2010 (8) TMI 836 - HC - VAT and Sales Tax

Court rules surcharge part of tax rate for inter-State sales, impacting dealers' rates based on turnover.

Indian Oil Corporation Ltd. Versus State of Kerala

The court ruled that the surcharge should be considered part of the rate of tax for inter-State sales not covered by C forms, leading to different tax ... Whether the Tribunal was justified in holding that the turnover on interState sale of high speed diesel and bitumen not covered by C forms attracts rate of tax including turnover tax payable under section 5(2C) of the Kerala General Sales Tax Act, 1963 and the surcharge payable under the Surcharge on Taxes Act? Held that:- We uphold the order of the Tribunal declaring turnover tax payable under section 5(2C) of the KGST Act also as forming part of rate of tax within the meaning of section 8(2)(b) of the CST Act. The revision case is, therefore, dismissed. Issues:1. Interpretation of the rate of tax applicable on inter-State sale of high speed diesel and bitumen not covered by C forms under the Kerala General Sales Tax Act, 1963.2. Whether turnover tax and surcharge payable under specific Acts constitute part of the rate of tax under section 8(2)(b) of the Central Sales Tax Act.Issue 1: The court analyzed the petitioner's liability for tax on inter-State sales of high speed diesel (HSD) and bitumen not covered by C forms. The assessing officer applied a rate of tax that included the reduced Schedule rate, turnover tax (TOT), and a surcharge. The petitioner contested this, arguing that the rate of tax under section 8(2)(b) should only consider the rate applicable within the State for the goods. The court examined various decisions, including the Supreme Court's ruling in Deputy Commissioner of Sales Tax v. Aysha Hosiery Factory, and concluded that the surcharge should be considered part of the rate of tax for inter-State sales not covered by C forms, leading to different tax rates for dealers based on turnover.Issue 2: The court deliberated on whether turnover tax and surcharge, payable under specific Acts, should be included in the rate of tax under section 8(2)(b) of the Central Sales Tax Act. The petitioner argued that turnover tax, applicable only to oil companies, should not be considered part of the rate of tax. However, the court, following precedent and a liberal interpretation of the law, held that turnover tax and surcharge do form part of the rate of tax under section 8(2)(b), even though they are specific levies and not uniform for all dealers. The court dismissed the revision case, upholding the Tribunal's decision on the inclusion of turnover tax and surcharge in the rate of tax for inter-State sales not covered by C forms.