No. C2-44615/94/TX.                                          Office of the Board of Revenue (Taxes),

                                                                               Thiruvananthapuram, Dt. 18..03..1995.

CIRCULAR No. 5/95

Sub:   KGST Act – 1963 – Payment of surcharge by Abkari Contractors – certain instructions issued  – Reg.

…..

It has come to the notice of the Board that certain assessing authorities are levying surcharge on the entire compounded tax leviable being 20% of twice the rental amount from the Abkari Contractors.

As per Section 3 of the Surcharge of Taxes Act, 1957, “The tax payable under the KGST Act, 1963, shall in the case of a dealer whose turn over:

(a)                is not less than one lakh rupees in a year, be increased by a surcharge at the rate of five per centum, and

(b)               exceeds ten lakhs rupees in a year, be increased by a surcharge at the rate of ten per centum of the tax payable for that year .....”.

As per Section 7 (14) of the KGST Act, the tax payable by an Abkari Contractor who has opted compounding system is 20% of twice the rental amount less tax paid on the purchase of arrack on the first sale point. So surcharge will be payable only on the actual tax payable under the KGST Act, ie., on the amount obtained after deducting the purchase tax paid on arrack purchased locally from 20% of twice the kist amount and not on the tax leviable.

Illustrations

Total amount of kist paid by dealer A for 1993-94                  :   Rs. 15,00,000

Compounded tax due ie., 20% of (2x15,00,000)                    :   Rs.   6,00,000

Less tax paid on the purchase of arrack                                   :   Rs.   2,50,000

within the state

Balance tax due for 1993-94                                                  :   Rs.   3,50,000

Surcharge is to be levied on Rs. 3,50,000/- and not on Rs. 6,00,000/-.

All the assessing officers are dir4ected to follow the above guidelines while completing the assessments.

The Deputy Commissioners shall acknowledge the receipt of the Circular and obtain acknowledgement from their subordinates.

Sd/-

Secretary (Taxes) – II

Ps/-24.3