PARAKKATTIL ALEYAMMA Vs. SALES TAX OFFICER

JUDGEMENT

(1.) The challenge in all these cases is to the demand by the respondents for surcharge under the Surcharge on Taxes Act, 1957 on the amount paid for compounding under S.7(14) of the Kerala General Sales Tax Act, 1963 (the Act) as also for turnover tax from the petitioners.

(2.) The petitioners are abkari contractors who are licencees of arrack shops in various excise ranges in the State of Kerala. Arrack is liable to tax at the first and second sale points in the State at the rate of 50% and 12.5% respectively under S.5(1)(v) read with the Fifth Schedule to the Act. But dealers in arrack are afforded the facility of compounding, by sub-s.(14) and (15) of S.7 which were introduced in the Act by the Kerala Finance Act, 1992 with effect from 1-4-1992. These provisions enabled dealers in arrack to compound the tax payable under S.5 at 20% of the rental amount payable for the licence under the Abkari Act, 1077. But deduction is allowed from the amount so compounded, of the amount of tax paid on the purchase of arrack for each month. I shall extract these sub-s.(14) and (15) for purposes of reference:

(3.) The Board of Revenue informed the Deputy Commissioner, Kannur by letter dated 31-8-1992 that surcharge and turnover tax are leviable on such dealers in arrack, even though they have opted for compounding under S.7(14). Petitioners challenge the demand for payment of surcharge and turnover tax, in addition to the amount for which they have compounded, namely 20% of the kist payable for the arrack shops under the Abkari Act 1 of 1077.