STATE OF KERALA Vs. GOPALAKRISHNAN

JUDGEMENT

(1.) THE matter arises under the Kerala General Sales Tax act, 1963 (hereinafter referred to as the Act ). THE assessment year concerned is 1996-97. THE question that arises for consideration is as to whether the surcharge paid under the Kerala Surcharge on Taxes Act can be reckoned for the purpose of computation of tax at the compounded rate under S. 7 of the Act.

(2.) THE State is the revision petitioner. THE respondent is a jeweller and an assessee to sales tax under the Act. He opted for the benefit of paying tax at the compounded rate under S. 7 (1) of the Act. THE final assessment of the respondent-assessee for the assessment year 1996-97 was completed as under: According to the respondent, for the year 1996-97 the surcharge paid on the amount of sales tax in the previous year cannot be reckoned in the computation of tax under S. 7 of the Act. THE respondent, therefore, took the matter in appeal before the Appellate Assistant Commissioner of commercial Taxes, Idukki. THE appeal was allowed by accepting the contention of the assessee and directed exclusion of the surcharge paid in the previous year from the computation of tax under S. 7 of the Act. On appeal by the State, the sales Tax Appellate Tribunal confirmed the order of the Appellate Assistant commissioner.

(3.) IN this context, it is relevant to note the provisions of the Kerala Surcharge on Taxes Act, 1957. S. 3 of the said Act reads as follows: "3. Levy of surcharge on sales and purchase taxes.- (1) The tax payable under the Kerala General Sales Tax Act, 1963, shall, in the case of a dealer whose turnover- (a) is not less than one lakh rupees but does not exceed ten lakhs rupees in a year, be increased by a surcharge at the rate of five per centum, and (b) exceeds ten lakhs rupees in a year, be increased by a surcharge at the rate of ten per centum, of the tax payable for that year, and the provisions of the Kerala General Sales Tax Act, 1963, shall apply in relation to the said surcharge as they apply in relation to the tax payable under the said Act: Provided that where in respect of declared goods as defined in Cl. (c) of S. 2 of the Central Sales Tax Act, 1956, the tax payable by such dealer under the Kerala General Sales Tax Act, 1963 together with the surcharge payable under this sub-Section exceeds four per centum of the sale or purchase price, the rate of surcharge in respect of such goods shall be reduced to such an extent that the tax and the surcharge together shall not exceed four per centum of the sale or purchase price. Notwithstanding anything contained in sub-s. (1) of S. 22 of the Kerala General Sales Tax Act, 1963 no dealer referred to in sub-s. (1)shall be entitled to collect the surcharge payable under the said sub-section. (3) Any dealer who collects the surcharge payable under sub-s. (1) in contravention of the provisions of sub-s. (2) shall be punishable with fine which may extend to one thousand rupees and no court below the rank of a Magistrate of the first class shall try any such offence. " As per this section in the case of a dealer who is liable to pay tax under the Kerala General Sales Tax Act and whose turnover is not less than Rs. 1 lakh, but does not exceed Rs. 10 lakhs in a year the tax payable under the said Act shall be increased by a surcharge at the rate of 5 per cent and where the turnover exceeds Rs. 10 lakhs in a year the tax shall be increased by a surcharge at the rate of 10 per cent of the tax payable for that year and the provisions of the Act shall apply in relation to the said surcharge as they apply in relation to the tax payable under the Act. This would show that the levy of surcharge is an independent levy and the measure of such levy is geared to a percentage of the tax payable under the Act. Thus, it is clear that the tax payable under the provisions of S. 7 (1) (a) of the Act cannot take in any surcharge payable under S. 3 of the Kerala Surcharge on Taxes act in the absence of a specific mention in the said section including the surcharge paid under the Kerala Surcharge on Taxes Act.