Question

Q. With reference to the Cess and Surcharge, consider the following statements:

Which of the above given statements is/are correct?

• A.
  1 only
• B.
  1 and 2 only
• C.
  2 and 3 only
• D.
  1, 2, and 3

Answer 1

The correct option is D

1, 2, and 3
Explanation:

Statement 1 is correct: A cess may be in the nature of a tax or a fee but it is imposed for a specific purpose, as identified in the charging legislation. On the other hand, a surcharge is a tax on tax imposed for the purposes of the charging authority, and may not necessarily be limited to a specific purpose.

Statement 2 is correct: Article 270 of the Constitution describes a cess. A tax is a compulsory contribution collected by the government from the public at large and is to be used for a public purpose. A surcharge is dealt with under Article 271 of the Constitution.

Statement 3 is correct: The proceeds collected from a surcharge and a cess levied by the union form part of the Consolidated Fund of India. The funds need not be shared with the State governments and are thus at the exclusive disposal of the union government.