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TMI Blog2016 (11) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... x from the amount of tax payable before the levy of surcharge under Section 5A of the OST Act - on a conjoint reading of Section 5 of the OST Act, Section 4 of the OET Act and Rule 18 of the Rules, we are of the considered opinion that the amount of surcharge under Section 5A of the OST Act is to be levied before deducting the amount of entry tax paid by a dealer. Surchargr to be calculated on gross amount - appeal allowed - decided in favor of appellant revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... rt 'the Rules') neither curtails nor expands the ambit of the provisions of the Act for which he relied upon a decision of this Court in Shambhu Nath Mehra vs. The State of Ajmer AIR 1956 SC 404, wherein it was held as under:- "11. We recognise that an illustration does not exhaust the full content of the section which it illustrates but equally it can neither curtail nor expand its ambit;…." 5) Learned senior counsel further relied upon Lalit Mohan Pandey vs. Pooran Singh and Others (2004) 6 SCC 626, wherein this Court has held as under:- "75. The illustration appended to the Rules does not envisage such a situation. Illustrations although are of relevance and have some value in the construction of the text of the sections but they cannot have the effect of modifying the language of the statute and they cannot either curtail or expand the ambit of the statute." 6) Learned senior counsel further submitted that the levy of tax includes surcharge for which he relied upon the following judgments of this Court in:- (i) In The Commissioner of Income Tax, Kerala vs. K. Srinivasan (1972) 4 SCC 526, this Court has held as under:- "10. The meaning of the word "surcharge" a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcharge. The nature of such imposition is the same viz., land revenue on which it is a surcharge." 7) On the other hand, learned senior counsel for the respondents submitted that in view of the clarification issued by the office of Commercial Tax through e-mail to one of the dealers in motor vehicles, viz., TELCO, Bhubaneswar, the appellants were stopped from demanding surcharge on the entire amount of tax payable under the OST Act before deducting the amount payable under the OET Act. According to him, the clarification issued by the Commercial Tax Department to TELCO, Bhubaneswar, was in accordance with the illustration appended to Rule 18 of the Rules which did not take into consideration the amount of surcharge payable before deducting the entry tax paid while computing the amount of sales tax payable. He, thus, submitted that the amount of surcharge is to be levied only on the balance amount of sales tax payable on the sale price of the motor vehicle after deducting the entry tax paid. According to him, if two constructions are possible then the one which preserves the workability and efficacy has to be preferred for which he relied upon a decision of this Court in State of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the vehicle with body built on the chassis shall be treated as one and the same goods. (2) When an importer or manufacturer of goods specified in Part-III of the schedule except motor vehicles pays tax under sub-section (1) of section 3 or section 26 of this Act, being a Dealer under the Sales Tax Act becomes liable to pay tax under the said Act by virtue of Sale of such goods, then his liability under the Sales Tax Act shall be reduced to the extent of tax paid under this Act. (3) The reduction in tax liability of an importer as provided in sub-section (1) or of an importer or manufacturer as provided in sub-section (2) shall not be allowed, unless the entry tax paid and tax payable under the Sales Tax Act are shown separately in the cash memo or the bill or invoice issued by him for the sale by virtue of which such liability accrues." 13) Rule 18 of the Odisha Entry Tax Rule, 1999 is reproduced hereunder: "18. Set off of Entry Tax against Sales Tax: (1) When the importer of a motor vehicle liable to pay tax under sub-section (2) of section 3 of this Act being a dealer in motor vehicles becomes liable to pay tax under the Sales Tax Act by virtue of sale of such motor v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of levy of surcharge on an interpretation of the provisions of the OET Act, the OST Act and the Rules which is as under:- "GOVERNMENT OF ORISSA FINANCE DEPARTMENT No. CTB-23/2001. 55863/F From: Shri K.C. Parija, Deputy Secretary to Government To The Commissioner of Commercial Taxes, Orissa, Cuttack Sub: Computation of tax payable on Motor Vehicle for the purpose of levy of surcharge. Ref: C.C.T.'s letter No. 15264/CT, dt. 12.7.2000 Bhubaneswar, the 19th November, 2001. Sir, In inviting a reference to the aforesaid letter, I am directed to say that surcharge under Orissa Sales Tax Act, 1947, shall be calculated on the payable amount of tax due on the taxable turnover (Section 5 & 5A) instead of on the reduced Sales Tax amount after setting off of entry tax. The position may kindly be clarified to the Field Officers and if such faulty procedure of charging surcharge is adopted by any of the Circle Officers, same should be discontinued forthwith and corrective measure as per the provisions of the statue may be taken up to make good the loss. 2. It may further be noted that the illustration in rule -18 of Orissa Entry Tax Rule, 1999 or provision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly contemplate anything, which would indicate that the provisions of the OET Act or the Rules have to be taken into consideration while assessing the sales tax or surcharge. In essence, the provisions made in the Rules lay down the modality of 'set off'. It is important to mention here that OST Act was enacted in the year 1947 whereas OET Act was enacted in 1999. The provision of set off has been made in the OET Act and the Rules framed thereunder and not in the OST Act. The heading of Section 4 of the OET Act gives a broad idea regarding the provision of set off by way of "reduction in tax liability". Sub-Sections 1 and 2 of Section 4 of the OET Act provide for reduction of liability under the OST Act. 20) It is well settled that the objective of framing rules is to fill up the gaps in a statutory enactment so as to make the statutory provisions operative. Rules also clarify the provisions of an Act under which the same are framed. Section 4 of the OST Act is a charging Section attracting liability to pay Sales Tax "on sales and purchases effected". Section 5 of the OST Act provides for rate of Sales Tax. Section 5A of the OST Act levies surcharge on the dealer which is nothing b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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