TMI Blog2016 (11) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - Civil Appeal Nos. 5913-5920, 5921 of 2008 - - - Dated:- 28-10-2016 - Shiva Kirti Singh And R. K. Agrawal, JJ. JUDGMENT R. K. Agrawal, J. 1) Challenge in the above said appeals is to the legality of the common judgment and order dated 05.01.2007 rendered by a Division Bench of the High Court of Orissa at Cuttack in Writ Petition (C) being No. 233 of 2002 and connected matters wherein the High Court allowed the petitions filed by the respondents herein. 2) Civil Appeal No. 5913 of 2008 is being treated as the leading case, hence, the facts of the said appeal are given below:- a) The respondents are engaged in the sale and purchase of Motor Vehicles and are registered dealers under the Orissa Sales Tax Act, 1947 (in short the OST Act ) as well as under the Central Sales Tax Act. The respondents had been paying ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 as given i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Tamil Nadu vs. M.K. Kanda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 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 ..... ucting therefrom the amount of entry tax paid by the Respondent No.1-Company while importing a motor vehicle into the State of Orissa. 16) On 20.11.2001, the Government of Orissa, in the Finance Department, wrote a letter to the Commissioner of Commercial Taxes, Orissa relating to the computation of tax payable on the motor vehicle for the purpose 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. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the OET Act and the Rules, it can be seen that Section 5A of the OST Act creates a charge and imposes liability on every dealer under the OST Act to pay surcharge @ 10% on the amount of tax payable by him under the OST Act. Section 4(1) of the OET Act, in the same way, prescribes for reduction of the tax amount payable by the dealer to the extent of entry tax already paid for the same article for which sales tax is payable. The Section, does not specifically 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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