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TMI Blog2015 (1) TMI 855X X X X Extracts X X X X X X X X Extracts X X X X ..... rson or class of persons, without any condition or with such condition as may be specified in the notification. The notification dated 30.04.1993 generally provides for an exemption from payment of tax under the Act of 1954 on the condition of payment of 1% of the total value of the works contract executed by the assessee in respect of works enumerated therein. Clearly the amount of 1% of the total value of contract in issue as paid by the assessee was not a payment of lump-sum in lieu of tax under Section 5 of the Act of 1994 as in fact has never been the case of the Department at any stage of the proceedings, but a payment to satisfy the condition for exemption from payment of tax. Even though the exemption notification does indeed refer to the payment of 1% of the work contract value as an “exemption fee”. Fee is a concept well known in law and has is own legal connotation. It would be desirable to note that nothing turns on the mere use of the word “fee” in a statute rule / circular / or notification. The nature and character of the impost is to be determined to conclude whether the charge is a fee or not. In the context of the legal connotation of a fee as enunciated by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ajasthan Tax Board, Ajmer (hereinafter 'the Tax Board') affirming the judgment dated 25.11.2005, passed by the Dy. Commissioner (Appeals), Commercial Taxes, Ajmer (hereinafter 'the Appellate Authority ) which set aside the assessment order of the Assessing Officer passed on 13.07.2001 whereunder the respondent-assessee (hereinafter 'the assessee') was visited with a demand for payment of surcharge on the amount of 1% of its total value of contract paid as a condition for availing exemption from payment of sales tax made under Section 4(2) of the extant Rajasthan Sales Tax Act, 1954 (hereinafter 'the Act of 1954'). The facts of the case are that vide notification No.898 : F.4(7)FDGr.IV/92-14 dated 30.04.1993 issued in the exercise of powers conferred by the extant Section 4(2) of the Act of 1954 read with Rule 10B of the then operating Rajasthan Sales Tax Rules, 1955, the State Government exempted from tax the transfer of property in goods (whether as goods or in some other form) involved in the execution of works contracts relating to buildings, bridges, dams, roads and canals on the following conditions : 1. That the contractor undertakes to pay e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax payable under this Act, shall so far as may be, apply in relation to surcharge payable under sub-section (1). Aggrieved of the order dated 13.07.2001, passed by the Assessing Officer, the assessee laid a first statutory appeal under Section 84 of the Act of 1994 before the Appellate Authority. The Appellate Authority in its order dated 25.11.2005 took the view that the exemption of tax under the notification dated 30.04.1993 entailed absolving the assessee of all tax liability whatsoever including surcharge-also a tax-under the Act of 1994. For this the Appellate Authority inter alia relied upon Section 2(41) of the Act of 1994 which defined tax to mean any tax or other levy by any name, leviable under the provisions of the Act. Also relying upon the judgment of this Court in the case of M/s. Murlidhar Deendayal, Ajmer Vs. Commercial Taxes Officers, Special Circle, Ajmer [(2002) 1 RTR] 59 decided on 07.02.2002 the appellate authority held that surcharge on amounts paid as condition of exemption from payment of tax under Section 4(2) of the then extant Act of 1954 was not leviable. The assessing authority's order to the contrary issued on 13.07.2001 was thus set asid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f land revenue to the extent of the imposition of surcharge. Thus effectively surcharge over land revenue only entailed an additional amount of land revenue payable to the State. A similar view has been expressed by the Hon'ble Supreme Court in the case of Indian Aluminium Co. and Ors. Vs. State of Kerala Ors. [(1996) 7 SCC 637]. Therein the Hon'ble Supreme Court held that where the word surcharge is not defined in the Act in which it occurs (as is the position both under the Act of 1954 and also the Act of 1994), etymologically, it should inter alia be construed to stand for additional or extra charge over tax charged in the first place. It held that surcharge where provided for in an Act is thus a mere super added charge. Dealing with the word surcharge under the Kerala Electricity Surcharge (Levy and Collection) Act, 1989, the Hon'ble Apex Court held that surcharge under the said Act was an enhanced levy only. Reference was made by the Apex Court to its own judgment in the case of The Commissioner of Income Tax, Kerala Vs. K. Srinivasan [(1972) 4 SCC 526] wherein, dealing with the question whether the term income tax as defined under Section 2 of the Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax under the Act of 1954 on the condition of payment of 1% of the total value of the works contract executed by the assessee in respect of works enumerated therein. Clearly the amount of 1% of the total value of contract in issue as paid by the assessee was not a payment of lump-sum in lieu of tax under Section 5 of the Act of 1994 as in fact has never been the case of the Department at any stage of the proceedings, but a payment to satisfy the condition for exemption from payment of tax. The question that now remains is as to whether the payment of 1% of the total value of the works contract in respect of enumerated works under the notification dated 30.04.1993 was in the nature of a fee. Under the obtaining state of law, it cannot be so held even though the exemption notification does indeed refer to the payment of 1% of the work contract value as an exemption fee . Fee is a concept well known in law and has is own legal connotation. It would be desirable to note that nothing turns on the mere use of the word fee in a statute rule / circular / or notification. The nature and character of the impost is to be determined to conclude whether the charge is a fee or not. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y any name -As otherwise would be due on transfer of property in goods (whether as goods or in some other form) involved in the execution of works contracts relating to buildings, bridges, dams, roads, and canals. In my considered opinion, the invoking of Section 13 of the Act of 1994 to levy a surcharge on the amount of 1% of the total value of the works contract paid by the assessee as a condition to avail the exemption on tax on transfer of property in goods (whether as goods or in some other form) involved in the execution of works contracts relating to enumerated works was wholly misdirected and misplaced. Such a levy was not only on a narrow and erroneous understanding of the exemption notification dated 30.04.1993 but also against a wholistic construction of the statutory provisions of the Act of 1994. The Assessing Authority had made a fundamental error in interpreting Section 13 of the Act of 1994 and in seeking to visit the assessee with liability to surcharge on the amount of 1% of the value of the works contract paid under the exemption notification dated 30.04.1993. The Appellate Authority exercised its jurisdiction justly and fairly in setting aside the aforesaid ord ..... 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