Compounded sales tax does not exclude surcharge or turnover tax where the statute creates separate fiscal liabilities.

Section 7(14) of the Kerala General Sales Tax Act permits compounding only as a substitute method for collecting sales tax on arrack turnover, not as an exemption from other distinct fiscal levies. The compounded amount remains sales tax in substance, and surcharge under the Kerala Surcharge on Taxes Act and turnover tax under section 5(2A) continue to apply unless the statute expressly excludes them. The provision merely replaces full turnover-based assessment with a notional lump-sum computation and does not absorb separate statutory imposts. The challenge to the additional demands therefore failed, and the impugned surcharge and turnover tax liabilities were upheld.

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Issues: Whether surcharge and turnover tax are leviable on amounts paid by arrack dealers under section 7(14) of the Kerala General Sales Tax Act, 1963, and whether such compounded payment ceases to be sales tax so as to exclude surcharge.

Analysis: Section 7(14) gives only an option to pay tax in a compounded form in lieu of the normal levy under section 5(1)(v). The compounded amount is a statutory substitute for the sales tax otherwise payable on the turnover of arrack, and the provision merely dispenses with the need for a full turnover-based assessment by creating a notional computation. It does not indicate any legislative intention to exempt the dealer from other distinct statutory imposts. Surcharge under the Kerala Surcharge on Taxes Act, 1957, and turnover tax under section 5(2A) are separate levies referable to the same legislative field and are not absorbed by compounding under section 7(14).

Conclusion: The compounded payment under section 7(14) remains sales tax in substance and does not bar levy of surcharge or turnover tax. The challenge to those demands fails.

Final Conclusion: The petitions were rejected and the impugned demands for surcharge and turnover tax were upheld.

Ratio Decidendi: A statutory compounding provision that substitutes a lump-sum method of collection for the normal sales tax levy does not, by itself, extinguish independently imposed fiscal liabilities unless the statute expressly so provides.

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