STATES OF ORISSA versus M/S. UTKAL DISTRIBUTORS (P) LTD.

Citation: [1966] 3 S.C.R. 55 · Decided: 13-12-1965 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Dismissed

Judgment (excerpt)

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A 
B 
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D 
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STATES OF ORISSA 
v. 
MIS. UTKAL DISTRIBUTORS (P) LTD. 
December 13, 1965 
[K. SUBBA RAo, J. c. SHAH AND s. M. Suw, JJ.] 
O"- Sale!t Tax Act, 1946-SJ. 2(h), 2(1) an4 5(2)-'Sale price' 
and 'Turnour'-Whether includu Central Sal.<s·tax collected on """ of 
iro1t <l1td steel goods by controlled stock-holder-Iron and Steel Control 
Order, 1956 and Iron d: Steel (Control) Notification dt. Oct. 18, 1958-
Efject of. 
In the course of assessment to sales tax for the last two quarters of 
1957 under the Orissa Sales Tax Act, 1947 on the sales of iron and steel 
1oodi, the assessee company claimed a deduction from its grOM turnover 
of an amount representing central sales-tax collected by it from purcbMers 
and paid over to the central sales-tax authority. 
This claim was .U.-
allowed by the Sales Tax Officer and the Collector of Sal...,tax confirmed 
tW. deciaion. 
However, on appeal, the Sales Tax Tribunal held that the 
central sales-tax realised by the assessee from its customers waa not pvt 
of tho price charged by it and, therefore, it did not fall within the defini-
tiono of -.ale price" and "taxable turnover" in the Act. 
In coming to 
its conclmion, the Tribunal relied upon the fact (i) that the imessee was 
a controlled stock-holder under the Iron and Steel Control Order, 1956, 
and was not, therefore, entitled to charge a price higher than that fixed 
by the Government of India; and 
(ii) 
that by virtue of Condition 
No. 4(ii) of the Iron & Steel (Control) 
Notification dated Oct. 18, 
1958 the customer was required to pay the controlled stock-bolder the 
central sales tax incurred .. by the latter in obtaining tho material and on 
the sale to the customer. 
The High Court, upon a 
reference, agreed 
with the Tribnnal. On appeal to this Court, 
HELD : In view of the fact that the price which the stock-holder was 
entitled to charge was statutorily fixed and the stock-holder was not en-
titled to end did not charge more, the central sales-tax paid nndcr the 
provisions of the Iron and Steel (Control) Notification did not form part 
of the sale price paid by the customer to the assessee. [60 D-E] 
The Deputy Commissioner of Commercial Taxes v. M. Kri.shn11.1wan1i 
Mudaliar & Sons, 5 S.T.C. 88 and Bata Shoo Co. Ltd. v. Momber, Board 
of Revenue, West Bengal referred to. 
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 64 and 
65 of 1965. 
G 
Appeals by special leave from the judgment and order, dated 
April 12, 1963 of the Orissa High Court in Special jurisdiction 
Case& Nos. 38 and 39 of 1962. 
1 
O. P. Malhotra and R. N. Sachthey, for the appellant. 
, 
The respondent did not appear. 
H 
The Judgment of the Court was delivered by 
Slkri, J. These appeals by special leave are directed against 
the judgment of the Orissa High Court in a reference made to it 
56 
SUPREME COURT REPORTS 
(1966] 3 S.C.R, 
under s. 24(1) of the Orissa Sales Tax Act, 1947. The following 
A 
questions were referred : 
"l. Whether in the facts and circumstances of the 
case, the Tribunal is right in holding that the Central 
Sales Tax paid by the opposite party at its purchase 
point and charged on to its customers does not form a 
B 
part of the sal~price of the commodity sold so as to be 
taxable under the Orissa Sa!.:s Tax Act, 1947. 
2. Whether, in the facts and circumstances, the 
allowance of the claim of the opposite party for deduc-
tion of Central Sales Tax collected from ii! customers is 
permissible under the provisions of the Orissa Sales Tax 
Act and the rules framed thereunder." 
Before we examine the facts and circumstances of the cue, 
c 
it ia convenient to set out the relevant provisions of the Oriua 
s.I• Tax Act, 1947 (hereiaafter called the Act) aa it stood prior D 
~ the amendmc.n1$ made in 1958, In the Act, the definition of 
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expressions "sale price" and "turnover" in ss. 2(h) and 2 (i) 
(omitting immaterial portioos) were as foll0W1 : 
"2(1ii)-'sale pm:.' means the amount payable to a 
dealer u valuable consideration for-
(i) the sale or supply of any goods, less any IUDI 
allowed ~. cuh dieoo,un,t aCQOr\f.ing to ordinary trado 
prac:tic;o, but i.t!cluding any S1llll clwpd t~ miything 
4oae by the dealer in respect of tho gooda at the time ol, 
or before, delivery thereof, -other than the cost ol freight 
or delivery or the ~ 
of installation when 1uch COit is 
teparately charged; .... 
2(i)-Tumovor' melDI the aggregate of the nle 
prices and tax, if any, received or receivable by a dea

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