The court established the validity of the levy of surcharge under Kerala Act No. XI of 1957 and clarified the criteria for exemption from sales tax under section 5(vi) of the General Sales Tax Act.

VAIDIALINGAM, J. - In these three writ petitions, Mr. V. Rama Shenoi, learned counsel for the petitioners, challenges the orders of assessment to sales tax made by the respective Sales Tax Officers.

2. Though the petitioners in each of these writ petitions are different, these writ petitions have been heard together, because common questions of law have been raised by Mr. Ram Shenoi, learned counsel for the petitioners.

3. The common questions of law the arise for decision in all these writ petitions are :

(1) The legality of the levy of surcharge under the Kerala Surcharge on Taxes Act, XI of 1957, and

(2) Whether transactions in "maida" are exempt from payment of sales tax under section 5, clause (vi), of the General Sales Tax Act.

4. There is also a special question that arises for decision in O.P. No. 1585 of 1960, as to whether the order of assessment therein suffers from the infirmity of being arbitrary and passed in violation of the principles of natural justice.

5. I may at this stage mention that as against the assessment orders, which are under attack in O.P. Nos. 214 and 215 of 1960, appeals before the appropriate Appellate Assistant Commissioners are pending. In those appeals, I am informed by Mr. Rama Shenoi, learned counsel for the petitioners, that several attacks are made on questions of fact also. Therefore, I make it very clear that even in respect of those writ petitions, excepting upon adjudicating on the question regarding the legality of the levy of surcharge and the question relating to exemption from taxation on maida, all other questions are free to be canvassed by the respective petitioners in the appeals that they have filed, and which are pending before the Appellate Assistant Commissioners.

6. The question of arbitrary assessment raised in O.P. No. 1585 of 1960 will be considered after adjudicating upon the common questions of law that have been raised in all these writ petitions.

7. The first attack that is made as against these orders relates to the levy of surcharge under Kerala Act No. XI of 1957. The competency of the Legislature to enact the measure in question cannot now be disputed, more especially because of the decision of this Court in Kunahmmed Haji v. Agricultural Income-tax Officer ((1960) K.L.J. 517), where the learned Judges had to consider, in particular, the validity of another provision in the same enactment, namely, section 2. Section 2 of the Kerala Surcharge on Taxes Act, XI of 1957, related to levy of surcharge on agricultural income-tax.

8. Section 3 relates to the levy of surcharge on sales and purchases. In sub-section (1) of section 3, it is provided that in respect of the tax payable under the enactments mentioned therein by a dealer whose turnover exceeds thirty thousand rupees in a year, the tax shall be increased by a surcharge at the rate of 2 1/2 per cent. of the tax payable for the particular year under the provisions of the statutes mentioned. There is also a proviso to sub-section (1) of section 3, which need not detain me for the purposes of these writ petitions. Sub-section (1) of section 3 has not been challenged on any ground whatsoever.

9. Sub-section (2) of section 3, which has come in for a goods deal of attack by the learned counsel for the petitioners, is as follows :

"Notwithstanding anything contained in sub-section (1) of section 11 of the Travancore-Cochin General Sales Tax Act, 1125, or in sub-section (1) of section 8-B of the Madras General Sales Tax Act, 1939, no dealer referred to in sub-section (1) shall be entitled to collect the surcharge payable under the said sub-section."

10. It will be seen that under sub-section (2), the liability to any the surcharge levied under section 3(1) of Act XI of 1957 is entirely cast on the dealer, and he is not entitled to collect the same from the consumers or other persons. In this connection, reference may be made to section 11(1) of the General Sales Tax Act, which empowers a dealer to collect the