Supreme Court of India
COMMISSIONER OF COMMERCIAL TAXES & ORS.versusM/S BAJAJ AUTO LTD. & ANR.
- Citation
- 2016 INSC 996
- Decided
- 28 October 2016
- Disposal
- Appeal(s) allowed
- Bench
- SHIVA KIRTI SINGH
Holding
Surcharge under Section SA of the Orissa Sales Tax Act is to be levied on the gross sales tax payable, i.e., before deducting entry tax.
Summary
The respondents, dealers of motor vehicles, paid entry tax under the Orissa Entry Tax Act, 1999 and surcharge under the Orissa Sales Tax Act, 1947. A Finance Department circular directed that surcharge under Section SA of the Sales Tax Act be calculated on the gross sales tax payable, not after set‑off of entry tax. The High Court allowed the respondents' claim that surcharge should be computed on the net amount after entry‑tax deduction. The Supreme Court examined whether the surcharge provision is a self‑contained charge and whether Rule 18 of the Entry Tax Rules could modify its computation. It held that the surcharge is an additional tax levied on the total tax payable under the Sales Tax Act and must be calculated before any entry‑tax set‑off. Consequently, the Court set aside the High Court judgment and allowed the appeals, directing that surcharge be levied on the gross sales tax.
Issues considered
- Whether surcharge under Section SA of the Orissa Sales Tax Act, 1947 is to be computed on the gross amount of sales tax payable or on the net amount after deduction of entry tax under the Orissa Entry Tax Act, 1999.
Legislation cited
- Odisha Entry Tax Rules, 1999s. Rule 18
- Orissa Entry Tax Act, 1999s. 4
- Orissa Sales Tax Act, 1947s. 5, s. SA
Subjects
surchargesales taxentry taxset‑offstatutory interpretationtax computationOrissa Sales Tax ActOrissa Entry Tax Actrules vs. act
Judgment
[2016] 7 S.C.R. 1008
A COMMISSIONER OF COMMERCIAL TAXES & ORS.
v.
MIS BAJAJ AUTO LTD. & ANR.
(Civil Appeal Nos. 5913-5920 of2008)
B OCTOBER 28, 2016
[SHIVA KIRTI SINGH AND R.K. AGRAWAL, JJ.]
Orissa Sales Tax Act, 1947 - s.5A - Levy of surcharge
under - Co111putatio11 of - Whether surcharge u/s. 5A is to be
computed on the gross amount of sales tax or on the net amount of
c sales tax after setting off or deducting the amount of entry tax -
Held: On a conjoint reading of s.5 of the Act, s.4 of Entry Tax Act
and r.18 of Entry Tax Rules, surcharge uls. 5A is to be levied before
deducting the entry tax - Orissa Enfly Tax Act, 1999 - s.4 - Odisha
Entry Tax Rules, 1999 - r.18.
D Interpretation of Statutes - interpretation of Rules made under
statutes - Held: The Rules are to be construed to have been made
for further once of the cause for which the statute is enacted and
not for the purpose of bringing inconsistencies - The illustration
given under the Rules can neither curtail nor expand the ambit of
E the statute it illustrates.
Tax/Taxation - Surcharge - Is an additional tax - Is payable
in the manner laid down for levy of surcharge.
Allowing the appeals, the Court
HELD: 1. On a plain reading of the provisions of the Orissa
F Sales Tax Act, 1947 (OSTACT) as well as the Orissa Entry Tax
Act, 1999 (OETACT) and the Orissa Entry Tax Rules 1999, it
can be. seen that Section SA of the OST Act creates a charge and
imposes liability on every dealer under the OST Act to pay
surcharge @ 10% on the amount of tax payable by him under the
OST Act. Section 4(1) of the OET Act, in the same way, prescribes
G for reduction of the tax amount payable by the dealer to the extent
of entry tax already paid for the same article for which sales tax is
payable. The Section, does not specifically contemplate anything,
which would indicate that the provisions of the OET Act or the
Rules have to be taken into consideration while assessing the
H sales tax or surcharge. [Para 19) (1019-D-E]
1008
COMMISSIONER OF COMMERCIAL TAXES & ORS. v. M/S 1009
BAJAJ AUTO LTD. & ANR.
2. The objective of framing rules is to fill up the gaps in a A
statutory enactment so as to make the statutory provisions
operative. Rules also clarify the provisions of an Act under which
the same are framed. An illustration given under the Rules does
not exhaust the full content of the section which it illustrates but
equally it can neither curtail nor expand its ambit. [Paras 18 and
8
20] [1019-B; G-H]
Shambhu Nath Mehra v. The State of Ajmer AIR 1956
SC 404: 1956 SCR 199; La/it Mohan Pandey v.
Pooran Sinf{h and Others (2004) 6 SCC 626: 2004
(1) Sup1JI. SCR 737 - relied on.
c
3. In essence, the provisions made in the Rules, lay down
the modality of 'set off'. OST Act was enacted in the year 1947
whereas OET Act was enacted in 1999. The provision of 'set off'
has been made in the OET Act and the Rules framed thereunder
and not in the OST Act. The heading of Section 4 of the OET Act
gives a broad idea regarding the provision of 'set off' by way of D
"reduction in tax liability". [Para 19] (1019-F]
4. Surcharge is nothing but an additional tax and is payable
on the sale of goods in the manner laid down for levy of surcharge.
Section SA of the OST Act is a self-contained provision and the
surcharge is leviable at the specified per centum of tax payable E
under the OST Act. Tax payable under the OST Act is independent
of the provisions of OET Act. The assessment or quantification
or computation of surcharge shall have to be made in accordance
with the provisions of the OST Act. [Paras 18 and 21] [1019-C;
1020-C-D] F
The Commissioner of Income Tax, Kera/a v. K.
Srinivasan (1972) 4 SCC 526: 1972 (2) SCR 309;
The Madurai District Central Co-operative Bank Ltd.
v. The Third Income Tax Officer, Madurai (1975) SCC
454: 1976 (1) SCR 136; Mis Hoechst Pharmaceuticals G
Ltd. and Others v. SIL/le of Bihar and Others (1983) 4
SCC 45: 1983 (3) SCR 130; Mis Ashok Service Centre
and Others v. State of Orissa (1983) 2 SCC 82: 1983
(2) SCR 363; Sarojini Tea Co. (P) Ltd. v. Collector of
Dibrugarh, Assam and Another (1992) 2 SCC 156:
1992 (1) SCR 371- relied on. H
1010 SUPREME COURT REPORTS [2016] 7 S.C.R.
A S. On a plain reading of the provisions under the OST Act
as well as under the OET Act, a dealer is not entitled for reduction
of the amount of entry tax from the amount of tax payable before
the levy of surcharge under Section SA of the OST Act. A
harmonious reading of Rule 18 of the Rules as well as Section 4
of OET Act and Section S, S-A of the OST Act reveals no conflict
B
or inconsistency. The Rules are to be construed to have been
made for furtherance of the cause for which the Statute is enacted
and not for the purpose of bringing inconsistencies. Thus, on a
conjoint reading of Section S of the OST Act, Section 4 of the
OET Act and Rule 18 of the Rules, the amount of surcharge u/s.
c SA of the OST Act is to be levied before deducting the amount of
entry tax paid by a dealer. (Paras 20 and 22] [1019-G-H; 1020-A-
B, D-E]
State of Tamil Nadu v. MK. Kandaswami and Others
(197S) 4 SCC 74S: 1976 (1) SCR 38; Associated
D Cement Companies Ltd. v. State of Bihar and Others
(2004) 7 sec 642: 2004 (4) Suppl. scR 868 -
referred to.
Case Law Reference
19S6 SCR 199 relied on Para4
E 2004 (1) Suppl. SCR 737 relied on Paras
1972 (2) SCR 309 relied on Para6
1976 (1) SCR 136 relied on Para6
1983 (3) SCR 130 relied on Para6
1983 (2) SCR 363 relied on Para6
F
1992 (1) SCR 371 relied on Para6
1976 (1) SCR 38 referred to Para 7
2004 (4) Suppl. SCR 868 referred to Para8
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 5913-
G 5920 of2008.
WITH
C. A. NO. 5921 OF 2008.
From the Judgment and Order dated 05.01.2007 of the High Court
ofOrissa in Writ Petition Nos. 233 of2002, 3870 of2002, 4617 of2002,.
H 4718 of2002, O.J.C. No. 4303 of2002, Writ Petition Nos. 1145 of2003,
COMMISSIONER OF COMMERCIAL TAXES & ORS. v. MIS 1011
BAJAJ AUTO LTD. & ANR.
9766 of2005 and 2584 of2005. A
Mr. Jaideep Gupta, Sr. Adv., Mrs. Kirti Renu Mishra & Ms. Apurva
Upmanyu, Advs. for the Appellants.
Arvind P. Datar, Sr. Adv. Pratap Venugopal, Ms. Surekha Raman,
Purushottam Kumar Jha (for M/s. K. J. John & Co.), Rajiv Shankar
Roy, Avrojyoti Chatterjee, Abhijit S. Roy, Pranab Kumar Mullick, B
Sukumar, Aditya Mehrotra, Se bat Kumar Deuria, M. P. Devanath, Vivek
Sharma &Aditya Bhattacharya, Advs. for the Respondents.
The Judgment of the Court was delivered by
R.K. AGRAWAL, J. l. Challenge in the above said appeals is
to the legality of the common judgment and order dated 05.01.2007 c
rendered by a Division Bench of the High Court ofOrissa at Cuttack in
Writ Petition (C) being No. 233 of2002 and connected matters wherein
the High Court allowed the petitions filed by the respondents herein.
2. Civil Appeal No. 5913 of 2008 is being treated as the leading
case, hence, the facts of the said appeal are given below:- D
a) The respondents are engaged in the sale and purchase of Motor
Vehicles and are registered dealers under the Orissa Sales Tax Act,
194 7 (in short 'the OST Act') as well as under the Central Sales Tax
Act. The respondents had been paying entry tax on the goods when
they were bought into the State of Orissa under Section 3(3) of the E
Orissa Entry Tax Act, 1999 (in short 'the OET Act'). However, they
were paying surcharge on the balance amount after deduction of the
entry tax paid on the motor vehicles.
b) The Finance Department, Government of Orissa, by letter dated
20.11.2001, stated that the surcharge under the OST Act shall be F
calculated on the payable amount of tax due on the taxable turnover
(Section 5 & SA) instead of on the reduced Sales Tax amount after
setting off of entry tax.
c) On 30.03.2002, the Sales Tax Officer, Sambalpur-I Circle, passed an
order under Section 12(4) of the OST Act wherein surcharge was levied
G
under Section SA of the OST Act on the gross sales tax payable by the
respondent-Company.
d) Being aggrieved by the demand notice dated 30.03.2002 as well as
the letter dated 20.11.2001 issued by the Finance Department of the
Government of Orissa, the respondent-Company filed a writ petition
H
1012 SUPREME COURT REPORTS [2016] 7 S.C.R.
A being No. 233 of2002 along with a set of other writ petitions filed by the
respondents herein before the High Court of Orissa at Cuttack.
e) The Division Bench of the High Court, vide common judgment and
order dated 05.01.2007, allowed the petitions filed by the respondents
herein.
B (f) Being aggrieved by the judgment and order dated 05.01.2007, the
appellants have preferred these appeals before this Court by way of
special leave. ·
3. Learned senior counsel for the appellants have taken the stand
that there is nothing in the provisions of the OET Act or the Rules made
c thereunder which would alter the mode of computation prescribed in
Section SA of the OST Act. Section 4 of the OET Act provides for
reduction of the liability of a dealer under the Sales Tax Act to the extent
of entry tax paid under the OET Act. This provision only appertains to
reduction of entry tax. lt has nothing to do with the computation of the
D surcharge under the OST Act. Jn any event, in terms of Section 4 of the
OET Act, reduction of entry tax paid by the dealers is from the liability
under the Sales Tax Act. In substance, it means that the total liability
under the Sales Tax Act having been determined would then be reduced
by the extent of entry tax paid.
E 4. Learned senior counsel further submitted that the illustration
given under Rule 18 of the Odisha Entry Tax Rule, 1999 (in short 'the
Rules') neither curtails nor expands the ambit of the provisions of the
Act for which he relied upon a decision of this Court in Sltambliu N"th
Me/1m vs. The St"te ofAjmer AIR 1956 SC 404, wherein it was held
as under:-
F
"11. We recognise that an illustration does not exhaust the full
content of the section which it illustrates but equally it can neither
curtail nor expand its ambit; ...."
5. Learned senior counsel further relied upon La/it Moh"" P"11dey
vs. Poor<m Si111:h mu/ Others (2004) 6 SCC 626, wherein this Court
G has held as under:-
"75. The illustration appended to the Rules does not envisage
such a situation. lllustrations although are of relevance and have
some value in the construction of the text of the sections but they
cannot have the effect of modifying the language of the statute
H and they cannot either curtail or expand the ambit of the statute."
COMMISSIONER OF COMMERCIAL TAXES & ORS. v. M/S 1013
BAJAJ AUTO LTD. & ANR. [R.K. AGRAWAL, J.]
6. Learned senior counsel further submitted that the levy of tax A
includes surcharge for which he relied upon the followingjudgments of
this Court in:-
(i) In Tile Commissioner of Income Tax, Kera/a vs. K. Srinivasan
( 1972) 4 SCC 526, this Court has held as under:-
" 10. The meaning of the word "surcharge" as given in the B
Websters New International Dictionary includes among others
"to charge (one) too much or in addition ... "also "additional tax"."
(ii) In Tile Madurai District Central Co-opermive Bank Ltd. vs. The
Tflirtl Income Tax Officer, Madurai ( 1975) 2 SCC 454, it was held as
under:- c
"18. In CIT Kera/av. K. Srinivasan on which the appellant
relies, th is Court has traced the history of the concept of
"surcharge" in the tax laws of our country. After considering the
repo1t of the Committee on Indian Constitutional Reforms, the
provisions of the Government oflndia Act, 1935, the provisions of D
Articles 269, 270 and 271 of the Constitution and the various
Finance Acts, this Court held, differing from the High Court, that
the word "income tax" in Section 2(2) of the Finance Act, 1964
includes surcharges and the additional surcharge."
(iii) In Mis Hoechst P/wrnwceuticals Lid. wu/ 01/ters vs. State of E
Bi/wr and Others ( 1983) 4 SCC 45, it was held as under:-
"28. It cannot be doubted that a surcharge paitakes of the
nature of sales tax and therefore it was within the competence of
the State legislature to enact sub-section (1) of Section 5 of the
Act for the purpose oflevying surcharge on certain class of dealers F
in addition to the tax payable by them .....
79 •.... A surcharge in its true nature and character is nothing
but a higher rate of tax to raise revenue for general purposes ...."
(iv) In Mis Al·lwk Service Centre a11d Others vs. State of Orissa
( 1983) 2 SCC 82, this Court has held as under:- G
"17 ....The Act only levied some extra sales tax in addition to
what had been levied by the principal Act. The nature of the taxes
levied under the Act and under the principal Act was the same
and the legislature expressly made the provisions of the principal
Act mutatis mutandis applicable to the levy under the Act. ...." H
1014 SUPREME COURT REPORTS [2016] 7 S.C.R.
A (v) In Saro]ini Tea Co. (P) Ltd. vs. Collector of Dihrul(arlt, Assam
and Another (1992) 2 SCC 156, it was held as under:-
"16. From the aforesaid decisions, it is amply clear that the
expression 'surcharge' in the context of taxation means an
additional imposition which results in enhancement of the tax and
B the nature of the additional imposition is the same as the tax on
which it is imposed as surcharge. A surcharge on land revenue is
an enhancement of the land revenue to the extent of the imposition
of surcharge. The nature of such imposition is the same viz., land
revenue on which it is a surcharge."
7. On the other hand, learned senior counsel for the respondents
c
submitted that in view of the clarification issued by the office of
Commercial Tax through e-mail to one of the dealers in motor vehicles,
viz., TELCO, Bhubaneswar, the appellants were stopped from demanding
surcharge on the entire amount of tax payable under the OST Act before
deducting the amount payable under the OET Act. According to him,
D the clarification issued by the Commercial Tax Depaitment to TELCO,
Bhubaneswar, was in accordance with the illustration appended to Rule
18 of the Rules which did not take into consideration the amount of
surcharge payable before deducting the entry tax paid while computing
the amount of sales tax payable. He, thus, submitted that the amount of
surcharge is to be levied only on the balance amount of sales tax payable
E
on the sale price of the motor vehicle after deducting the entry tax paid.
According to him, if two constructions are possible then the one which
preserves the workability and efficacy has to be preferred for which he
relied upon a decision of this Court in State of Tamil Niu/u vs. M.K.
Kandaswami and Others (1975) 4 SCC 745, wherein it has been held
F as under:-
"26. It may be remembered that Section 7-A is at once a charging
as well as a remedial provision. Its main object is to plug leakage
and prevent evasion of tax. In interpreting such a provision, a
construction which would defeat its purpose and, in effect, obliterate
G it from the statute book, should be eschewed. If more than one
construction is possible, that which preserves its workability, and
efficacy is to be preferred to the one which would render it otiose
or sterile. The view taken by the High Court is repugnant to this
cardinal canon of interpretation."
H 8. Learned senior counsel also relied upon a decision of this Court
COMMISSIONER OF COMMERCIAL TAXES & ORS. v. M/S IOlS
BAJAJ AUTO LTD. & ANR. [R.K. AGRAWAL, J.]
in Associ(lted Cement Comp"nies Ltd. vs. St"te of Bilwr (In</ Others A
(2004) 7 SCC 642, wherein this Court has held that a dealer is entitled to
reduction in tax to the extent of tax paid under the Bihar Entry Tax Act
while working out the tax payable by it under the Bihar Sales Tax Act.
9. Heard learned counsel f9r the parties and perused the records.
10. The sole question for consideration is whether the 'Surcharge' B
under Section SA of the OST Act is to be computed on the gross amount
of sales tax or on the net amount of sales tax after setting of or deducting
the amount of entry tax?
11. Under Section S of the OST Act, Sales Tax is payable by a
dealer on the taxable turnover at a prescribed rate. Under Section SA, it c
is provided inter alia for payment of surcharge. Section SA of the OST
Act (as it stood at the relevant time) reads as under:
"SA Surcharge: (I) Every dealer whose gross turnover during
any year exceeds rupees ten lakhs shall, in addition to the tax
payable by him under this Act, also pay a surcharge at the rate of D
ten per centum of the total amount of tax payable by him: ..... "
12. It would also be relevant to reproduce Section 4 of the OET
Act (as it stood at the relevant time) which reads as uhder:-
(4) Reduction in Tax Liability:
E
~ (1) where an importer of motor vehicle liable to pay tax under
sub-section (3) of Section 3 being a Dealer in motor vehicles
?ecomes liable to pay tax under the Saies Tax Act by virtue of
sale o( such motor vehicles then his liability under the Sales Tax
Act shall be reduced to the extent of tax paid under this Act.
Explanation: For the purpose of this sub section the chassis and F
the vehicle with body built on the chassis shall be treated as one
and the same goods.
(2) When an importer or manufacturer of goods specified in Part-
III of the schedule except motor vehicles pays tax under sub-
section ( 1) of section 3 or section 26 of this Act, being a Dealer G
under the Sales Tax Act becomes liable to pay tax under the said
Act by virtue of Sale of such goods, then his liability under the
Sales Tax Act shall be reduced to the extent of tax paid under this
Act.
(3) The reduction in tax liability of an importer as provided in sub-
H
1016 SUPREME COURT REPORTS [2016) 7 S.C.R.
A section ( 1) or of an importer or manufacturer as provided in sub-
section (2) shall not be allowed, unless the entry tax paid and tax
payable under the Sales Tax Act are shown separately in the
cash memo or the bill or invoice issued by him for the sale by
virtue of which such liability accrues."
B 13. Rule 18 of the Odisha Entry Tax Rule, 1999 is reproduced
hereunder:
"18. Set off of Entry Tax against Sales Tax: (I) When the
impo1ter of a motor vehicle liable to pay tax under sub-section (2)
of section 3 of this Act being a dealer in motor vehicles becomes
c liable to pay tax under the Sales Tax Act by virtue of sale of such
motor vehicle, his tax liability under the Sales Tax Act shall be
reduced to the extent of the tax paid under these rules.
Illustration: Assuming Entry Tax Rate and Sales Tax Rate to be I0%
1) Purchase Value of Motor Vehicle Rs. 2,00,000/-
D 2) Ent1y Tax Payable@ !0% Rs. 20,000/-
Total:- Rs. 2,20,000/-
3) Sale Price of the Motor Vehicle Rs. 2,20,000/-
E 4) (a) Sales Tax due@ 10% Rs. 22,000/-
Deduct Entry Tax paid Rs. 20,000/-
Sales Tax payable Rs. 2,000/-
Total:- Rs. 2,22,000/-
F
Note: If the sales tax payable on such motor vehicle
is less than the entry tax paid, then the sales tax
payable will be nil.
G (2) When an impo1terofgoods specified in Pait III of the Schedule
to the Act other than motor vehicle, liable to pay tax under this
Act is also a dealer liable to pay tax under the Sales Tax Act, then
the Sales Tax payable on the sale of goods shall be reduced to the
extent of entry tax paid in the same manner as illustrated under
the sub-rule( I)."
H
COMMISSIONER OF COMMERCIAL TAXES & ORS. v. M/S 1017
BAJAJ AUTO LTD. & ANR. [R.K. AGRAWAL, J.]
In view of the statutory provision contained in Rule 18 of the Rules, the A
tax payable under the said Act was to be determined after deduction
therefrom the entry tax paid by a dealer importing vehicle into the State
of Orissa.
14. Since the determination of surcharge payable under the OST
Act was relatable and/or linked to the tax payable under the OET Act, a B
clarificatio11 was sought for by one of the dealers in motor vehicles,
namely, TELCO which is similarly situated as the Respondent No.1-
company from the office of Commercial Tax, in view of the provision
contained in Rule 18 of the Rules, which is as under:-
"Surcharge is payable on the amount of tax that becomes payable
by a dealer after set off of entry tax paid at the time of purchase c
of such goods.'
15. In accordance with the clarification issued to TELCO,
Bhubaneswar, as aforesaid, which was also circulated to other dealers
of motor vehicles, including the Respondent No. I-Company, surcharge
was calculated and paid which was quantified after deducting therefrom D
the amount of entry tax paid by the Respondent No. I-Company while
importing a motor vehicle into the State ofOrissa.
16. On 20.11.200 I, the Government of Orissa, in the Finance
Department, wrote a letter to the Commissioner of Commercial Taxes,
Orissa relating to the computation of tax payable on the motor vehicle E
for the purpose oflevy of surcharge on an interpretation of the provisions
of the OET Act, the OST Act and the Rules which is as under:-
"GOVERNMENT OF ORISSA
FINANCE DEPARTMENT
No. CTB-23/200 I. 55863/F
From: F
Shri K.C. Parija,
Deputy Secretary to Government
To
The Commissioner of Commercial Taxes,
Orissa, Cuttack G
Sub: Computation of tax payable on Motor Vehicle for the purpose
of levy of surcharge.
Ref: C.C.T.'s letter No. 15264/CT, dt. 12.7.2000
Bhubaneswar, the I 91h November, 200 I.
H
1018 SUPREME COURT REPORTS [2016] 7 S.C.R.
A Sir,
In inviting a reference to the aforesaid letter, I am directed
to say that surcharge under Orissa Sales Tax Act, 194 7, shall be
calculated on the payable amount of tax due on the taxable turnover
(Section 5 & 5A) instead of on the reduced Sales Tax amount
after setting off of entry tax. The position may kindly be clarified
B
to the Field Officers and if such faulty procedure of charging
surcharge is adopted by any of the Circle Officers, same should
be discontinued f011hwith and corrective measure as per the
provisions of the statue may be taken up to make good the loss.
2. It may further be noted that the illustration in rule -18 of
c Orissa Entry Tax Rule, 1999 or provision of any other Finance
Depai1ment notification have limited implication for that purpose
only and they have no overriding effect on the statutory provisions
of the OST Act.
Yours
faithfully
D
Sd/-
(K.C. Parija)
DEPUTY SECRETARY TO GOVERNMENT
E OFFICE OF THE COMMISSIONER OF COMMERCIAL
TAXES: ORISSA: CUTTACK
Dated: 20.11.01
Memo No. 24808/CT
111(1) 207/2000
F
Copy forwarded to all ACCTs/All CTOs/All Addi. CTOs
of Assessment Units for information and necessaiy action. The
CTOs are requested to circulate the above clarification of Finance
Deptt. to all the Addi. CTOs of their respective circles.
Dd/-
G Addl. Commissioner of Commercial
Taxes (Gen) Orissa, Cuttack"
In the said letter, it was inter alia intimated that surcharge shall be
calculated on the payable amount of tax due on the taxable turnover
(section 5 and SA) instead of on the reduced sales tax amount after
setting off of Entry Tax.
H
COMMISSIONER OF COMMERCIAL TAXES & ORS. v. M/S 1019
BAJAJ AUTO LTD. & ANR. [R.K. AGRAWAL, J.]
17. On 30.03.2002, the Sales Tax Officer, Sambalpur-1 Circle, A
Sambalpur passed an order under section 12(4) of the OST Act wherein
surcharge has been levied under Section SA of the said Act on the gross
sales tax payable, without deducting the entry tax as required under
Section 4 of the OET Act. As a result of this, excess surcharge to the
tune of Rs. 2l,2S,117 .37/- has been levied by the Sales Tax Officer.
B
18. It is well settled that an illustration given under the Rules does
not exhaust the full content of the section which it illustrates but equally
it can neither curtail nor expand its ambit. Further, surcharge is nothing
but an additional tax and is payable on the sale of goods in the manner
laid down for levy of surcharge. In view of the provisions contained in
the OET Act, a dealer is not entitled for reduction of the amount of entry
c
tax from the amount of tax payable before the levy of surcharge under
Section SA of the OST Act.
19. On a plain reading of the provisions of the OST Act as well as
the OET Act and the Rules, it can be seen that Section SA of the OST
Act creates a charge and imposes liability on every dealer under the D
OST Act to pay surcharge@ 10% on the amount of tax payable by him
under the OST Act. Section 4( 1) of the OET Act, in the same way,
prescribes for reduction of the tax amount payable by the dealer to the
extent of entry tax already paid for the same article for which sales tax
is payable. The Section, does not specifically contemplate anything, E
which would indicate that the provisions of the OET Act or the Rules
have to be taken into consideration while assessing the sales tax or
surcharge. In essence, the provisions made in the Rules lay down the
modality of 'set off'. It is important to mention here that OST Act was
enacted in the year 194 7 whereas OET Act was enacted in 1999. The
provision of set off has been made in the OET Act and the Rules framed F
thereunder and not in the OST Act. The heading of Section 4 of the
OET Act gives a broad idea regarding the provision of set off by way of
"reduction in tax liability". Sub-Sections 1 and 2 of Section 4 of the
OET Act provide for reduction of liability under the OST Act.
20. lt is well settled that the objective of framing rules is to fill up G
the gaps in a statutory enactment so as to make the statutory provisions
operative. Rules also clarify the provisions of an Act under which the
same are framed. Section 4 of the OST Act is a charging Section
attracting liability to pay Sales Tax "on sales and purchases effected".
Section S of the OST Act provides for rate of Sales Tax. Section SA of H
1020 SUPREME COURT REPORTS [2016] 7 S.C.R.
A the OST Act levies surcharge on the dealer which is nothing but an
additional tax. Therefore, on a plain reading of the provisions under the
OST Act as well as under the OET Act, a dealer is not entitled for
reduction of the amount 6f entry tax from the amount of tax payable
before the levy of surcharge under Section SA of the OST Act. A
harmonious reading of Rule 18 of the Rules as well as Section 4 ofOET
B
Act and Sections S, S-A of the OST Act reveals no conflict or
inconsistency. The Rules are to be construed -to have been made for
furtherance of the cause for which the Statute is enacted and not for the
purpose of bringing inconsistencies.
21. Section SA of the OST Act is a self-contained provision and
c the surcharge, as already seen above, is leviable at the specified per
centum of tax payable under the OST Act. Tax payable under the OST
Act is independent of the provisions of OET Act. The assessment or
quantification or computation of surcharge shall have to be made in
accordance with the provisions of the OST Act.
D 22. Thus, on a conjoint reading of Section S of the OST Act,
Section 4 of the OET Act and Rule 18 of the Rules, we are of the
considered opinion that the amount of surcharge under Section SA of
the OST Act is to be levied before deducting the amount of entry tax
paid by a dealer.
E 23. In view of the forgoing discussion, the impugned judgment
and order dated OS .01.2007 passed by the High Court cannot be sustained
and is liable to be set aside. In the result, all the appeals are allowed;
however, the parties shall bear their own cost.
Kalpana K. Tripathy Appeals allowed.
F
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