Judgment:
H.L. Agrawal, C.J.
1. By this reference under Section 24(1) of the Orissa Sales Tax Act, 1947 (hereinafter referred to as the 'Act'), the Additional Sales Tax Tribunal, Orissa, has forwarded a statement of case and referred the following question for giving an interpretation to the expression 'cost' appearing in serial No. 90 of the notification dated 23rd April, 1976 :
Whether, on the facts and in the circumstances of the case, the Additional Sales Tax Tribunal was correct in holding that the expression 'cost' appearing in serial No. 90 of Notification No. 20215 dated 23rd April, 1976 as further amended by Notification No. S.R.O. 972/76 dated 24th September, 1976 refers to the purchase cost and not the selling cost of a radio ?
2. The opposite party is a registered dealer under the Act and deals in radio, microphone, etc. For the period 1976-77 the dealer was assessed to tax under Section 12(4). It was found to have sold 82 Nos. of Murphy radio, the sale price of which was more than Rs. 150 each, but the purchase price was less than that, and accordingly sales tax was charged on the turnover of sale of the said radios at the rate of 12 per cent resulting in demand of an additional tax. Serial No. 90 reads as follows :
SCHEDULE-------------------------------------------------------------------------Serial Description of goods Rate of taxNo.-------------------------------------------------------------------------90 'Wireless reception instruments and appara- Twelve per cent. tus, radio and radio-gramophones, television sets, accumulators, amplifiers and loud-speakers and spare parts, component parts and accessories thereof and electrical valves, except radios costing less than rupees one hundred and fifty each.'-------------------------------------------------------------------------
3. The contention of the dealer before this Court has been that in view of the said entry, the purchase price of each radio being less than Rs. 150, tax only at the rate of 6 per cent on the sale of the radios was exigible.
4. The first appellate authority held that the 'cost' referred to in serial No. 90 of the notification in question relates to the 'sale price' and not the 'purchase price' as contended by the dealer.
The Tribunal, however, on further appeal took a contrary view and accepted the stand of the dealer. In that view of the matter, the present reference has been made on the application of the State for proper interpretation of the expression 'cost'.
5. It was submitted on behalf of the dealer in this Court that the expression 'cost' must mean the cost to the selling dealer and not the sale price. It was accordingly contended that the notification would have no application to the sale of radios, etc., which were purchased by the dealer for less than Rs. 160 each but were sold at a price higher than Rs. 150. In support of the contention, some other notifications were filed to show that wherever a 'sale price' was intended, the notification specifically stated to that effect, e.g., 'when the price exceeds rupees...a piece'.
6. Section 5(1) under which notifications are issued reads as follows :
5. Rate of tax.-(1) The tax payable by a dealer under this Act shall be levied on his taxable turnover at such rate, not exceeding thirteen per cent and subject to such conditions as the State Government may, from time to time, by notification, specify.
The whole structure and scheme of the Sales Tax Act contemplate a taxable turnover on the sale price.
'Purchase price' has been defined in Section 2(ee) of the Act. Similarly, 'sale price' has been defined in Section 2(h). The Act does not define anywhere 'cost price'. Section 4 which deals with incidence of taxation also takes into account only the dealer's 'gross turnover' during a year. Sales tax means an incidence of tax on sale. Obviously, the notification had been issued 'for realisation of sales tax. The expression 'cost' must therefore mean the sale price of the goods sold by the dealer, i.e., which will be the cost for him for purchasing the radio.
7. The determining factor regarding the rate of tax in the transaction of the present nature therefore being the 'sale price' and undisputedly sale price of each radio being Rs. 150, the dealer must be held to be liable to pay tax at the rate of 12 per cent under serial No. 90 of this notification. 'Purchase price' of such radios by the selling dealer must be completely an irrelevant consideration for computation of the rate of tax.
8. The answer to the question therefore must be given in favour of the department and against the dealer.
S.C. Mohapatra, J.
I agree.