1984 (12) TMI 278 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to levy of surcharge under Jammu and Kashmir General Sales Tax Act, 1962 on various grounds including violation of constitutional provisions and double taxation.

Analysis:
The petitioner, a partner of a firm engaged in sales of electric appliances, sewing machines, and radios, challenged the levy of surcharge by the assessing authority for the accounting year 1976-77. The challenge was based on multiple grounds, including violation of article 14, 19(1)(f), 19(1)(g), and 276(2) of the Constitution of India, as well as double taxation and contravention of article 286(3) of the Constitution of India. The respondents contended that the challenge was not maintainable as there was an alternative remedy by way of appeal. The High Court referred to the Supreme Court judgment in S. Kodar v. State of Kerala, which held that the levy of surcharge is a tax on sales of goods, not on income, and is not violative of the Constitution. The Court rejected the first four grounds of attack based on this precedent.

Regarding the fifth ground of attack, which alleged violation of article 286(3) of the Constitution of India, the Court found that the petition lacked specific facts or figures to support the challenge. The petitioners failed to demonstrate how the levy of surcharge exceeded the prescribed limits under the State and Central Sales Tax Acts. The Court upheld the validity of section 4-A of the Jammu and Kashmir Sales Tax Act, 1962, stating that there was a presumption of constitutionality and insufficient evidence to prove the violation of relevant provisions.

The last ground of attack focused on the interpretation of section 4-A, which was amended in 1978 to replace "for every year" with "for any year." The Court analyzed the legislative intent behind this change and concluded that before the amendment, the dealer had to exceed the turnover limit every year to be liable for surcharge. However, post-amendment, exceeding the limit in any year made the dealer liable. As the assessing authority did not record a finding on the turnover exceeding the limit every year from 1974 to 1978, the Court held the levy of surcharge to be improper. The Court quashed the surcharge and remanded the case for a fresh determination by the assessing authority.

In conclusion, the writ petition was partially allowed, quashing the surcharge levy and remanding the case for a fresh assessment. Each party was directed to bear its own costs as the petition succeeded only in part.