The court confirmed the legality of surcharge and denied exemption claims on 'maida', emphasizing the obligation to inform taxpayers of assessment bases to ensure due process.

1In 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. Rama Shenoi, learned counsel for the petitioners.

3 The common questions of law that arise for decision in all these writ petitions are:
(1) the legality of the levy of surcharge under the Kerala Surcharge on Taxes Act, Act XI of 1957, and
(2) Whether transactions in 'maida' are exempt from payment of sales tax under S.5 clause (vi) of the General Sales Tax Act.

4 There is also a special question that arises for decision in O. P. No. 1585/60, 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. 1585/60 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 Kunhammed Haji v. Agricultural Income Tax Officer (1960 KLJ 517), where the learned Judges had to consider, in particular, the validity of another provision in the same enactment, namely, S.2. S.2 of the Kerala Surcharge on Taxes Act, XI of 1957, related to levy of surcharge on agricultural income tax.

8 S.3 relates to the levy of surcharge on sales and purchases. In sub-section (1) of S.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% of the tax payable for the particular year under the provisions of the statutes mentioned. There is also a provision to sub-section (1) of S.3, which need not detain me for the purposes of these writ petitions. Sub-section (1) of S.3 has not been challenged on any ground whatsoever.

9 Sub-section (2) of S.3, which has come in for a good deal of attack by the learned counsel for the petitioners, is as follows:
"Notwithstanding anything contained in sub-section (1) of S.11 of the Travancore-Cochin General Sales Tax Act, 1125, or in sub-section (1) of S.8 B of the Madras General Sales Tax Act, 1939, no dealer referred to in sub-section (1) shall be entitled to coiled the surcharge payable under the said sub-section."

10 It will be seen that under sub-section (2), the liability to pay the surcharge levied under S.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 S.11(1) of the General Sales Tax Act, which empowers a dealer to collect the sales tax from others.

11 The attack that is made on S.3(2) by Mr. Rama Shenoi, learned counsel for the petitioners, is that this provisi