Surcharge despite sales tax exemption upheld where statute expressly overrides exemption through a non obstante clause.

Section 30-AA of the Punjab General Sales Tax Act was upheld as a valid levy of surcharge notwithstanding exemption under section 30-A, because surcharge is an additional tax within the State's legislative competence and the non obstante clause gave it overriding effect. Communications sent to exempted units were not illegal recovery notices; they merely informed the petitioners of the statutory liability and did not amount to coercive enforcement. The petitioners were not entitled to treat surcharge as part of the exempted sales tax amount, since the statute required actual payment on taxable turnover despite the exemption order. The challenge therefore failed and the statutory amendment was sustained.

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Issues: (i) Whether section 30-AA of the Punjab General Sales Tax Act, 1948, inserting liability to pay surcharge despite exemption under section 30-A, was unconstitutional. (ii) Whether the communications issued to the exempted units were illegal notices for payment of surcharge. (iii) Whether the petitioners, having obtained exemption from sales tax, were also exempt from surcharge or could treat the surcharge as part of the exempted amount.

Issue (i): Whether section 30-AA of the Punjab General Sales Tax Act, 1948, inserting liability to pay surcharge despite exemption under section 30-A, was unconstitutional.

Analysis: The levy of tax on sale or purchase of goods fell within the State's legislative competence under Entry 54 of List II. A surcharge is an additional tax and is of the same character as the underlying tax. Section 30-AA used a non obstante clause to make the surcharge payable notwithstanding exemption granted under section 30-A, and the provision was not a colourable exercise of power. The presumption of constitutionality supported the enactment, and the levy was not shown to offend any constitutional mandate.

Conclusion: The provision was upheld and held to be valid.

Issue (ii): Whether the communications issued to the exempted units were illegal notices for payment of surcharge.

Analysis: The communications only informed the petitioners of the statutory liability created by section 30-AA and advised compliance. No assessment order or coercive recovery direction had been issued, and no illegality in the issuance of the communications was established.

Conclusion: The communications were not illegal notices for recovery of surcharge.

Issue (iii): Whether the petitioners, having obtained exemption from sales tax, were also exempt from surcharge or could treat the surcharge as part of the exempted amount.

Analysis: Section 30-AA expressly required the exempted industries to pay surcharge notwithstanding exemption under section 30-A. The language of the provision and the non obstante clause showed that the legislative mandate overrode the exemption order. The petitioners could not read the surcharge as merely a paper addition within the exemption limit, because the statute required actual payment on the taxable turnover.

Conclusion: The petitioners were not entitled to exemption from surcharge, and the amount could not be treated as part of the exempted tax liability.

Final Conclusion: The statutory amendment was sustained, the challenge to the surcharge failed, and the petitions were dismissed.

Ratio Decidendi: A surcharge imposed by valid State legislation on taxable turnover remains payable notwithstanding exemption from sales tax where the statute expressly gives overriding effect through a non obstante clause.

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