Compounded tax computation excludes surcharge unless expressly included in the sales tax provision.

Tax payable at the compounded rate under section 7(1)(a) of the Kerala General Sales Tax Act is computed only by reference to tax under that Act. Surcharge levied under the Kerala Surcharge on Taxes Act is an independent levy, even though it is measured with reference to sales tax, and cannot be read into the compounding formula unless the statute expressly includes it. Accordingly, surcharge paid in the preceding year cannot be added while computing compounded tax for dealers in gold or silver ornaments. The interpretation is supported by earlier authority on the same provision, while decisions on the character or validity of surcharge do not expand the scope of the compounding section.

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Issues: Whether surcharge paid under the Kerala Surcharge on Taxes Act, 1957 in the preceding year can be included while computing the tax payable at the compounded rate under section 7(1)(a) of the Kerala General Sales Tax Act, 1963.

Analysis: Section 7(1)(a) permits a dealer in gold or silver ornaments to pay tax at 150% of the maximum amount of tax payable for the relevant period, and the expression used in that provision refers to tax payable under the Kerala General Sales Tax Act. Surcharge is levied under a separate statute and, though measured with reference to sales tax, remains an independent levy. In the absence of an express inclusion of surcharge in section 7(1)(a), the compounded tax computation cannot take in surcharge paid under the Surcharge Act. The earlier decision dealing with the same issue under section 7(1)(a) supports this interpretation, while the cited authorities concerning the character or validity of surcharge do not alter the scope of the compounding provision.

Conclusion: The surcharge paid in the previous year cannot be reckoned for computing tax at the compounded rate under section 7(1)(a); the issue is answered in favour of the assessee.

Ratio Decidendi: Where a compounding provision refers only to tax payable under the sales tax statute, surcharge imposed under a separate enactment cannot be included in the computation unless the statute expressly so provides.

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