Surcharge on net sales tax after entry tax set-off, not gross tax, and the contrary government letter was invalid.

Surcharge under Section 5-A of the Orissa Sales Tax Act, 1947 had to be computed on the net sales tax payable after giving credit for entry tax under Section 4 of the Orissa Entry Tax Act, 1999 and Rule 18 of the Orissa Entry Tax Rules. Reading the provisions harmoniously, the phrase "tax payable" in Section 5-A referred to the tax remaining after statutory set-off, so surcharge could not be levied on the unreduced gross tax. The Government letter directing computation on the gross amount was inconsistent with the statutory scheme and was invalid, making the additional demand unsustainable.

---

---

Issues: Whether surcharge under Section 5-A of the Orissa Sales Tax Act, 1947 is to be computed on the gross sales tax before giving credit for entry tax, or on the net tax payable after reduction under Section 4 of the Orissa Entry Tax Act, 1999 and Rule 18 of the Orissa Entry Tax Rules, and whether the Government letter directing computation on the gross amount was valid.

Analysis: Section 5-A of the Orissa Sales Tax Act, 1947 creates liability to surcharge in addition to the tax payable under that Act and operates on the amount of tax so payable. Section 4 of the Orissa Entry Tax Act, 1999 and Rule 18 of the Orissa Entry Tax Rules provide for reduction of the sales tax liability by the amount of entry tax already paid, and the illustration to Rule 18 shows that the set-off is to be given in computing the tax payable. Reading the provisions harmoniously, the surcharge cannot be levied on the unreduced gross tax, because the expression "tax payable" in Section 5-A means the tax remaining after statutory set-off. The executive clarification could not override the statutory scheme, and the impugned computation was inconsistent with the Act and Rules.

Conclusion: The surcharge had to be computed on the net sales tax payable after set-off of entry tax. The Government letter directing surcharge on the gross tax was invalid, and the extra tax demand based on it was unsustainable.

---