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TMI Blog2002 (12) TMI 582X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent, for the year 1996-97 the surcharge paid on the amount of sales tax in the previous year cannot be reckoned in the computation of tax under section 7 of the Act. The respondent, therefore, took the matter in appeal before the Appellate Assistant Commissioner of Commercial Taxes, Idukki. The appeal was allowed by accepting the contention of the assessee and directed exclusion of the surcharge paid in the previous year from the computation of tax under section 7 of the Act. On appeal by the State, the Sales Tax Appellate Tribunal confirmed the order of the Appellate Assistant Commissioner. 3.. The learned special Government Pleader appearing for the petitioner contends that the surcharge paid by the assessee in the assessment for the previous year will have to be reckoned while determining the compounded rate of tax and the two appellate authorities had misread the provisions of section 7(1)(a) of the Act in directing exclusion of the surcharge from the computation. The Government Pleader in support of this contention has relied on the decisions of the Supreme Court reported in Cardamom Planters' Association v. Deputy Commissioner of Sales Tax (Law), Board of Revenue (Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who opts for the compounding facility is in lieu of the tax which is payable under sub-section (1) of section 5 of the Act. No doubt, the tax payable under section 5(1) of the Act is the tax due on his taxable turnover for that year in the case of goods specified in the First or Second Schedule at the rate and at the points specified against such goods in the said Schedules. Surcharge is a tax payable not under the provisions of the Act but is a tax payable under the provisions of the Kerala Surcharge on Taxes Act, 1957. Of course the tax payable under section 7(1)(a) of the Act is 150 per cent of the maximum amount of tax payable by him for a period of 12 months as conceded in the return in any of the three financial years immediately preceding the assessment year The tax payable in this context can be understood only as the tax payable under the provisions of section 5(1) or at any rate under the provisions of the Act. 5.. In this context, it is relevant to note the provisions of the Kerala Surcharge on Taxes Act, 1957. Section 3 of the said Act reads as follows: "3. Levy of surcharge on sales and purchase taxes.-(1) The tax payable under the Kerala General Sales Tax Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payable under section 3 of the Kerala Surcharge on Taxes Act in the absence of a specific mention in the said section including the surcharge paid under the Kerala Surcharge on Taxes Act. 6.. In the circumstances we are of the view that surcharge paid in the previous year under the Kerala Surcharge on Taxes Act cannot be reckoned or included in computing the tax payable under section 7(1)(a) of the Act. 7.. In fact, the very same question arose for consideration before a single bench of this Court in O.P. No. 11716 of 2002 (T) (Bhima Jewellery v. Assistant Commissioner (Assessment) Special Circle, Commercial Taxes [2004] 138 STC 272) and one of us (Justice C.N. Ramachandran Nair) in the judgment dated July 4, 2002 held that surcharge paid during the previous year cannot be reckoned for the purpose of computation of compounded tax under section 7(1) of the Act. The assessment year concerned in that case was 2000-01 where the assessee had excluded the surcharge paid in the previous year in the computation of compounded rate of tax payable under section 7(1) of the Act. The assessing authority, however, included the surcharge amount also for the purpose of reckoning the compounde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e KGST Act defining "tax" also does not include surcharge which was being levied by a separate statute; until its repeal. So long as tax based on which compounding fee is payable under section 7(1) is the sales tax due under section 5(1) or purchase tax due under section 5A, it does not include surcharge which is a levy under separate statute. It is not as if Surcharge Act is not applicable to dealers paying tax at compounded rate under section 7. Surcharge under that Act was a levy on the sales tax payable under the KGST Act and dealers paying tax at compounded rate also would have been liable to pay surcharge on the compounding fee but for its repeal. However, surcharge cannot be reckoned for the purpose of computation of tax at compounded rate under section 7(1) of the KGST Act." Of course, during the assessment year 2000-2001 section 7(1)(a) of the Act had an Explanation thus: "Explanation: For the purpose of this clause 'tax payable as conceded in the return or account for the immediate preceding year' means tax payable on the sales turnover under sub-section (1) of section 5 and the tax payable on the purchase turnover under section 5A: " It is with reference to secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be determined by taking the aggregate price of all the goods sold by it. The fact that it was prohibited from reimbursing itself either from the vendors or from the principals or that it had to pay the surcharge from the meager earnings permitted by statute, it was held, did not justify a different interpretation. The Supreme Court also held that provisions of the Act and the Kerala Surcharge on Taxes Act, 1957 clearly treat a commission agent as a dealer and make him liable to sales tax as well as surcharge in respect of his entire turnover. In that context the Supreme Court in the said judgment has observed thus: "We may note here two important features of the latter Act. The first is that, unlike sales tax which the dealer is entitled to get reimbursed from the purchaser of the goods sold by him, the surcharge has to be borne by the dealer himself, for sub-section (2) of section 3 of the Surcharge Act prohibits the dealer from collecting the surcharge payable by him under sub-section (1) on pain of prosecution under sub-section (3). The second is that while a dealer might be liable to sales tax at different rates on the turnover of the different goods dealt in by him, he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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