Turnover for surcharge assessment includes sales tax collections where the surcharge statute provides no deduction mechanism.

Where surcharge is levied on a dealer's turnover and the surcharge statute contains no deduction mechanism comparable to the sales tax law, sales tax collected from customers as part of the sale consideration is includible in turnover for surcharge assessment. The Kerala High Court held that, because the Kerala Surcharge on Taxes Act, 1957 does not define turnover and does not provide any deduction for separately shown sales tax collections, the entire consideration received on sales must be taken into account. The Tribunal's contrary view was rejected and the assessment had to be recomputed by including sales tax collections.

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Issues: Whether sales tax collected by a dealer forms part of the turnover for the purpose of surcharge assessment under section 3 of the Kerala Surcharge on Taxes Act, 1957.

Analysis: The Kerala Surcharge on Taxes Act, 1957 does not define turnover, whereas the Kerala General Sales Tax Act, 1963 defines turnover, total turnover and taxable turnover and permits deduction of separately shown sales tax collections while computing taxable turnover under rule 9(1) of the Kerala General Sales Tax Rules, 1963. Section 3 of the Kerala Surcharge on Taxes Act, 1957, however, levies surcharge on the tax payable by reference to the dealer's turnover, not taxable turnover. In the absence of a provision similar to rule 9(1) or the deduction machinery under the Kerala General Sales Tax Act, the entire consideration received for the sale, including sales tax collected from customers, is to be treated as part of turnover for surcharge purposes. The authorities relied on by the assessee were distinguishable because they concerned statutes imposing a statutory duty on the seller to collect tax, whereas under the Kerala General Sales Tax Act the dealer is only permitted, but not obliged, to pass on tax to the purchaser.

Conclusion: Sales tax collected by the dealer forms part of turnover for assessment under the Kerala Surcharge on Taxes Act, 1957; the contrary view of the Tribunal is wrong and the revision succeeds in favour of the Revenue.

Final Conclusion: The surcharge assessment was required to be recomputed by including the sales tax collections in the dealer's turnover, and the revision was allowed.

Ratio Decidendi: Where surcharge is levied on turnover and the surcharge statute contains no deduction provision analogous to the sales tax law, sales tax collected from customers as part of the sale consideration is includible in turnover for surcharge assessment.

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