Compounded tax computation cannot include surcharge; it is a separate levy outside the statutory tax base.

Section 7(1)(a) of the Kerala General Sales Tax Act, 1963 computes compounded tax with reference to the tax payable as conceded for the immediately preceding year, and the explanation confines that base to tax on sales turnover under section 5(1) and purchase turnover under section 5A. Surcharge, being levied under a separate statute and not falling within the Act's definition of tax, remains a distinct impost even though it is linked to sales tax. It cannot therefore be included in the tax figure used to calculate compounded tax, and any demand that adds surcharge to that base is not sustainable.

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Issues: Whether surcharge paid for the previous year could be included while computing the tax payable at compounded rate under section 7(1)(a) of the Kerala General Sales Tax Act, 1963.

Analysis: The compounded rate under section 7(1)(a) is calculated on the tax payable as conceded in the return or accounts for the immediately preceding year, and the explanation confines that figure to tax payable on sales turnover under section 5(1) and purchase turnover under section 5A of the Kerala General Sales Tax Act, 1963. Surcharge was levied under a separate statute and was not included within the definition of tax under section 2(xxiv) of the Kerala General Sales Tax Act, 1963. Though surcharge was linked to sales tax, it remained a distinct levy and could not be treated as part of the tax base for computing compounded tax.

Conclusion: Surcharge could not be reckoned for computation of compounded tax under section 7(1)(a); the demand including surcharge was illegal and the assessee was entitled to exclusion of the surcharge component.

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