K.AGRAWAL,J. - (1.) The Tribunal, New Delhi, has referred the following question of law under s. 256(1) of the IT Act, 1961, hereinafter referred to as the Act, for opinion to this Court : "Whether, the Tribunal is right in holding that the case of the assessee was covered by the decision of the Supreme Court in the case of Kedarnath Jute Mfg. Co. vs. CIT (1971) 82 ITR 363 (SC) and not by the decision in the case of Chowringhee Sales Bureau (P) Ltd. vs. CIT 1973 CTR (SC) 44 : (1973) 87 ITR 542 (SC) even though the amount of extra sales -tax had neither been demanded by the Sales -tax Department nor yet paid by the assessee -
(2.) BRIEFLY stated the facts giving rise to the present reference are as follows : The present reference relates to the asst. yrs. 1974 -75 and 1975 -76. The respondent -assessee is a registered firm running a press. The controversy is regarding the assessability of excess sales -tax collected by the respondent from its customers though much smaller amounts were deposited as sales -tax with the Sales -tax Department during the relevant years. The excess sales -tax collection is Rs. 6,427 in the asst. yr. 1975 -76 (1974 -75) and Rs. 77,279 in the asst. yr. 1975 -76 were brought to tax under proceedings under s. 147 of the Act. In appeal, the liability to pay tax on the aforesaid amount was deleted by the CIT(A) by holding that the liability to pay sales -tax arose as soon as the transaction was entered into and finalized as the respondent was following mercantile system of accounting and the fact that the sales -tax was paid in the year was of no consequence. The Revenue's appeal before the Tribunal had failed.
(3.) WE have heard Sri Shambhoo Chopra, learned counsel appearing for the Revenue and Sri P.K. Jain, learned counsel appearing for the respondent. The learned counsel for the Revenue submitted that the amount of sales -tax realized by the respondent from its customer is part of the trading receipts as held by the apex Court in the case of Chowringhee Sales Bureau (P) Ltd. vs. CIT 1973 CTR (SC) 44 : (1973) 87 ITR 542 (SC) and Sinclair Murray & Co. (P) Ltd. vs. CIT 1974 CTR (SC) 283 : (1974) 97 ITR 615 (SC). He further submitted that the respondent had collected 7 per cent as sales -tax from its customer whereas it had paid only 3 per cent and had transferred the balance amount to the security account. Since it had not paid the entire amount collected from its customers the balance amount would form part of the trading receipts and was not the liability towards the sales -tax. Relying upon a decision of the Supreme Court in the case of Kedarnath Jute Mfg. Co. Ltd. vs. CIT (1971) 82 ITR 363 (SC), he submitted that the amount which the respondent had paid over to the Sales -tax Department can be treated as sales -tax liability and can be allowed.;