2008 (8) TMI 823 - HC - VAT and Sales Tax

Whether, in the facts and circumstances of the case, surcharge is leviable on compounding of tax on outstill liquor under rule 90AA of the Orissa Sales Tax Rules, 1947 read with first proviso to section 5 of the Orissa Sales Tax Act, 1947. Whether, in the facts and circumstances of the case, the findings of the learned Sales Tax Tribunal can be sustained in law? Held that - We are of the considered opinion that it is not permissible for the court to add or subtract any word from the statute while interpreting, as it may amount to legislation which is not permissible for the court. In view of the above, the arguments advanced on behalf of the assessee are not acceptable. The words in addition to the tax payable contained in section 5A make it crystal clear that surcharge is leviable under a different provision altogether as an additional/extra/superadded tax over and above the tax payable under section 5 of the Act. Rule 90AA makes it evident that the payment of composite tax is only in lieu of tax assessable on the taxable turnover under the provisions of the Act. Therefore, rule 90AA has an application only to the extent of the tax payable under section 5 of the Act. Section 5A was added by amendment with effect from July 1, 1990. The Legislature has not given any indication that such payment will not be made where agreement for compounding exists. Therefore, we hold that surcharge under section 5A is to be paid in addition to tax payable under section 5 of the Act. Thus, the questions are answered in favour of the Revenue and against the assessee.

Issues Involved:
1. Levy of surcharge on compounding tax for out-still liquor under Rule 90AA of the Orissa Sales Tax Rules, 1947, read with the first proviso to Section 5 of the Orissa Sales Tax Act, 1947.
2. Sustainability of the findings of the Sales Tax Tribunal in law.

Detailed Analysis:

Issue 1: Levy of Surcharge on Compounding Tax

The petitioner, a registered dealer under the Orissa Sales Tax Act, 1947, and a manufacturer of out-still liquor, opted to pay compounding tax as permitted under Rule 90AA. The assessing authority determined the sale turnover and imposed a surcharge in addition to the compounding tax. The petitioner contended that surcharge should not be levied over and above the compounding tax, arguing that the term "tax payable" under the Act should include surcharge, making the surcharge inclusive in the lump sum agreement.

The Revenue argued that surcharge under Section 5A of the Act is an additional tax calculated at 10% of the tax payable under Section 5, thus it should be levied separately from the compounding tax.

The court examined the relevant statutory provisions, including Sections 5 and 5A of the Act and Rule 90AA. Section 5 outlines the rate of tax payable by a dealer, allowing for a lump sum agreement in lieu of tax on taxable turnover. Section 5A mandates a surcharge "in addition" to the tax payable, indicating it as an extra charge over the usual tax.

The Tribunal had previously held that Rule 90AA pertains only to Section 5 and provides a method for quantifying tax on out-still liquor sales. Surcharge under Section 5A is an additional charge, and Rule 90AA does not negate the obligation to pay this surcharge.

The court upheld the Tribunal's findings, emphasizing that interpreting Section 5A to exclude surcharge from the compounding agreement would render the words "in addition" redundant. The court reiterated the principle that every word in a statutory provision must be given effect, and no word should be considered redundant. The court cannot add or subtract words from the statute, and the legislative intent must be fully realized.

The court concluded that surcharge under Section 5A is to be paid in addition to the tax payable under Section 5, and Rule 90AA applies only to the tax payable under Section 5.

Issue 2: Sustainability of the Tribunal's Findings

The petitioner challenged the Tribunal's findings, which upheld the surcharge imposition. The Tribunal had reasoned that Rule 90AA is silent on surcharge, but surcharge is an additional charge under Section 5A. The court found the Tribunal's reasoning justified, as accepting the petitioner's argument would nullify the legislative intent of Section 5A.

The court noted that statutory interpretation principles require that no word in the statute is redundant and that legislative intent must be fully realized. The court cited several precedents emphasizing that courts cannot amend or add to statutory provisions under the guise of interpretation.

The court concluded that the Tribunal's findings were legally sustainable and aligned with the statutory provisions.

Conclusion:

The court held that surcharge under Section 5A is payable in addition to the compounding tax under Rule 90AA, answering the questions in favor of the Revenue and against the assessee. The sales tax revision was disposed of accordingly.

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