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2018 (6) TMI 1334 - HC - VAT and Sales TaxLevy of Surcharges for promoting indigenous and local business. - Constitutional validity of Sub section (1A) of Section 3 of the Kerala Surcharge on Taxes Act, 1957 - demand of surcharge at the rate of 10 percent on the output tax collected - The case of the petitioners is that dealers who do not import into the State more than 50 percent of their stock, but nevertheless fulfilling all the remaining conditions mentioned in the impugned provision, are not subjected to the levy under the said provision and therefore the said levy is also a levy on the goods imported into the State. Held that:- The impugned levy was introduced in Section 3 of the Act in terms of the Kerala Finance Act, 2008 - The object of the legislation as evident from the Budget Speech is that the same was introduced with a view to augment the revenue for the purpose of implementing social security measures. Though in the counter affidavit filed by the State it is contended that the impugned levy was introduced with the specific objective of promoting indigenous and local business as well, such an object is absent in the Budget Speech of the Minister. Had the same been one of the objectives of the legislation, I have no doubt in my mind that the same would have certainly reflected in the Budget Speech of the Minister with supporting empirical data. In the absence of such an objective in the Budget Speech, the stand taken by the State in the counter affidavit that the impugned levy was introduced with the objective of promoting indigenous and local business cannot be accepted as a bonafide one. If the object of the legislation is augmentation of revenue, a classification of the dealers based on the criterion viz., whether they import goods into the State is per se unjustifiable and unintelligible. There is no hesitation to hold that the impugned levy is discriminatory and violative of Article 301 read with clause (a) of Article 304 as also Article 14 of the Constitution. The contention that the impugned levy is only an additional tax on multi national companies falling within the criteria provided therein, and the same, therefore, does not in any way impede trade or business cannot be accepted, for the liability to pay surcharge applies only to multi national companies who import goods into the State from other States. The contention of the learned Government Pleader that Article 301 is not attracted in the instant case as the impugned levy is only a levy based on the turnover of the dealer also cannot be accepted. Petition disposed off.
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