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2015 (8) TMI 791 - HC - VAT and Sales TaxLevy of Surcharge manufacture and sale of tractors and three wheelers - Industrial unit holding exemption from tax Tribunal held that even when appellant was exempted unit as per entitlement certificate, still every year tax has to be calculated on taxable turnover and then it has to be exempted within exemption entitlement Further that surcharge was leviable on tax payable and shall also be added to amount of tax for which exemption entitlement was there Held that - Section 5(1C) of PGST Act provides for levy and collection of surcharge on taxable turnover of dealer payable by him under Act For purposes of determining taxable turnover , deductions as admissible under section 5(2) of PGST Act and rule 29 of Rules, 1949 were to be allowed In absence of any specific provision which confers any right on assesse whereby surcharge on taxable turnover would not be reduced from its exemption limit in case of exempted unit, assesse was not entitled to claim such benefit Thus, tax and surcharge payable every year on taxable turnover would form part of its exemption entitlement Tribunal noticed that assesse had failed to file any list to show that there was sale of three-wheelers and therefore as per section 5(1C) of PGST Act, no such surcharge was leviable There was no material to show that finding recorded by Tribunal was perverse or erroneous Appeal dismissed Decided against Assesse.
Issues Involved:
1. Exigibility of surcharge under section 5(1C) of the Punjab General Sales Tax Act, 1948. 2. Deductibility of sales made by an exempted unit from gross turnover to determine taxable turnover liable to surcharge. 3. Applicability of surcharge on sales of three-wheelers. 4. Legitimacy of penalty imposed under section 23 of the Punjab General Sales Tax Act, 1948. Issue-wise Detailed Analysis: 1. Exigibility of Surcharge under Section 5(1C): The court examined whether surcharge could be levied on an industrial unit holding exemption from tax under the Punjab General Sales Tax (Deferment and Exemption) Rules, 1991, especially after the omission of section 30AA. The court referred to section 5(1C) of the PGST Act, which mandates a surcharge on the taxable turnover of a dealer at ten percent of the tax payable. The court noted that section 30AA, which explicitly required exempted units to pay surcharge, was omitted. However, the court concluded that in the absence of any specific provision exempting surcharge for exempted units, the surcharge was still exigible and would form part of the exemption entitlement. 2. Deductibility of Sales Made by an Exempted Unit: The court analyzed whether sales made by an exempted unit should be deducted from the gross turnover to determine the taxable turnover liable to surcharge. The court referred to sections 5(2) and 30A of the PGST Act and rule 29 of the 1949 Rules. It concluded that taxable turnover is calculated after allowing deductions as per section 5(2) and rule 29. The court held that tax and surcharge payable every year on the taxable turnover would be part of the exemption entitlement, and no specific provision exempted surcharge from the exemption limit. 3. Applicability of Surcharge on Sales of Three-Wheelers: The court addressed whether sales of three-wheelers amounting to Rs. 6,90,181 could be subjected to surcharge despite the prohibition in the second proviso to section 5(1C). The Tribunal found that the assessee had failed to provide a list of sales of three-wheelers. The court upheld the Tribunal's finding, noting that there was no evidence to support the assessee's claim that such sales were exempt from surcharge. 4. Legitimacy of Penalty Imposed under Section 23: The court examined the imposition of a penalty under section 23 of the PGST Act. Section 23 allows for a penalty for contraventions or failures to comply with the Act or rules. The Tribunal found that the assessee was asked to explain why penalty should not be imposed but did not respond. The court upheld the penalty, noting that the assessee had been given an opportunity to be heard, and the lack of a separate notice did not invalidate the penalty. Conclusion: The court answered all substantial questions of law against the assessee and in favor of the Revenue. The appeal was dismissed, affirming the Tribunal's decision to levy surcharge, include it in the exemption entitlement, and impose the penalty under section 23 of the PGST Act.
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