe.s mto 
the common till of the dealer till he pays the tax; 1t 1s the money which he 
keeps using for his business till he pays the tax; it i~ the m~:mey which he keeps 
·using for his business till he pays it over to \)overnmenl; 1t be~om~s a pa!t of 
the circulating capital of the tradesman and 1s 
turned over m lus busmess. 
Secondly the price paid by· the purchaser was ~ot s.o 
much 
mon!'y for .th.e 
cause turnover means the: amount of money which JS turned over m the, busi-
ness. [923 E-GJ 
f 
• 
r 
MC DOWELL & co. v. COMM. TAX OFFICER (Jaswant Singh, J.) 915 
In the instant case the excise and the countervailing duties did not go into 
A 
the common tills of the appellants and did not become a part.of their circulat-
ing capital. 
The. Sales tax authorities were not competent co include jn . the 
turnovers of the appellants the excise .duty and the countervailing duty which 
was not charged by them but was charged by and paid directly to the excise 
authorities by the buyers of the liquors: [924 A] 
. 
A. V. Fernandez v. The State of Kera/a [1957] S.C.R. 837 followed. 
R. C. Jail v. Union of India [l 962] Supp. 3 S.C.R. 436, Seit Custums Act 
B, 
[1964] 3 S.C.R. 787, A. B. Abdul Kadir & Ors. v. State of Kera/a [1976] 3 S.C.R. 
219, K!rlyani Stores v. The State of OrfasCJ & Ors. [1966] 1 ~.~.R. 865 & Mis. 
Mohan Meakin Brewaries Ltd. v. Excise & Taxation Comm1s1sonff, Cha11d1garh 
& Ors. [1976] 3 S.C.C. 421 referred to. 
Mess1~ George Oakes (Private) Ltd. v. The Stcite of Madras & Ors. (12 
S.T.C. 476) and (13 S.T.C. 98) referred to and distinguished. 
The Government of Andhra (now Andhr

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