TaxTMI 
TaxTMI 
2002 (3) TMI 892
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....sions including exemption from payment of sales tax and grant of subsidies were announced. The petitioners claimed that they were "granted eligibility/exemption certificates" by which they were exempted from payment of sales/purchase tax for a period of seven years. On April 11, 2000, the State Legislature enacted the Punjab Social Security Act, 2000. Under section 3, a cess was imposed on the sale and purchase of goods. By Act No. 18 of 2000, the provision regarding payment of cess was amended. The rate of cess was fixed at 10 per cent of the tax payable on sale and purchase of taxable goods. The validity of this Act was questioned. The challenge was upheld vide judgment dated September 27, 2001. 4.. The attempt to levy cess having failed, the Governor of Punjab promulgated the Punjab General Sales Tax (Second Amendment) Ordinance, 2001. This Ordinance was published in the Gazette of November 7, 2001. On January 17, 2002, the Legislature had enacted the Punjab General Sales Tax (Amendment) Act, 2002. By the Amendment Act, section 30-AA was inserted. It was provided that notwithstanding any exemption granted to any class of industries under section 30-A of the Act the said in....
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....t was enacted in the year 1948. The object was "to provide for the levy of a general tax on the sale or purchase of goods in Punjab". Section 5 lays down "the rate of tax". Provisions for deferment and exemption have also been made. 11.. In the present case, we are concerned with the grant of exemption to a class of industries. This is governed by the provision in section 30-A. By this provision, it has been, inter alia, provided that "the State Government may, if satisfied, that it is necessary or expedient so to do in the interest of industrial development of the State, exempt such class of industries from the payment of tax, for such period and subject to such conditions, as may be prescribed". Thus, exemption from payment of tax can be granted in the interest of industrial development. However, conditions can also be imposed. To regulate the matter, the Punjab General Sales Tax (Development and Exemption) Rules, 1991 have been framed. These Rules were enforced with retrospective effect from April 1, 1989. Provisions regarding conditions of eligibility, benefits to sick units, quantum of entitlement, mode of availing the benefits and furnishing of security have been....
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....ty of the dealers who have been granted exemption from payment of sales or purchase tax. The Legislature has acted with abundant caution and clarified the matter beyond doubt. It is apparent that the provision should prevail over an executive order for the grant of exemption passed by the competent authority under the Act. 15.. Mr. Sibal contended that the provision is a colourable exercise of power. The State Legislature had initially imposed a cess. Having failed in its attempt, it had now committed a "fraud" and levied the impugned surcharge. It is, thus, unconstitutional. 16.. This contention cannot be accepted. Under entry 54 of List II, the State Legislature is competent to levy tax "on the sale or purchase of goods other than newspapers". Thus, the levy of tax on the sale or purchase of goods is clearly within the legislative competence of the State Legislature. A surcharge is only an additional tax. It is similar to the sales tax. 17.. As observed by their Lordships of the Supreme Court in Sarojini Tea Co. (P) Ltd. v. Collector of Dibrugarh, Assam (1992) 2 SCC 156 and in Indian Aluminium Co. v. State of Kerala (1996) 7 SCC 637, "the expression 'surcharge' in the co....
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....llegal. 20.. Even otherwise, it may be mentioned that there is always a presumption in favour of the constitutionality of an enactment. The courts normally presume that the Legislature is aware of the needs of the State made manifest by experience. It, thus enacts a provision to remedy the situation. In the present case, the Legislature has enacted the provision to raise extra resources. The levy being within the ambit of entry 54, the impugned enactment is not invalid. 21.. In view of the above, the first question is answered against the petitioners. Reg. (ii): 22.. Mr. Sibal contended that the surcharge is leviable on the tax payable. Since the petitioners have been granted exemption from payment of purchase and sales tax, the impugned notices issued to them are invalid. Is it so? 23.. The copies of the two communications have been produced as annexures P7 and P8. Both the documents bear no date. However, these are identical. The contents of one of these, a copy of which has been produced as annexure P7 may be noticed. These are as under: "By virtue of section 30-AA of the Punjab General Sales Tax Act, 1948, added vide Punjab Ordinance No. 8 of 2001, the ....
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....stries which had been granted exemption were not liable to pay the tax, the question of paying the surcharge could not arise. 29.. The argument is fallacious. As already observed, the "surcharge" is to be "levied and collected on the taxable turnover of a dealer". The petitioners admittedly maintain account of the taxable turnover. On account of the orders of exemption, they have exemption from actual payment of the tax up to a specific limit. On a harmonious reading of section 5(1-C) with section 30-AA, it is clear that despite the exemption granted to the industries like the petitioners, they are liable to "pay the surcharge" on their "taxable turnover..........which shall be calculated at the rate of 10 percentum of the tax payable.............under the Act". We cannot read the impugned provision to mean that the levy has to be only a paper addition and the dealer remains exempt from payment till it reaches the limit fixed by the authority while granting exemption. The legislative mandate is to "pay". Notwithstanding the exemption. The "text" is clear. Thus, the contention cannot be accepted. 30.. Mr. Sibal referred to the decision of the Kerala High Court in Deputy Commis....