1993 (3) TMI 320

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..... the State at the rate of 50 per cent and 12.5 per cent respectively under section 5(1)(v) read with the Fifth Schedule to the Act. But dealers in arrack are afforded the facility of compounding, by sub-sections (14) and (15) of section 7 which were introduced in the Act by the Kerala Finance Act, 1992, with effect from April 1, 1992. These provisions enabled dealers in arrack to compound the tax payable under section 5 at 20 per cent of the rental amount payable for the licence under the Abkari Act, 1077. But deduction is allowed from the amount so compounded, of the amount of tax paid on the purchase of arrack for each month. I shall extract these sub-sections (14) and (15) for purposes of reference: "(14) Notwithstanding anything contai .....

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..... rge or turnover tax. Secondly, it is stated that the amount paid for compounding under section 7(14) is by virtue of an agreement between the parties, that the payment does not partake the nature of sales tax, and therefore surcharge cannot be demanded on that amount. After hearing counsel, I do not find substance in either of these contentions. 5.. It is true that sub-section (14) of section 7 enables the dealer to compound the tax payable for the year by paying 20 per cent of the rental payable under the Abkari Act, with remission for the tax paid on the purchase of the arrack. What the sub-section provides is an option to pay this amount in lieu of paying the tax in accordance with the provisions of clause (v) of sub-section (1) of sect .....

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..... tate may impose under the powers vested in it under entry 54 of List II of the Seventh Schedule to the Constitution. Surcharge and additional tax are payable under separate enactments and turnover tax is payable under a different section, namely, sub-section (2A) of section 5, all referable to the said entry 54. No intention is discernible in sub-section (14) to do away with these other levies in case compounding is opted for under it. That is limited to the tax payable under section 5(1)(v) and not for anything else. Demand for surcharge, turnover tax or additional tax is not therefore hit by the compounding under section 7(14). 7.. The second limb of the argument does not merit any consideration. It is that the amount is paid by virtue o .....

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