Surcharge linked to sales tax liability cannot be levied on statutorily exempt turnover.

Surcharge under section 3(1) of the Tamil Nadu Sales Tax (Surcharge) Act, 1971 is payable only by a dealer liable to sales tax under the Tamil Nadu General Sales Tax Act, 1959, because the surcharge is computed as a percentage of the sales tax payable. Where the relevant turnover is statutorily exempt from sales tax, the underlying tax liability does not arise, and the surcharge cannot be imposed on that exempt turnover. The court therefore treated the surcharge as dependent on an existing sales tax liability and held that it was not leviable on exempt turnover.

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Issues: Whether surcharge under Section 3(1) of the Tamil Nadu Sales Tax (Surcharge) Act, 1971 could be levied when the relevant turnover was exempt from sales tax.

Analysis: Section 3(1) makes the surcharge payable only by a dealer liable to pay tax under the Tamil Nadu General Sales Tax Act, 1959, and the surcharge is computed as a percentage of the sales tax payable. Where the turnover is statutorily exempt from sales tax, the foundational liability to sales tax does not arise. In that situation, the surcharge, being dependent upon the existence of sales tax liability, cannot be imposed.

Conclusion: Surcharge was not leviable on the exempt turnover, and the revision failed.

Ratio Decidendi: A surcharge that is expressly calculated with reference to sales tax liability cannot be levied where the underlying turnover is exempt from sales tax and no tax liability exists.

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