TaxTMI 
TaxTMI 
2016 (9) TMI 869
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....sing Authority levying surcharge on the tax payable on lump sum basis on the works contract. The petitioner is carrying on the business as works contractor. Facts in CWP No. 14681 of 2014: 4. The petition has been filed by Haryana Pradesh Brick Kiln Owners Association (Regd.) impugning the circular dated 14.1.2014 issued by the Excise and Taxation Commissioner, Haryana, referring to the order passed by the Tribunal in STA No. 485 of 2012-13 in the case of M/s Mahashiv Promoters (P) Limited, Rohtak Vs. State of Haryana, (this order of the Tribunal is subject matter of challenge in VATAP No. 59 of 2014) specifying that the surcharge is leviable and be collected from the lump-sum composition dealers availing benefit of lump sum payment of tax except the retailers. 5. As the legal issue involved in all the cases is identical, the detailed facts are being taken from VATAP No. 59 of 2014. 6. The assessee has filed the present appeal against the order dated 8.10.2013 passed by the Tribunal in STA No. 485 of 2012-13, raising the following substantial questions of law: (i) Whether on the facts and in the circumstances of the case, the Ld. Tribunal was justified in up....
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.... arguments, learned counsel for the appellant contended that Section 9 of the VAT Act, which provides for payment of tax in lump-sum clearly mentions that such amount is payable 'in lieu of tax payable under the Act'. This will include all types of taxes payable under the Act. Even Section 7A of the VAT Act under which additional tax has been levied is also a tax. Hence, there cannot be any further demand of tax from the appellant beyond the composition amount as determined in the Rules. He further submitted that in the case of the contractors and for that matter in none of the cases, where payment of tax in lump sum has been provided for except the retailers, there is determination of taxable turnover. In the cases of contractors, the tax is payable on gross receipts, which includes labour component also, whereas in the other types of cases, such as, brick-kiln, halwai, lottery dealer, ply-board manufacturer etc., the same is payable in terms of capacity. The mere fact that there is exclusion of retailers, one of the category in which case lump-sum payment of tax is permissible, shows that the intent of the levy is in those cases where taxable turnover can be determined. I....
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....nt of Hon'ble the Supreme Court in M/s Hoechst Pharmaceuticals Ltd. and another Versus State of Bihar and others , 1983(4) SCC 45, defining the term 'surcharge' which amounts to tax. The Judgment of Hon'ble the Supreme Court in M/s Jindal Poly Films Ltd. Versus Commissioner of Central Excise, Meerut-II, 2006(198) ELT 3, was cited dealing with the non-obstante clause. Reference was made to assessment order passed in the case of the appellant, wherein taxable turnover had been determined. Reply by Appellant 13. In response, learned counsel for the appellant submitted that all the words used in Section 7A of the VAT Act have to be given their true meaning. Words ''levied and collected on the taxable turnover'' cannot be held to be surplus. The judgment of this Court in Hoshiarpur Large and Medium Industries Association's case (supra), is distinguishable, as in that case vires of Section imposing surcharge was under challenge. It was further submitted that even as per the understanding of the department, there was no surcharge payable on the tax payable by the dealers opting for lumpsum payment. Though the amendment was carried out in the VAT A....
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....ther measure, with or without any deduction therefrom, to be determined by the State Government, and such lump sum shall be paid at such intervals and in such manner, as may be prescribed, and the State Government may, for the purpose of this Act in respect of such class of dealers, prescribe simplified system of registration, maintenance of accounts and filing of returns which shall remain in force during the period of such composition. (2) No dealer in whose case composition under subsection (1) is in force, shall issue a tax invoice for sale of goods by him and no dealer to whom goods are sold by such dealer shall be entitled to any claim of input tax in respect of the sale of the goods to him. (3) A dealer in whose case composition under subsection (1) is made and is in force may, subject to such restrictions and conditions, as may be prescribed, opt out of such composition by making an application containing the prescribed particulars in the prescribed manner to the assessing authority, and in case the application is in order, such composition shall cease to have effect on the expiry of such period after making the application as may be prescribed.'' ....
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....lottery tickets at the rates given below:- S. No. Type of lottery Lump sun payable in lieu of tax 1 Weekly Lottery Rs.65,000 per draw 2 Monthly Lottery Rs. 19 lakh per draw 3 Festival Lottery Rs. 19 lakh per draw 4 Instant Lottery Rs. 19 lakh per draw PROVIDED that no refund of any amount of lump sum already paid shall be made on account of reduction/omission of lump sum rates paid at the rates applicable before such reduction/omission. xx xx xx xx (6) A lottery dealer liable to pay lump sum may purchase lottery tickets for sale on the authority of declaration(s) in Central Form C, which he shall disclose use of at the time of applying for issue of forms and in quarterly returns to be filed in Form VAT-R9 within a month of the close of the quarter. 49. Lump sum scheme in respect of contractors (1) A contractor liable to pay tax under the Act may, in respect of a works contract awarded to him for execution in the State, pay in lieu of tax payable by him under the Act on the transfer of property (whether as goods or in some other form) involved in the execution of the contract, a lump sum ca....
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.... annum 1 8' x 4' x 10 Rs. 9.00 lakh 2 8' x 4' x 7 Rs. 6.30 lakh 3 6' x 4' x 10 Rs. 6.75 lakh 4 6' x 4' x7 Rs. 4.73 lakh 5 4' x 4' x 10 Rs.3.21 lakh 6 4' x 4' x 7 Rs. 2.25 lakh Where an 8'x 4' x 10 press is designed to make 10 number ply-boards each measuring 8 feet by 4 feet i.e. 320 square feet ply-board in single operation and presses of other sizes are designed to make ply-board in the same proportion: PROVIDED that annual rate of lump sum in respect of press of any other size not tabulated above shall, if the press is designed to make plyboards of size not exceeding 4' x 4' i.e. 16 square feet per piece be computed @ Rs. 2008.93 per square feet else @ Rs. 2812.50 per square feet, rounded off to nearest thousand in each case: PROVIDED FURTHER that lump sum for any additional press of the same or lower size shall be computed at one-half of the full rate tabulated above. xx xx xx xx (7) A ply-board manufacturer liable to pay lump sum may make use of declarations in Form VATD1 or in Central Form C for making purchase of ....
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....xes and charges shown in the invoice. xx xx xx xx (6) The lump sum retailer shall be authorised to make purchase of goods on declarations in Central Form C from outside the State but he shall not be authorised to make use of declaration in Form F. He shall be required to make use of declarations in Form VAT-D3 for carrying goods. He shall declare the use of both declarations in Central Form C and Form VAT-D3 in his returns.'' 18. A perusal of Section 9 of the VAT Act shows that the State Government has been authorized to accept from a class of dealers, in lieu of tax payable under the VAT Act, for any period, by way of composition, a lump-sum tax. It can be linked with production capacity or can be determined on the basis of other suitable measures related to the extent of business or calculated at a flat rate of gross receipt of business or gross turnover of purchase or sale etc. The tax so determined has to be paid at such intervals as may be specified. The State is further entitled to provide for other conditions in the process. For the dealers, who opted for payment of lump sum tax, the Government is authorized to prescribe simplified system of registrati....
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.... payment of lump sum tax, but the calculation thereof is at the rates of tax provided on the taxable turnover. Even for the sale of goods from the purchase of goods from outside the State when sold within the State, the tax is leviable at the rates provided under the VAT Act. Meaning thereby, the taxable turnover will have to be determined. 22. Section 7A of the VAT Act if analyzed starts with a nonobstante clause. It provides for -levy and collection of tax is on the taxable turnover of a registered dealer, -additional tax in the nature of surcharge, -to be calculated at the rate of 5% of the tax payable by him, -except in the cases of retailers opting for payment of lump sum tax. 23. In addition to Section 3 of the VAT Act, which is a charging Section providing for levy of tax under the VAT Act, Section 7A thereof is also charging Section for levy and collection of additional tax in the nature of surcharge on taxable turnover. 24. The issue regarding various components in the concept of taxation was considered by Hon'ble the Supreme Court in Govind Saran Ganga Saran v. Commissioner of Sales Tax and others, (1985) 60 STC 1 (SC). It ....
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....e needful in the matter." 27. In National Mineral Development Corporation Limited Vs. State of M.P. and another, 2004 (6) SCC 281, the issue under consideration before Hon'ble the Supreme Court was as to whether despite there being levy under the charging section, the royalty could be demanded in the absence of rates, the answer was in negative. 28. Four components required for levy of additional tax are existing in the section. Such as: (i) taxable event - the taxable turnover. (ii) taxable person - the dealer registered under the Act. (iii) rate of tax - @ 5% (iv) measure of tax - on the tax payable under the Act. 29. As has already been noticed above, levy of tax under Section 7A of the VAT Act is on the taxable turnover. At the time of prescribing the rates instead of mentioning different rates of taxes for different commodities, it has been provided that its calculation shall be at the rate of 5% of the tax payable. A simplified method is adopted. Tax payable would mean that tax as calculated on the taxable turnover after it is determined in terms of Section 6 of the VAT Act, after application of rates as provided for under Sect....
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..... In the absence of determination of taxable turnover, additional sale tax was held to be not leviable. Claim for additional sales tax by treating contract value as taxable turnover was held to be not permissible. Relevant paras of the judgment are extracted below: "15. As the additional tax is thus levied at the prescribed percentage on the taxable turnover of the dealer that percentage varying from 1.5 to 3 depending on the turnover of the assessee for the purpose of levy of this additional tax, the determination of the taxable turnover is crucial. Despite the declared intention to levy additional tax on the sale or purchase of goods, the tax levied under that Act having been linked solely to the taxable turnover, mere payment of tax under the principal enactment would not render the dealer liable for the additional sales tax unless taxable turnover of that dealer is determinable under the principal Act. 16. While there is no difficulty in determining the taxable turnover of a dealer who is engaged in the execution of a works contract in cases where the tax is computed in terms of section 3-B of the Act, the determination of turnover of a dealer who has opted fo....
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....his clause in respect of a dealer liable to pay tax under section 7C of the said Act for the financial years commencing on the 1st day of April 1993, shall be the total value referred to in the said section.'' 33. The Judgment of Hon'ble the Supreme Court in Bhima Jewellery's case (supra) is distinguishable as in that case normal tax was payable under Sections 5 and 5-A of the Kerala General Sales Tax Act, 1963, whereas compounded rates were prescribed under Section 7 thereof. Additional tax was levied under Section 5D of that Act therein only on the taxes payable under Section 5 and 5A of that Act. Hence, levy of additional tax on the compounded rates was held to be bad. 34. In Systematic Conscom Ltd 's Case (supra), the facts were that the provision providing for composition of tax liability, further provided that in case there is any change in the rate of tax after the rates were agreed upon, there would be proportionate change in the lump-sum tax payable. Additional tax in that case having been levied in the form of a different tax namely State Development Tax, Hon'ble the Supreme Court opined that it cannot be termed as a change in rate of tax, ra....