TMI Blog1989 (8) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... HAN S. JJ. A.K. Ganguli, Senior Advocate (C.N. Sreekumar, Advocate, with him), for the appellant. A.S. Nambiar, Senior Advocate (K.R. Nambiar, Advocate, with him), for the respondent. -------------------------------------------------- The judgment of the Court was delivered by S. RANGANATHAN, J. -M/S. Cardamom Planters' Association, Bodinayakanur (hereinafter referred to as "the society") appeals from orders of the Kerala High Court upholding its liability to the levy of surcharge under the Kerala Surcharge on Taxes Act, 1957, as amended in 1976. The Kerala General Sales Tax Act, 1963, imposes sales tax on every dealer whose total turnover for any year exceeds a specific sum. The sum prescribed was initially Rs. 10,000 but was gradually stepped up to Rs. 20,000 in 1971, Rs. 25,000 in 1976, Rs. 35,000 in 1980, Rs. 50,000 in 1981, Rs. 75,000 in 1982 and Rs. 1 lakh in 1984. The expressions "dealer", "taxable turnover", "total turnover" and "turnover" are defined in section 2 of the Act. The relevant portions of these definitions read as follows: Section 2(viii): " 'Dealer' means any person who carries on the business of buying, selling, supplying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge by amending section 3(1) to read as follows: "(1) The tax payable under the Kerala General Sales Tax Act, 1963, shall, in the case of a dealer whose turnover- (a) is not less than one lakh rupees but does not exceed ten lakhs rupees in a year, be increased by a surcharge at the rate of five per centum, and (b) exceeds ten lakhs rupees in a year, be increased by a surcharge at the rate of eight per centum, of the tax payable for that year and the provisions of the Kerala General Sales Tax Act, 1963, shall apply in relation to the said surcharge as they apply in relation to the tax payable under the said Act." We may note here two important features of the latter Act. The first is that, unlike sales tax which the dealer is entitled to get reimbursed from the purchaser of the goods sold by him, the surcharge has to be borne by the dealer himself, for sub-section (2) of section 3 of the Surcharge Act prohibits the dealer from collecting the surcharge payable by him under sub-section (1) on pain of prosecution under sub- section (3). The second is that while a dealer might be liable to sales tax at different rates on the turnover of the different goods dealt in by him, he has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t years 1967-68 to 1969-70. The sales tax assessments of the society for 1973-74 to 1976-77 were completed by the Sales Tax Officer on the basis of the Tribunal's order. These assessments were, however, set aside by the Deputy Commissioner of Sales Tax who was of the opinion that the society was liable to pay surcharge on its aggregate turnover in each of these years and he directed accordingly. The assessee preferred appeals to the Appellate Tribunal from the orders of the Deputy Commissioner. The Tribunal allowed the appeals by a common order dated 3rd November, 1982, following its order for the earlier assessment years. It set aside the revisional orders passed by the Deputy Commissioner and restored the assessments made by the Sales Tax Officer for the assessment years 1973-74 to 1976-77. The High Court, on revision by the department, has set aside the orders of the Tribunal and restored the orders of the Deputy Commissioner. Hence these appeals. We are unable to see any flaw in the High Court's reasoning. The present assessee is clearly a dealer within the meaning of the statute, particularly in view of the inclusive part of the definition contained in clause (c). This is al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral Sales Tax Rules under which "the turnover of sales or purchases made by a dealer through his agent in respect of which tax has been paid by the agent" is excluded from his taxable turnover. 3.. The assessee has been placed in a financial predicament because all that the assessee can get out of the sales is the commission which cannot exceed 1 per cent of the turnover and, since the statute has prohibited it from collecting any part of the surcharge from the purchasers or the principals, the society has to meet the surcharge liability out of its meagre commission earnings. We are unable to see how these contentions can help the assessee to overcome the surcharge levy. The general principle of the law of agency, as rightly pointed out by the High Court, cannot prevail in the face of the statutory provisions. The assessee's contention, upheld by the Tribunal in its earlier order, is this: "........ an agent has as many dealers as he has principals........an agent can be assessed....... only on the aggregate of the turnover relating to principals who are liable to tax under section 5 and surcharge can likewise be levied only in respect of the turnover of the principals where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d then have to be split up, as it were, into a number of parts each containing the determination of turnover, tax and surcharge qua each of the constituents. These determinations require exercises which cannot be practically undertaken by an officer assessing a commission agent but can easily be undertaken by the different officers assessing the principals. That is why the statute evolved a very simple procedure to meet the situation. It brought the commission agent within the definition of a dealer and made his aggregate turnover liable to tax. But, it provided at the same time that the turnover so included and taxed in the hands of the agent should be excluded from the turnover of the principal, where he is separately assessed. This is rule 9(k). Rule 9(k) confers an exemption not on the commission agent but on the principal and does not help the assessee. So far as sales tax is concerned, this rule provides complete protection against double taxation. The rate of tax on any type of goods being uniform irrespective of the turnover, the turnover in regard to that item will get assessed only at one place; either in the hands of the principal or in the hands of the agent but not b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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