TaxTMI 
TaxTMI 
2016 (9) TMI 869
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....yable 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 upholding the levy of additional tax as surcharge leviable on th....
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....e 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. In support of the plea reliance was placed upon Bhima Jewellery Vs. Assistant....
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....r 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 Act by adding Section 7A therein, w.e.f 2.4.2010, however, no surcharge was demanded f....
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....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.'' 17. Rule 46 of the Rules provides for general provisions in respect of lump-sum dealers. Rules 47 to 52 of the Rules deal with different kinds of....
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....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 calculated at four per cent of the total valuable consideration receivable for the execution of the contract, by making an application to the appropriate assessing authority within thirty days of the award of the contract to him, containing the following particulars:- (1) Name of the applicant contractor; (2) T....
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....her 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 goods at lower rate of tax or Central Sales Tax, as the case may be, for use in manufacturing of goods for sale. He shall not be required to make use of declaration(s) in Form VAT-D3 for carrying goods. He shall be required to furnish quarterly returns in Form VAT-R11 within a month of the close of the quarter. xx xx xx xx 52. Lumpsum scheme in respect of retailers xx xx xx xx (2) Subject to other provisions of this rule, a retailer, in whose case aggregate of purchases of taxable....
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....ss 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 registration, maintenance of accounts and filing of returns. A dealer, who may have opted for payment of lump sum tax, can opt out by making an application to that effect. 19. Rules 47 of the Rules provides for payment of lump sum tax by brick kiln owners by way of composition. The rate of tax prescribed has relation with the capacity of the kiln. He is required to file his annual return on Form VAT-R8. There are other restrictions also. Similarly Rule 48 of the Rules, prescribes for payment of lump sum tax in respect of lottery dealers. The rates have been prescribed w....
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....alculated 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 was opined that four components are: (i) taxable event; (ii) taxable person; (iii) rate of tax and (iv) measure or value for which rate of tax is to be applied. In the absence of any of the components, the levy may be struck down. The relevant paragraph thereof is extracted below: "6. The components which enter into the concept of a tax are well known. The first is the character of the imposition known by its nature which prescribes the taxable event attracting the levy, the second is a clear indication of the person on whom the levy is imposed and who is obliged to pay the tax, the third is the ra....
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....der 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 Section 7 of the VAT Act. Taxable event for levy of additional tax under Section 7A of the VAT Act is on taxable turnover, is also evident from the fact that the retailers opting for payment of lump sum tax have been excluded from the levy. As provided for in Rule 52 of the Rules, in the case of retailers, taxable turnover is determined only then the amount of tax is calculated. Whereas in none of the other categories of the dealers opting for payment of tax on lumpsum basis, the taxable turnover is calculated. Unless in the case of a dealer taxable turnover is determined, the provision will not have application. As has already been noticed above in the c....
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....nder 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 for payment of tax under section 7-C is not possible at all under the parent Act, as the amount computed under section 7-C is not an amount which is determined as tax on the taxable turnover, but is determined with reference to the total value of the works contract in respect of which option is exercised. As already noticed there is no provision in the Act which deems such a total contract value as total turnover. 17. Turnover, as defined in the Act, is the aggregate of value of sales effected or purchase effected by the dealer. The works contract not only involves the transfer of goods but also involves the rendering of several services which cannot be subjected to ta....
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.... '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, rather levy of a new tax. Hence, proportionate change in the compounded rates was held to be not permissible. The judgment has no application in the facts of the case. 35. Division Bench judgment of this court in Hoshiarpur Large and Medium Industries Association's case (supra), is not applicable in the case in hand as the issue involved therein was regarding vires of Section 30-AA added in Punjab General Sales Tax Act, 1948 providing for levy of surcharge even on the dealers availing exemption from payment of tax. Surcharge otherwise was leviable under Section 5(1)(C ) of 1948 Act. Vires thereof was upheld. The contention raised by learned counsel for the petitioner therein that it should be adjusted against the exempt....