State tax surcharge counts toward Central sales tax rate on inter-State sales of declared goods.

For purposes of section 8(2-A) of the Central Sales Tax Act, the rate of tax under the appropriate State law includes surcharge imposed as an additional levy on the same taxable sale. The Andhra Pradesh High Court reasoned that section 8(2-A) is not limited to the bare tax percentage but covers the effective burden payable under the State enactment, including surcharge under section 6-B of the Andhra Pradesh General Sales Tax Act. Applying that construction, the surcharge formed part of the applicable rate for inter-State sales of declared goods, so the Central sales tax liability included the surcharge component and the writ petitions were dismissed.

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Issues: Whether, for the purposes of section 8(2-A) of the Central Sales Tax Act, surcharge leviable under section 6-B of the Andhra Pradesh General Sales Tax Act forms part of the rate of tax payable under the State enactment while determining the Central sales tax liability on inter-State sales of declared goods.

Analysis: Section 8(2-A) lowers the Central sales tax to the rate at which the goods are taxable under the appropriate State law where the State levy is nil or below four per cent. The expression used in the provision is not confined to a bare tax percentage; it extends to tax payable under whatever nomenclature the State law adopts, including levy described as surcharge or fee. Since surcharge under section 6-B is an additional levy on the very tax imposed by the State enactment, it is part of the effective rate payable on an intra-State sale. The object of section 8(2-A) is to maintain uniformity between intra-State and inter-State taxation of the same goods, and the provision must be construed so that inter-State sales do not attract a lower burden than intra-State sales of the same declared goods.

Conclusion: Surcharge under section 6-B is to be taken into account while determining the lower rate under section 8(2-A); the Central sales tax payable on the inter-State sales includes the surcharge component, and the contention of the petitioners fails.

Final Conclusion: The writ petitions were dismissed because the impugned surcharge demand was held to be valid in law as part of the applicable tax rate for inter-State sales under the Central enactment.

Ratio Decidendi: For purposes of section 8(2-A) of the Central Sales Tax Act, the rate of tax under the appropriate State law includes an additional levy such as surcharge where it is imposed as part of the taxable burden on the same sale.

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