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TMI Blog2013 (2) TMI 682X X X X Extracts X X X X X X X X Extracts X X X X ..... 05 has introduced the levy and collection of the State Development Tax. Except for some changes, the State Development Tax bears resemblance to the levy and collection of the Turnover Tax. We say so, for the reason that the State Development Tax is levied on a particular class of dealers at a particular rate. What is added in Section 3-H of the Act, after its amendment is that the said section will operate only for a period of five years from the date of issuance of the notification by the State Government. Section 7-D of the Act provides for composition of amount at an agreed rate on the turnover of the dealer, in lieu of taxes payable by the dealer under the Act. Firstly, offer would be made by the Assessee and the same requires to be accepted by the assessing authority and then only there would be a concluded contract between the dealer and the assessing authority for payment of tax. The proviso, as we have already noticed, comes into play only when there is a change in the rate of tax. It provides, that, when there is any change in the rate of tax on the goods, such increase will proportionately affect the rate of compounding of tax. The introduction of State Development Tax ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NO.1881 OF 2013 @ SLP(C) NO. 19384 of 2010 ,CIVIL APPEAL NO.1882 OF 2013 @ SLP(C) NO. 19385 of 2010 ,CIVIL APPEAL NO.1883 OF 2013 @ SLP(C) NO. 19386 of 2010 ,CIVIL APPEAL NO.1884 OF 2013 @ SLP(C) NO. 19388 of 2010 ,CIVIL APPEAL NO.1885 OF 2013 @ SLP(C) NO. 19389 of 2010 ,CIVIL APPEAL NO.1886 OF 2013 @ SLP(C) NO. 19391 of 2010 ,CIVIL APPEAL NO.1887 OF 2013 @ SLP(C) NO. 19392 of 2010 ,CIVIL APPEAL NO.1888 OF 2013 @ SLP(C) NO. 19395 of 2010 ,CIVIL APPEAL NO.1889 OF 2013 @ SLP(C) NO. 19396 of 2010 ,CIVIL APPEAL NO.1890 OF 2013 @ SLP(C) NO. 19397 of 2010 ,CIVIL APPEAL NO.1891 OF 2013 @ SLP(C) NO. 19398 of 2010 ,CIVIL APPEAL NO.1892 OF 2013 @ SLP(C) NO. 19407 of 2010 ,CIVIL APPEAL NO.1893 OF 2013 @ SLP(C) NO. 19409 of 2010 ,CIVIL APPEAL NO.1894 OF 2013 @ SLP(C) NO. 19411 of 2010 ,CIVIL APPEAL NO.1895 OF 2013 @ SLP(C) NO. 19412 of 2010 ,CIVIL APPEAL NO.1896 OF 2013 @ SLP(C) NO. 19413 of 2010 ,CIVIL APPEAL NO.1897 OF 2013 @ SLP(C) NO. 19414 of 2010 ,CIVIL APPEAL NO.1898 OF 2013 @ SLP(C) NO. 19415 of 2010 ,CIVIL APPEAL NO.1899 OF 2013 @ SLP(C) NO. 19416 of 2010 ,CIVIL APPEAL NO.1900 OF 2013 @ SLP(C) NO. 19417 of 2010 ,CIVIL APPEAL NO.1901 OF 2013 @ SLP(C) NO. 19418 of 2010 ,CIVIL APPEAL NO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OF 2013 @ SLP(C) NO. 2653 of 2011 ,CIVIL APPEAL NO.1919 OF 2013 @ SLP(C) NO. 27966 of 2010 ,CIVIL APPEAL NO. 1920 OF 2013 @ SLP(C) NO. 27967 of 2010 ,CIVIL APPEAL NO.1921 OF 2013 @ SLP(C) NO. 34079 of 2010 ,CIVIL APPEAL NO.1922 OF 2013 @ SLP(C) NO. 34085 of 2010 ,CIVIL APPEAL NO.1923 OF 2013 @ SLP(C) NO. 36473 of 2010 ,CIVIL APPEAL NO.1924 OF 2013 @ SLP(C) NO. 36474 of 2010 ,CIVIL APPEAL NO.1925 OF 2013 @ SLP(C) NO. 36475 of 2010 ,CIVIL APPEAL NO.1926 OF 2013 @ SLP(C) NO. 36478 of 2010 CIVIL APPEAL NO.1927 OF 2013 @ SLP(C) NO. 36479 of 2010 ,AND WITH CIVIL APPEAL NOS.1845-1846 OF 2013 @SLP(C) NO. 8975-8976 of 2010 H. L. DATTU AND DIPAK MISRA, JJ. Ravi Prakash Mehrotra, Sushendra K.Chauhan, Ms. Suman Gupta, Vinay Garg, Gunnam Venkateswara Rao and Adarsh Upadhyay, Advocates, for the petitioners. Kumar Rajesh Singh for Praveen Kumar, Mohit D. Ram, Ms. Meenakshi Arora, P. Narasimhan, S. K. Ray, Firasat Ali, Ram Swarup Sharma, R. D. Upadhyay, Rishi Kesh, R. P. Gupta, Dr. N. K. Khetarpal, S. R. Setia, Virag Gupta, Virendra Singh, Prashant Chaudhary, Shwetank Sailakwal for Dr. Kailash Chand, Nitin Mishra for M/s. Khaitan & Co., Anish Kumar Gupta, R. D. Gupta, Prashant Kumar, Syed Rehan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in-lieu of tax that may be payable by the dealer in respect of such goods or class of goods and for such period as may be agreed upon. For that purpose, the dealer is obliged to execute an agreement of undertaking to pay the sales tax in lump sum and the same was assessed at an agreed rate as envisaged under the Act itself. The scheme as introduced by the legislature provides for a bilateral agreement between the Assessee and the Sales Tax Authorities with an object to dispense with the requirement of regular assessment and for the easy purposes of levy and collection of the tax payable under the Act. A dealer who has opted for payment of lump sum amount in lieu of tax, is not required to file monthly, quarterly or annual returns of his turnover. It is the choice of a dealer to opt for compounded payment of tax and if the said choice is in accordance with the scheme and is ultimately accepted by the authority concerned, it becomes an agreed amount of tax. The department and the dealer are thereafter bound by the said agreement. 8. The Sate Government by Act No. 9 of 2005 dated 24.03.2005 with effect from May 1, 2005 has introduced the State Development Tax under Section 3-H of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court by filing Writ Petitions under Article 226 of the Constitution of India. The main prayer in the Writ Petitions was to declare void the circular instructions issued by the Commissioner dated 04.06.2007 and also to set aside the levy and demand of the State Development Tax in addition to the composition amount which was already agreed upon by the dealers and the assessing authorities. 10. We have heard Learned Counsel appearing for the respective parties. 11. In our view, the only issue that requires to be considered and decided by us, is, whether the Commissioner was justified in issuing the Circular dated 04.06.2007 on the sole ground that with the introduction of the State Development Tax, there is a change in the rate of tax as provided under the proviso to Section 7-D of the Act and therefore, the assessing authorities are expected to levy and collect the State Development Tax in addition to the composition fee payable by the dealer. 12. In order to appreciate the aforesaid issue a bird's eye view of the Act requires to be noticed. The dictionary clause of the Act defines the meaning of the expressions apart from others 'assessing authority', the ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods, other than the goods referred to in Clause (a), at such point and at such rate, not exceeding fifty per cent, as the State Government may, by notification, declare, and different points and different rates may be declared in respect of different goods. (c) on the turnover in respect of goods, other than those referred to in Clause (a) or Clause (b), at the point of sale by manufacturer or importer at the rate of ten percent. (2) Every notification made under this section shall, as soon as may be after it is made, be laid before each House of the State Legislature, while it is in session, for a total period of not less than fourteen days, extending in its one session or more than one successive sessions, and shall, unless some later date is appointed, take effect from the date of its publication in the Gazette subject to such modifications or annulments as the two houses of the legislature may during the said period agree to make, so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done thereunder except that any imposition, assessment, levy or collection of tax or penalty shall be subject to the said modific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P. Act 9 of 2005, dated 24.03.2005 with effect from 01.05.2005. The said section provides for the levy of the State Development Tax. In order to appreciate the contentions canvassed by Learned Counsel appearing for the parties, it is desirable to extract Sub-Section 3-H of the Act before and after its amendment. They are as under:- "Section 3-H of the Act prior to 1.5.2005. Section 3-H, Turnover Tax:- (1) There shall be levied a turnover tax at the rate of one percent on the dealers of whose aggregate turnover as referred to in Sub-section (2) of Section (3) exceeds fifty lakh rupees, in addition to the tax payable under this Act. Such tax shall be levied and collected notwithstanding any rebate, concession or exemption provided under this Act. (2) In the case of composition of tax liability under Section 7-D, the turnover tax leviable under Sub-section (1) shall be calculated separately and be charged in addition to the amount payable as composition. (3) No tax under Sub-section (1) shall be leviable on:- (a) the newspapers and other goods or the dealers specified or notified under Section 4; (b) the declared goods mentioned under Section 14 of the Central Sales Tax Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity even in respect of the State Development Tax. This is yet another change that has been brought in by the State Legislature while inserting Section 3-H of the Act with effect from 01.05.2005. The other Sub-sections of Section 3-H of the Act are not necessary for the purpose of disposal of these Civil Appeals. 19. Section 7 of the Act provides for determination of turnover and assessment of tax. Section 7-D of the Act commences with a non-obstante clause and provides for composition of the tax liability. The said section requires to be extracted and reads as under:- "7-D. Composition of tax liability. Notwithstanding anything contained in this Act, but subject to directions of the State Government, the assessing authority may agree to accept a composition money either in lump sum or at an agreed rate on his turnover in lieu of tax that may be payable by a dealer in respect of such goods or class of goods and for such period as may be agreed upon; Provided that any change in the rate of tax, which may come into force after the date of such agreement shall have the effect of making a proportionate change in the lump sum or the rate agreed upon in relation to that part of the per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esaid components are clearly and definitely ascertainable. 21. The power to levy tax is an inherent attribute of sovereign function of the State Government by which the Government under the charging provision has the power to levy tax on the taxable turnover of the dealer at the rate prescribed under the provisions of the Act. The said rate of tax as prescribed by the legislature under the charging section can be altered when the legislature empowers the government to change the rate of tax by issuing notification. In the instant case, the Commissioner has issued the impugned circular on the ground that by the introduction of State Development Tax by Act 9 of 2005, the State Government has effected the change in the rate of tax as envisaged under the proviso to Section 7-D of the Act. 22. As we have already noticed, Section 7-D of the Act provides for composition of amount at an agreed rate on the turnover of the dealer, in lieu of taxes payable by the dealer under the Act. Firstly, offer would be made by the Assessee and the same requires to be accepted by the assessing authority and then only there would be a concluded contract between the dealer and the assessing authority for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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