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TMI Blog1989 (2) TMI 386X X X X Extracts X X X X X X X X Extracts X X X X ..... the unit for a period of five years from the date of commencement of sale of such goods in terms of the Government Notification S.R.O. No. 968/80, G.O. Ms. No. 74180/TD dated 29th September, 1980 with effect from 1st April, 1979 subject to the conditions thereunder. The question arising for decision in this case is whether for the purpose of granting such exemption the additional sales tax and surcharge should also be taken into account. 2.. The assessee herein was eligible for exemption to the sum of Rs. 39,734 only. The amount eligible for exemption carried forward from 1979-80 was Rs. 38,398. The aggregate of the tax and the additional tax due for the year 1980-81 was Rs. 28,371. Exemption was granted in respect of this amount and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k Service Centre v. State of Orissa [1983] 53 STC 1. There, it was held that any dealer who is not liable to pay tax under the principal Act either by reason of his not having sufficient gross turnover of goods or by reason of exemption given under section 7 of the principal Act as amended is not liable to pay the additional sales tax. Applying the ratio of this decision the Tribunal held that when the sales turnover is exempted under the notification dated 29th September, 1980 issued under section 10 of the Kerala General Sales Tax Act additional sales tax is not leviable and when there is no tax payable by the dealer no surcharge can also be levied. The Revenue has challenged the correctness and legality of these findings of the Appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... granted to a unit at any point of time within this period shall not exceed 90 per cent of the cumulative gross fixed capital investment of the unit. Explanation.-For the purpose of this notification 'new industrial units under the small-scale industries' shall mean undertakings set up on or after 1st April, 1979, and registered with the Department of Industries and Commerce as a small-scale industrial unit (but shall not include old industrial units under the small-scale industries closed down and reopened under a new banner and style of business, after 1st April, 1979). This notification shall be deemed to have come into force with effect from 1st April, 1979. " 7.. The levy of sales tax is under section 5 of the Kerala General Sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s an increase on the tax payable by the dealer whose turnover exceeds the limit. Therefore, when tax is payable under the Kerala General Sales Tax Act, for the financial year, the liability to pay the additional tax whereby the sales tax is increased also follows. However, when there is no liability to pay the tax by the dealer for the year there cannot be a levy of surcharge in respect of tax not payable. The liability to pay surcharge arises only when there is liability to pay the tax. It is only in the case of specified assessees the tax is increased by a surcharge. When the turnover is statutorily exempted from sales tax, there is no liability to pay surcharge also as the levy presupposes the liability to pay sales tax [vide State Of Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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