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Sudershan Khanna Vs. State of Jammu and Kashmir and anr. - Court Judgment

LegalCrystal Citation
SubjectSales Tax;Constitution
CourtJammu and Kashmir High Court
Decided On
Case NumberWrit Petition No. 115 of 1980
Judge
Reported in[1985]59STC112(NULL)
AppellantSudershan Khanna
RespondentState of Jammu and Kashmir and anr.
Appellant Advocate J.M. Gupta and; M.M. Gupta, Advs.
Respondent Advocate S. Dutt and; A. Kapoor, Advs.
Cases ReferredS. Kodar v. State of Kerala
Excerpt:
- .....as follows ;every dealer whose turnover for every year exceeds 2.5 lacs shall also pay for that year a surcharge at 5 per cent of the amount of tax payable by him, and the provisions of this act in regard to the assessment, recovery and payment of tax and all other matters connected therewith shall apply to the assessment, levy, collection, etc., of such surcharge, as if it were a tax leviable under this act.9. the aforesaid section came to be amended in 1978 with effect from 9th may, 1978 and the words 'for every year' were substituted by the words 'for any year'. learned counsel for the petitioners submitted that in the order of assessment there is no finding recorded to the effect that the turnover of the firm for 'every year' from 1974 till the amendment of the section in 1978.....
Judgment:
ORDER

A.S. Anand, Ag. C.J.

1. The petitioner is a partner of the firm M/s. Air India Radio Corporation, City Chowk, Jammu. The firm is registered with the Sales Tax Department and carries on business of sales of electric appliances, sewing machines and radios. For the accounting year 1976-77 the assessing authority levied a surcharge of Rs. 1,730.22 on the petitioner-firm. That levy is questioned by means of this writ petition.

2. The levy of surcharge has been questioned, inter alia, on the. grounds: (1) that Section 4-A of the Jammu and Kashmir General Sales Tax Act, 1962 as amended is violative of Article 14 of the Constitution of India, (2) that Section 4-A contravenes Articles 19(1)(f) and 19(1)(g) of the Constitution of India, (3) that the levy of surcharge is a tax on the income and, therefore, suffers from the vice of double taxation, (4) that Section 4-A is hit by Article 276(2) of the Constitution of India, for, the section does not limit the levy of surcharge to a maximum of Rs. 250 as provided under Article 276(2) of the Constitution of India, (5) that the levy of surcharge under Section 4-A is unconstitutional, as it contravenes Article 286(3) of the Constitution of India read with Section 15 of the Central Sales Tax Act, and (6) that in case of the petitioner-firm no finding was recorded by the assessing authority that the turnover of the firm for every year exceeded Rs. 2.5 lacs before levying of surcharge under Section 4-A.

3. Counter has been filed to the writ petition by the respondents wherein besides raising the preliminary objection to the maintainability of the writ petition on the ground that the petitioner has equally an efficacious remedy by way of appeal, the respondents have controverted the challenge made in the petition.

4. We have heard Mr. S. Dutt appearing for the assessing authority and Mr. A. Kapoor for the State of Jammu and Kashmir.

5. In so far as the first four grounds of attack as enumerated above are concerned, the same stands concluded by the judgment of the Supreme Court in S. Kodar v. State of Kerala [1974] 34 STC 73 (SC). Their Lord-ships of the Supreme Court in the aforesaid authority held that the levy of additional tax or surcharge as neither violative of Article 19 of the Constitution nor violative of Article 14 of the Constitution. Dealing with the nature of levy their Lordships opined that the additional tax is a tax upon sales of goods and not upon the income of a dealer. They opined that the additional tax or surcharge is in reality a tax on the aggregate of sales effected by a dealer during a year and the same is an enhancement in the rate of the sales tax when the turnover of the dealer exceeds the specified limit and is, therefore, a tax on the aggregate of sales effected by the dealer during the year. In view of the authority of the Supreme Court, the first four grounds of attack as noticed above, must be repelled and in fairness to the learned counsel for the petitioners we must record that they conceded that these grounds of attack, in view of the Supreme Court judgment, noticed above, do not survive;

6. In so far as the fifth ground of attack is concerned, no factual matrix has been laid in the petition. All that is stated is that the levy of surcharge under Section 4-A is violative of Article 286(3) of the Constitution of India read with Section 15 of the Central Sales Tax Act because under those provisions the rate of tax on the specified goods can in. no case exceed 4 per cent. It is averred that since under the Jammu and Kashmir Sales Tax Act, the rate of tax provided in the taxing Schedule on the specified goods is already 4 per cent, therefore, with the additional surcharge, the rate of tax would exceed 4 per cent and thereby violate Article 286(3) of the Constitution of India and Section 15 of the Central Sales Tax Act. In reply Mr. Dutt has urged that Section 4-A is not violative of Article 286(3) of the Constitution of India and that the restriction contained in Section 15 of the Central Sales Tax Act has been incorporated in the State Act and there is no erosion of the limits prescribed under Article 286 of the Constitution of India read with Section 15 of the Central Sales Tax Act.

7. Beyond making a bald assertion that the provisions of Section 4-A violates Article 286 of the Constitution of India, or contravenes Section 15 of the Central Sales Tax Act, the petitioners have not given any facts or figures to show how the challenge is made. It has not been asserted that the levy of tax on the sales in case of specified goods has in fact exceeded the limits prescribed by the State Act and the Central Act. In vain did we search through the petition for any such challenge. Learned counsel for the petitioners were also unable to show how Article 286 of the Constitution of India stood violated by Section 4-A. It is well-settled that there is a presumption in favour of constitutionality and keeping in view the vague assertions and after considering the argument raised at the Bar, we are unable to hold that Section 4-A of the Jammu and Kashmir Sales Tax Act, 1962 as amended is violative of Section 15 of the Central Sales Tax Act or erodes Article 286 of the Constitution of India. We accordingly hold that the said section is not violative of Article 286 of the Constitution of India.

8. Coming now to the last ground of attack, with a view to appreciate the submission raised at the Bar it would be advantageous to first notice the provisions of Section 4-A of the Jammu and Kashmir Sales Tax Act, 1962 as amended. Section 4-A was inserted in the Act in 1974 by Act XIV of 1974 with effect from 1st October, 1974. This Section as it stood then reads as follows ;

Every dealer whose turnover for every year exceeds 2.5 lacs shall also pay for that year a surcharge at 5 per cent of the amount of tax payable by him, and the provisions of this Act in regard to the assessment, recovery and payment of tax and all other matters connected therewith shall apply to the assessment, levy, collection, etc., of such surcharge, as if it were a tax leviable under this Act.

9. The aforesaid section came to be amended in 1978 with effect from 9th May, 1978 and the words 'for every year' were substituted by the words 'for any year'. Learned counsel for the petitioners submitted that in the order of assessment there is no finding recorded to the effect that the turnover of the firm for 'every year' from 1974 till the amendment of the section in 1978 exceeded 2.5 lacs, and in the absence of such a finding, surcharge could not be levied under Section 4-A.

10. M/s. S. Dutt and A. Kapoor who appeared for the assessing authority and the State respectively in reply contended that the substitution of the words 'for every year' by the words 'for any year' in 1978 was meant to clarify that if the turnover of a dealer in a 'particular' year exceeded 2.5 lacs, he was liable to pay surcharge at the rate prescribed by Section 4-A of the Act.

11. We have given our thoughtful considerations to the respective submissions made at the Bar.

12. The section, as it was inserted in 1974, specifically provided that surcharge at the prescribed rate would be levied on a dealer if his turnover 'for every year' exceeded Rs. 2.5 lacs. The Legislature, in using that expression in its supreme wisdom considered that to make a dealer liable to pay surcharge, his turnover for every year must have exceeded 2.5 lacs from the date the aforesaid section was incorporated in the statute book. Subsequently, however, in 1978, the Legislature substituted the words 'for every year' by the expression' for any year' implying thereby that a dealer was liable to pay surcharge if in 'any year' his turnover exceeded 2.5 lacs irrespective of the fact whether the turnover continuously from 1978 onwards exceeded 2.5 lacs. The change became effective only from the date 9th May, 1978 and til] then, it is obvious that to make the dealer liable to pay surcharge, the assessing authority had to return a finding that the turnover of the dealer continuously from 1974 had been above 2.5 lacs. During 1974-78, the liability to pay surcharge under Section 4-A was contingent upon the turnover of the dealer exceeding 2.5 lacs for every year. An erratic increase in the turnover for any particular year during 1974-78, would not make the dealer liable to pay the surcharge under Section 4-A. The position has, of course, undergone a change with effect from 9th May, 1978 when the liability to pay surcharge under Section 4-A has been made for the concerned year irrespective of the fact whether the turnover exceeded 2.5 lacs for every year since 1974. In the order of assessment no finding has been recorded by the assessing authority to the effect that the turnover of the petitioner 'for every year' from 1974, exceeded 2.5 lacs. Without recording such a finding, proper assessment could not have been made. We cannot agree with Mr. Dutt, learned counsel for the assessing authority, that since surcharge has been levied for the assessment year 1976-77, it should be presumed that the turnover of the petitioner-firm for 'every year' since 1974 had exceeded 2.5 lacs. A fiscal statute has to be strictly construed and if two views are possible it is settled law, that the one which favours the assessee, has to be taken. The presumption as suggested by Mr. Dutt cannot be read into the order of assessment, particularly when the petitioner has in the petition categorically stated that its turnover for every year has not been above 2.5 lacs. The assessing authority has not determined this factum, and therefore, the levy of surcharge without such a determination is improper and that levy has to be quashed and the case remanded to the assessing authority for fresh determination of the surcharge.

13. We accordingly allow the writ petition in part and quash the levy of surcharge amounting to Rs. 1,730.22 and remand the case to the assessing authority to pass a fresh order with regard to the surcharge in the light of the observations made hereinabove after hearing the parties.

14. Since the writ petition succeeds only in part, the parties shall bear their own costs.


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