Decided on May 02,1967



- (1.) THE Sales Tax Tribunal (Board of Revenue, M. P.), at the instance of the assessee, has made this reference under Section 44 (1) of the M. P. General Sales Tax Act, 1958. The questions referred to us for our decision are: (1) Whether or not foot-wear manufactured by hand and sold for a price not exceeding Rs. 15 to a registered dealer by the manufacturer himself or by any member of his family would be free from liability to-sales tax when the goods so purchased were resold by the registered dealer who is himself not a manufacturer or a member of the family of the manufacturer ? (2) Whether or not it was legal to treat the sales tax collected separately by a registered dealer from customers to whom he sold goods as part of sale price ?
(2.) THE assessee is a dealer in foot-wear. During the assessment proceedings for the period 1st April, 1961, to 31st March, 1962, the assessee claimed deduction in the sum of Rs. 56,492. 31 on the ground that this sum represented the sale price of foot-wear purchased from local manufacturers and that such sales were exempt from sales tax under entry 5 of the First Schedule. This claim was negatived by the departmental authorities, and the Sales Tax Tribunal also agreed with the departmental authorities. The Sales Tax Officer also added Rs. 29,773. 77 to the taxable turnover returned by the assessee. This amount represented the sales tax separately collected by the assessee from its customers. According to the departmental authorities, the sales tax, though separately recovered, formed part of the sale price and as such was liable to be included in the taxable turnover. The assessee had challenged unsuccessfully the addition of the said amount also. The questions referred to us relate to these two matters.
(3.) SECTION 10 of the M. P. General Sales Tax Act provides that no tax shall be payable on the sales or purchases of goods specified in the second column of Schedule I subject to the conditions and exceptions, if any, set out in the corresponding entry in the third column thereof. Entry 5 of the First Schedule is to the following effect : Conditions and exceptions S. No. Description of subject to which exemption goods. has been allowed. * * * * 5. Foot-wears 1. When they are manufactured by hand and without the aid of power-driven machines ; 2. When they are sold by the manufacturer himself or by any member of his family; 3. When their selling price does not exceed rupees fifteen per pair. The contention of the assessee is that the foot-wears for which deduction was claimed were manufactured by hand and their price also did not exceed Rs. 15 per pair. The assessee also claimed that he purchased the foot-wears from the manufacturers themselves. Thus according to the assessee, all the three conditions mentioned in column 3 were satisfied and the foot-wears thus being tax-free, their sale by the assessee could not attract sales tax. The heading of Section 10 no doubt is "tax-free goods" but that is an inappropriate heading and cannot control the substantive provisions of Section 10 as shown hereinafter. ;

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