Judgment :- T.L. VISWANATHA IYER, J. The challenge in all these cases is to the demand by the respondents for surcharge under the Kerala Surcharge on Taxes Act, 1957, on the amount paid for compounding under section7(14) of the Kerala General Sales Tax Act, 1963 ("the Act") as also for turnover tax from the petitioners. 2. The petitioners are abkari contractors who are licensees of arrack shops in various excise ranges in the State of Kerala. Arrack is liable to tax at the first and second sale points in the State at the rate of 50 per cent and 12.5 per cent respectively under section 5(1)(v) read with the Fifth Schedule to the Act. But dealers in arrack are afforded the facility of compounding, by sub-sections (14) and (15) of section 7 which were introduced in the Act by the Kerala Finance Act, 1992, with effect from April 1, 1992. These provisions enabled dealers in arrack to compound the tax payable under section 5 to 20 per cent of the rental amount payable for the licence under the Abkari Act, 1077. But deduction is allowed from the amount so compounded, of the amount of tax paid on the purchase of arrack for each month. I shall extract these sub-sections (14) and (15) for purposes of reference : "(14) Notwithstanding anything contained in sub-section (1) of section 5, any dealer who is having licence for retail sales in arrack, may at his option, instead of paying tax in accordance with clause (v) of that sub-section, pay tax at twenty per cent of the rental amount payable by him under the Abkari Act 1 of 1077 for the licence, less tax paid for the purchase of arrack on the first sale point. (15) Every dealer referred to in sub-section (14) may opt to pay tax in accordance with that sub-section by making an application in the prescribed form to the assessing authority and pay the tax in monthly instalments in the prescribed manner after deduction of the tax paid on purchase of arrack for each month in accordance with the provisions of sub-section (14)."* All the petitioners have opted for payment of tax at this compounded rate. 3. 3. The Board of Revenue informed the Deputy Commissioner, Kannur, by letter dated August 31, 1992, that surcharge and turnover tax are leviable on such dealers in arrack, even though they have opted for compounding under section 7(14). Petitioners challenge the demand for payment of surcharge and turnover tax, in addition to the amount for which they have compounded, namely, 20 per cent of the kist payable for the arrack shops under the Abkari Act 1 of 1077. 4. The challenge is on two grounds. Firstly it is stated that the petitioners have compounded the tax payable at a lump sum, and therefore they cannot be called upon to make payment of any further amount by way of surcharge or turnover tax. Secondly, it is stated that the amount paid for compounding under section 7(14) is by virtue of an agreement between the parties, that the payment does not partake the nature of sales tax, and therefore surcharge cannot be demanded on that amount. After hearing counsel, I do not find substance in either of these contentions. 5. It is true that sub-section (14) of section 7 enables the dealer to compound the tax payable for the year by paying 20 per cent of the rental payable under the Abkari Act, with remission for the tax paid on the purchase of the arrack. What the sub-section provides is an option to pay this amount in lieu of paying the tax in accordance with the provisions of clause (v) of sub-section (1) of section 5. The charging section is section 5, and it provides by its sub-section (1) for the levy of tax on the total turnover of a dealer for a year in the manner specified. Clause (v) provides that in the case of goods specified in the Fifth Schedule (which includes arrack) the tax payable under the section will be at the rates, and at the two points specified against such goods in the said Schedule. Entry No. 1 in that Schedule is arrack, and as mentioned earlier it is liable to tax at the first and second sale points at the rate of 50 per cent and 12.5 per cent respectively. What sub-section (14) of section 7 provides is payment of tax in lieu of this general method of levy of tax, by paying a flat sum of 20 per cent of the kist payable for the shops. What sub-section (14) of section 7 provides is payment of tax in lieu of this general method of levy of tax, by paying a flat sum of 20 per cent of the kist payable for the shops. 6. What sub-section (14) does it is obviate the necessity for determination of taxable turnover by examination of the account and the records, and the completion of assessment of that basis. The amount paid at 20 per cent of the kist is in lieu of the tax payable on the turnover determined for purposes of clause (v) of sub-section (1) of section 5. The effect of section 7(14) is to fictionally fix the turnover, as also the tax payable, without the assessee being put to the difficulty of going through the process of assessment. It provides only for payment of the lump sum of 20 per cent, less the purchase tax paid, in lieu of what is payable under section 5(1). It is not a complete discharge of all the liabilities which the State may impose under the powers vested in it under entry 54 of List II of the Seventh Schedule to the Constitution. Surcharge and additional tax are payable under separate enactments and turnover tax is payable under a different section, namely, sub-section (2A) of section 5, all referable to the said entry 54. No intention is discernible in sub-section (14) to do away with these other levies in case compounding is opted for under it. That is limited to the tax payable under section 5(1)(v) and not for anything else. Demand for surcharge, turnover tax or additional tax is not therefore hit by the compounding under section 7(14). 7. The second limb of the argument does not merit any consideration. It is that the amount is paid by virtue of an agreement between the parties and therefore does not partake the nature of sales tax, on which alone surcharge is payable. I cannot agree. For one thing, the amount payable on compounding is in lieu of the sales tax payable under section 5(1)(v). What is payable is still sales tax though a different method of computation is adopted. The amount is paid only because of the purchases and sales effected by the licensees and is occasioned thereby. The fact that it is paid by virtue of a compounding provision does not make it any the less sales tax. What is payable is still sales tax though a different method of computation is adopted. The amount is paid only because of the purchases and sales effected by the licensees and is occasioned thereby. The fact that it is paid by virtue of a compounding provision does not make it any the less sales tax. If the contention of the petitioners was accepted, the consequence will be that the compounding itself cannot be sustained under the legislative powers of the State, a contingency which could not have been contemplated while enacting sub-section (14) of section 7. The amount paid as compounding fee under the agreement is only sales tax, though as stated earlier, the amount is fixed without going through the complicated process of assessment. It is therefore futile for the petitioners to contend that what is paid under section 7(14) is not sales tax on which no surcharge is payable. The letter sent by the Board of Revenue to the Deputy Commissioner, Kannur reflects the law on the point correctly. The petitioners' contentions are unsustainable. The original petitions are therefore dismissed.