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TMI Blog2003 (11) TMI 562X X X X Extracts X X X X X X X X Extracts X X X X ..... ng year". 4.. The appellant submitted an application for permission to pay tax in accordance with section 7 for the year 2001-02. It is alleged that the annual tax under section 7(1) was Rs. 1,88,40,678 being 120 per cent of the tax due for the previous year. Thus, the monthly tax for the year 2001-02 was Rs. 15,70,057. 5.. On July 23, 2001 the Legislature promulgated section 5D providing for the levy of additional tax. In view of this provision, the appellant deposited additional tax "at the rate of 15 per cent of the tax payable" for the months of July and August, 2001. Thereafter, it stopped paying. The first respondent issued notices in form 14-D under rule 21(10) of the Kerala General Sales Tax Rules, 1963 demanding additional sales tax for the two months and the interest. These notices are exhibits P2 and P3 on the record. 6.. The appellant felt aggrieved by the imposition of additional tax under section 5D. Thus, it approached this Court through a petition under article 226 of the Constitution. 7.. The matter was considered by the learned single Judge. It was held that when a dealer exercises option to pay tax under section 7, it pays "the tax payable under section 5(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of goods specified in the First or Second Schedule, at the rates and only at the points specified against such goods in the said Schedules". Entry 75 in the First Schedule provides for levy of sales tax at the rate of 4 per cent on "jewellary of gold, silver and platinum group metals and articles made of such metals at the point of first sale in the State by a dealer who is liable to tax under section 5". Thus, section 5 is the charging section. The taxable event is transfer of property in the goods, namely, jewellery, etc. The tax is leviable at the point of first sale. 12.. Similarly, section 5A provides for the levy of purchase tax. Section 5B deals with the levy of license fee on cooked food. Section 5BA provides for the levy of licence fee on lottery tickets "per draw" at the prescribed rates. Section 7 provides for the "compounding". The relevant portion of the provision is: "7. Payment of tax at compounded rates.-(1) Notwithstanding anything contained in sub-section (1) of section 5,- (a) any dealer in gold or silver ornaments or wares, may, at his option instead of paying tax in accordance with the provisions of that sub-section, pay tax at one hundred and fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ows that a dealer in gold or silver ornaments or wares has been given an option to pay at 150 per cent of the tax payable by him in respect of the immediate preceding year. By virtue of the explanation, the tax payable includes not only the levy under section 5(1) but also the purchase tax under section 5A. The provisos to the provision indicate the rate of tax for the succeeding years. 13.. On a reading of the two provisions, it is clear that section 5 is the charging section. If the assessee does not opt for the alternate method prescribed under section 7, it has to maintain the accounts and file returns. The assessing authority can determine the liability under the Act. Section 7 statutorily fixes the liability and saves the assessee of a lot of botheration. 14.. The provision of section 7 has been considered by their Lordships of the Supreme Court in State of Kerala v. Builders Association of India [1997] 104 STC 134; (1997) 1 KLT 88. It has been held that the method of taxation provided by the provision is optional. It is "in the nature of composition of tax payable under section 5(1)". The provision has "evolved a convenient, hassle-free and simple method of assessment just ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as enacted the Legislature was providing for even the compounding of tax leviable under section 5D. The plain language does not show that the Legislature intended to exclude the dealers availing of the option under section 7. Equally, the words of section 7 do not indicate that it covers the additional tax liability as well. 18.. Dr. K.B. Muhamed Kutty submitted that additional sales tax had been actually imposed by the 1978 Act. The whole enactment consisted of three sections. Section 2 provided for the levy of additional tax on sales and purchases. The explanation after clause (1) specifically provided that in a case "where the dealer has opted to pay the tax at the compounded rate mentioned in sub-section (1) of section 7, the tax payable at such reduced or compounded rate shall, for the purposes of this sub-section, be deemed to be the tax payable under the Sales Tax Act". On the basis of this explanation, it was pointed out that the Legislature had unambiguously provided for the levy of additional tax even in a case where the assessee had opted for the alternate method of paying tax at the compounded rate. The provisions of the 1978 Act has remained in force for many years. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... …..". This principle was enunciated by their Lordships of the Supreme Court in Commissioner of Sales Tax, Uttar Pradesh, Lucknow v. Parson Tools and Plants, Kanpur [1975] 35 STC 413. 21.. It is in the background of these principles that the position in the present case has to be examined. On a perusal of sections 5 and 5A, etc., it is clear that each provision is in the nature of a charging section. It provides for a levy. While section 5 provides for the levy of sales tax on the transfer of property in the goods, the provision in section 5D authorises the levy of additional sales tax. Still further, a perusal of section 7 clearly shows that it covers the liability of the assessee under sections 5 and 5A. Nothing more. The assessee has the option to pay tax in lumpsum by following the method laid down by the Legislature and avoid facing the lengthy procedure of assessment and appeals, etc. The provision does not, however, deal with the levy of additional tax. That liability on the plain language of the provision was created on July 23, 2001 when section 5D was brought on the statute book. Since the provision for the additional tax did not exist after the 1978 Act had cease ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g an order of assessment arises only when there is a dispute on facts. In the present case, there is no dispute on any factual matter. Even if the authority had proceeded to decide the mater after giving an opportunity to the appellant, it would have been liable. No prejudice has been caused. We have found that the appellant was liable. 27.. Dr. Kutty submitted that passing of an order without assessment carries with it the demand for interest at an exorbitant rate of 24 per cent. He contended that unless an order of provisional assessment as contemplated under rule 21(9) was served and an order of assessment was finally passed, the levy of interest could not be justified. 28.. The payment and recovery of tax under the Act is governed by section 23. Clause (3) provides that if the amount of the tax as assessed and due under the Act is not paid, the assessee is liable to pay interest. The rate of interest is 1 per cent for each month or part thereof for the first 3 months and 2 per cent for the subsequent period. In view of our finding on the main issue, it is clear that the tax was leviable. The amount was also clear. It was 15 per cent of the monthly rate of tax. This was admitt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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