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2013 (2) TMI 682 - SC - VAT and Sales TaxState Development Tax - whether payable by the petitioners in addition to the composition amount mentioned in the compounding scheme - Circular demanding tax annulled by High Court [2009 (3) TMI 872 - ALLAHABAD HIGH COURT] - 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 - Held that:- The State Legislature by inserting the amended provisions by the Act 9 of 2005 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 has not led to any change in the rate of tax on goods and therefore there is no proportional change in the rate of compounding of tax for the purposes of proviso to Section 7-D of the Act. By virtue of the circular issued by the Commissioner of Tax, the dealers though have agreed to pay the tax under Section 7-D of the Act are also expected to pay the State Development Tax. This, in our opinion, is fallacious view of the Commissioner. The Commissioner of Commercial Taxes could have issued the circular only if there is a change in the rate of tax. There is difference between the "change in the rate of tax" and introduction of altogether a new provision or new kind of tax for levy and collection from the dealers. - circular instructions issued by the Commissioner dated 04.06.2007 cannot be sustained and, therefore, the same requires to be set aside - Decided against Revenue.
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