State of Andhra Pradesh vs Buywell Corporation

Syed Shah Mohammed Quadri, J.—This tax revision case raises a short but an interesting question, i.e., whether levy of surcharge u/s 6-B of the Andhra Pradesh General Sales Tax Act, 1957 (for short "the Act") is permissible even in respect of the goods on which concessional tax has to be levied u/s 5-B of the Act.

The facts which gave rise to this question may briefly be stated.

The petitioner is a dealer in radios, televisions and electrical goods, etc. u/s 5-B of the Act, the turnover of the assessee on those goods was liable to tax at the concessional rate mentioned therein. During the assessment year 1981-82, surcharge was levied u/s 6-B on the amount of sales tax payable by it; the assessing authority took the view that the surcharge was leviable u/s 6-B of the Act. On appeal, the Deputy Commissioner (CT) Appeals, Hyderabad I Division, took the view that the explanation to section 6-B includes concessional tax within the meaning of the expression "tax under this Act" and, therefore, surcharge is leviable. The petitioner carried the matte in appeal before the Sales Tax Appellate Tribunal. Construing section 5-B of the Act as not falling within the scope of section 6-B, the Appellate Tribunal set aside the order of the appellate authority [Deputy Commissioner (CT) Appeals], and allowed the appeal by its order dated March 7, 1986.

The learned Government Pleader contends that section 6-B imposes a tax on tax, and the benefit granted to the petitioner u/s 5-B is only in respect of tax and, therefore, that cannot be the basis to exclude the operation of section 6-B in the case of the petitioner. Sri T. Raman, the learned counsel for the assessee, relied on the opening words of section 6-B of the Act in support of his contention that surcharge cannot be levied on the concessional tax. It would be useful to refer to section 6-B of the Act, which was in the following terms during the relevant assessment year :

"6-B. Levy of surcharge on sales tax. - (1) Every dealer, who is liable to pay tax under this Act on the sale or purchase of goods, shall pay a surcharge on such tax at the rate of ten per cent of such tax :

Provided that if, in respect of declared goods, the tax u/s 6 and the surcharge under this section, payable by such dealer, exceeds four per cent of the sale or purchase price thereof, the rate of surcharge in respect of such goods shall be reduced to such an extent that the tax and the surcharge together shall not exceed four per cent of the sale or purchase price of such goods.

(2) The provisions of this Act shall apply in relation to the surcharge payable under sub-section (1) as they apply in relation to the tax payable under this Act.

Explanation. - For the purpose of this section, the term ''tax under this Act'' shall include additional tax, concessional tax and other tax payable u/s 6 or section 6-A."

A plain reading of section 6-B makes it clear that a dealer who is liable to pay tax under the Act on the sale or purchase of goods is liable to pay surcharge on such tax at ten per cent of the tax. The proviso to sub-section (1) deals with declared goods u/s 6, and enjoins that the rate of surcharge in respect of such goods shall be reduced to such an extent that the tax and the surcharge together shall not exceed four per cent of the sale or purchase price of such goods. Explanation appended to this section explains the meaning of the expression "tax under this Act" so as to include the additional tax, concessional tax and other tax payable u/s 6 or 6-A. At the first sight it would appear that the explanation brings within its fold the concessional tax also, the tax on which surcharge is leviable. It may be relevant to point out that there are two provisions under the Act which deal with concessional tax. Section 5-B is the one with which we are concerned, and section 9 is the other which gives the power to the Government to reduce tax which could also be termed as concessional tax. Reading section 5-B, it can immediately be noticed that it begins with non obstante clause and provides, "every dealer shall pay, in respect of any sale of goods specified in a scheme published by the State Government by notification, to another for use by the latter as component part of any other goods specified in the said scheme, which he intends to manufacture inside the State for sale in the State or in the course of inter-State trade or commerce, a tax, at such rate (not exceeding four paise in rupee) as may be specified in the said scheme on the turnover relating to such sale". It may not be necessary to refer to the other provisions of this section. As could be seen, the intendment of the Legislature is to provide concessional rate of tax on the sale of the components of any goods specified in the scheme for providing an incentive to the manufacturer to manufacture those goods in the State for sale either in the State or for the sale in the course of inter-State trade or commerce. It is this intention that has kept away from the surcharge the turnover of sale or purchase of this goods. A combined reading of sections 5-B and 6-B, in our view, leads to the conclusion that concessional rates of tax provided in provisions other than section 5-B, would form basis for levy of surcharge and they would be included within the expression "tax under this Act", and the concessional tax contemplated u/s 5-B shall not be exigible to surcharge u/s 6-B. In this view of the matter, we do not find any illegality in the order of the Tribunal. The tax revision case is dismissed but in the circumstances no order as to costs.

Petition dismissed.