Monday, September 2, 2019


Assamese article on Mohamed Ali Carim Chagla

Taxation- A concerted phenomenon for upgradation of economic platform

Taxation means the system of imposition and collection of tax. Tax, on the other hand, means, the money demanded by the Government from the income of the citizen or on the value of the goods, bought or sold, or by other ways and means, adopted to collect revenue to the Government coffer within the frame-work of the Constitution or under the statute of the law, operative in this behalf.

Taxation in pre-imperial rule
 Taxation is not a new phenomanon in the history of India. It had the age- long tradition since Ramayan and Mahabhat era. The measure of tax in  the past, in fact, used to continue as a matter of convention, the mode and manner of extraction being harsh, beset with untold ingredients of torture and cruelty.The Land Revenue was the primary source of royal earnings with other ancillaries, adopted, from time to time. Such measures were, however, not systematic, rather haphazard, clumsy and cumbersome.  In the  Mauryya era, the great deplomate and economist Kautilya or Chanakya played a pivotal role towards the acceleration of administration commensurated with the ways and means towards upgradation of economy. In his famous  precious book  “Kautilya’s Artha Sastra”, this great man of giant personality formulated the unique technic of administration with various guide-lines, wherein the spheres of fiscal discipline in the field of administration gained the momentum.To speak the truth, Kanishka or Chanakya was the father of modern administration and economy, who designed a broad  platform centuries aback.

Imperial Rule in India
At  the out-set, say, from 2000 - 3000 B.C.till the early part of the 12th century, India was  ruled by the Hindu Kings with utmost glory and grandeur; but since 1206 A.D., the Muslim dynestic rule was set-up by Kututubuddin Aibek of Das Dynesty following the invasion  of the country by his master Mohammed Ghori of Ghazni dynasty  of Turky. The traditional marathan Muslim regime continued till 1712 A.D.,that is, upto the demise of the Emperor Bhadur Shah, the last Mughal dynestical ruler, which kingdom being set up by  Emperor Babar in 1526 A.D., The East India Company of England, a business organization, which came to India for trade and commerce purposes instantaneously changed their  modus-operandi on being tempted by the unparallel visible and potential wealth and property resources widely spread in the nooks and corns of the country ( east and west and north and south). They took up the helm of administration of India in a piece meal way by applying might and by hook or crook taking advantage of  utter weakness and unbecoming and  uncompromising  feuds and fall -outs  amongst the rulers  besides other internal chaos and  conflicts, those parallely being cropped up.  Ultimately, the entire Indian territorial administration came to their grip one after one under a single banner. The Ahom Kingdom of Assam, which had the unbreaking period of administrative regime for long 598 years (from 1228 to 1826 A.D.) in greater Assam ,also came under the grip of the East India Company following  the Yandabu Treaty, signed by the said company and the earlier invaders of  Assam, the Mans of erstwhile Burma, (now Myanma). During  the tenure of great Queen Victoria of England the British Government took over the administration from the East India Company on the 1st November, 1858 A.D. and started to rule the country through her representative, the Viceroy of India.  Since then, Assam  became a part of great Britain as a province of intregated and consolidated India. The province of Assam was primarily divided into ten districts on 6th February, 1874. The British Rule in India continued upto 1947 and on the 15th August , 1947, India  got its independance following  marathan  struggles and movements both violent and non-violent. But the most tragic part of the happenings was that India was bifurcated and Pakisthan took birth as a muslim dominated country in the global map. India is now a Sovereign, Secular, Socialistic, Democratic Republic since 26th January, 1950. Assam being  the part of India (a province since 1874) and now it is a State of the territory of India.
                     During the Muslim regime, the measures of taxation were there, but in many occasions, it posed to be detrimental to the interest of the Hindu inhabitants. Even, the Emporer Aurangeb used to levy  Jijia tax on the Hindus obviously playing a distinctive communal game to oppress and suppress the non-Muslim community. This was not the single instance, but there were  many. In a nut shell, the measures of taxes were there, but the levy and colletion lacked proper discipline and the requisite sense  of  justice and equity were lacking.

Tax administration in Assam under the British Rules
Our instant topic of discussion, in fact, is taxation in Assam though we designed it in a broad title ultimately to cover the State of Assam, one of the North Eastern States. During the hours of British reign since 1826 A.D., various measures of taxation were adopted. The prominent amongst them were Land Revenue, Excise Duty, Stamp Duty etc. There was Zamindari system in the erstwhile undivided Goalpara  district. The Zaminders or Kings became loyal to the British Goverment in lieu of payment money and other precious gifts. The said Zaminders were the agents of the Government in power in the matter of collection of such revenue resources and other gifts. In other areas  of Assam, the Mouzadars played the pivotal role in this matter.  The mode and manner  of collection and extraction of such revenue were not healthy, but was full of cruelty and brutality to the poor class of people.

State taxation laws
Tax under the Govt. of India Act,1935
Pre-independance  period

The British Government  enacted the Government of India Act in 1935, whereby, the people of India were, inter-alia, provided with a part of autonomy on certain matters to execute such power through their elected representatives, but, those too, were under the royal authority. Taxation was one of the subject of matter of such power of the allegedly designed autonomy. The system of levy and collection of Municipal tax in urban areas and house tax in rural areas also did prevail. A number of States adopted the measures of sales tax in 1936-37, but the Goverment of Assam introduced the following tax measures after enactment of law in 1939 only.
 The measures of tax were the following :-

 1. The Assam Sales of Motor Spirit and Lubricants Taxation Act, 1939- from 1st May, 1939 . A tax on sales or purchase of Petroleum and Lubricants This was, however, replaced by The Assam (sales of Petroleum, Petroleum  Products including Motor Spirit and Lubricants Taxation Act, 1955 from 1.5.1956 with gradual additions of numbers of refinery products and petro-chemicals products besides crude oil. This law was merged with the Assam General Sales Tax Act,  an amalgamated, consolidated and amendment of four operating Acts, namely;   the Assam Sales Tax Act, 1947, the Assam Finance (Sales Tax) Act, 1956, the Assam Sales of Petroleum, Petroleum Products including Motor Spirit and Lubricants Taxation Act, 1955 and the Assam Purchase Tax Act, 1967 from 1.7.1993. The Constitutional Safe-guard, in fact, was existent there in the new Act (The Assam General Sales Tax Act, 1993) by entry 54 List II (State List) in the Seventh Schedule of the Constitution. With the introduction of Assam Value Added Taxation Act, 2003 from 1.5.2005, the items of goods, as were there, were incorporated in the said Act. Contrary to the spirit and intention of the Assam Value Added Tax Act, crude oil, petroleum products and petro-chemical products, the items of first point tax in the State, continued to be administered by this Act without any separate base or footing, exceptions, whatsoever.  The items crude oil, petroleum,petroleum producuts with other ancillaries as well do not have any impact under the Goods and Services Act, 2017 and it has its independant way   of administration probably being carried on by the Assam Value Added Tax Act, 2003.

2. The Assam Agricultural Income Tax, 1939-from 1.4.1939. This is a tax levied   on the agricultural income of the agriculturists. This is seperated from the Indian Income Tax Act, 1961, which is a Central Act with measure of tax on income other than agricultural income. But  40% of the  income derived out of tea, an agricultural product,  is bifurcated and counted for levy of tax under the Indian Income Tax Act, as being the  alleged income derived out of trade. The State can levy tax on the remaining 60% of the income derived out of such production of tea, that too, subject to determination by the Income Tax authorities, a Central Government revenue wing. However, a disparity and discrimination besides over-riding the power of the State taxing authorities are being obviously continuing there. Not only that, the Income Tax Act made it mandatory that the income determined by the income tax authorities has to remain binding on the aggricultural income tax authorities without any power to call in question obviously thereby superseding the manadatory powers laid down in the Assam Agricultural Income Tax Act,1939. A funny aspect is, no doubt, transparent in the administration of this Act.
             This Act has now the base of entry 41 of List II (State List) in the Seventh Schedule of the  Indian Constitution.
3.The Assam Amusement and Betting Tax,1939- from 1.8.1939. A tax on Amusement , betting and on use of Cable Television  (being added subsequently). It continued to be operative even after the Constitution of India was adopted. The Constitutional safe-guard was obvious, as envisaged in entry 62 List II (State List) of the Seventh Schedule of the Constitution of India,.
        This measure of tax has been brought under the purview of the Goods and Services Tax Act, 2017 with effect from 1.7.2017.
Post independence period
         After the independence of India, but before the the Constitution of India came into force from 26.1.1950, the Government of Assam enacted the following taxation laws, as mentioned below :-
       1. The Assam Professions, Trades, Callings and Employments Taxation Act, 1947-  from 1st May, 1947. This tax measure was introduced on professions, trades, callings and employments. The  measure of income tax, adopted by the Government of India is a tax  on the net income derived out of income, while the taxes under this Act are levied on the professions, trades, callings and employments. The gross income has been designed as the measuring scale on such items  for levy of tax. Apparently, this is not a double tax on income. This Act is being administered independently by the State taxing authorities and it is well guarded by Article 276 read with  entry 60 of List II (State  List) in Seventh Schedule  of the Constitution of India.
  2.    The Assam Sales Tax Act, 1947 – from 24.12.1947. The measure of tax on the sales and purchases of goods,  was introduced in Assam with  exemption of tax on certain commodities. The tax  on transfer of property in  goods effected in course of execution of works contract and the goods handed over on lease for temporary use by the lessee  without any change of ownership, were  also brought under the  purview of this Act. This Act  was well safe-guarded by entry 54 List II (State List)of the Seventh Schedule of the Constitution.
        This Act was amalgamted with the Assam General Sales Tax Act,1993 with effect from 1.7.1993. There after, it was incorporated with Assam General Sales Tax Act, 1993 from 1.5. 1993 and then again with the Assam Value Added Tax Act, 2003 from 1.5.2005. Now with introduction of the Goods and Services Tax Act, 2017 with effect from 1.7.2017 this  is being governed by the said Act.

Post- Constitutional period
          After the Constitution of India, which came into force from 26.1.1950, the following taxation laws were enacted.
                1.The Assam Taxation on goods carried by Roads and Inland Waterways Act, 1954--  from 24.4.1954. This taxation law was introduced  on the carriage of tea and jute (on weight basis) by road or waterways.  This Act was declared ultra-vires by the Supreme Court of India, as the requisite assent was not obtained from the President of India  under Article 304(b) or 255 of the Constitution of India before  or after the enactment of the said law. The said Act was reintroduced to safe-guard the earlier collection of tax, but the Act finally ceased to be operative after 31.3.1962. This Act was enacted under the authority of entry 56, List II (State List) –Seventh Schedule of the Constitution of India.
           The loss incurred for inoperation of this Act, was compesated by enactment of the Assam Passengers and Goods Taxation Act, 1962, which came into force from 16.8.1962 (as is being discussed latter), based on the said consttutional footings.
          2.The Assam Finance (Sales Tax) Act, 1956- from 1.7.1956. This enactment of law was introduced for the purpose of levy of tax on the sales of some specific goods, which were (i)  imported from out side the State of Assam or (ii) manufactured or processed in Assam for the purpose of sales. This was done under the authority of Article 304(a) read with entry 54 of List II (State List) in the Seventh Schedule of the Constitution of India to avoid discrimination between imported and manufactured or processed goods. This reached to the same fate as in the case of the Assam Sales Tax Act, 1947, as discussed above.
             3.The Assam Passengers and Goods Taxation Act, 1962- from 16.8.1962- The requirement for enactment of this taxation Act  was partly discussed against the item  1 above (Viz the Assam Taxation of Goods carried by Road and Inland Waterways Act, 1954). This has the same Constitutional base as was in the said Act. This tax was leviable on the fare and freight of the passengers and goods, carried by roads and waterways on hire.
           The power of administration of this Act was transferred to the transport administration of the State in the year 1989.
           4. The Assam Urban and Immovable Property Tax Act, 1963- from 1.4.1963. Entry 49  List II (State List) of the Seventh Schedule of the Constitution of  India empowered the State Legisture  vide item ‘Tax on Lands and Buildings’ to enact such a law. The administration of this Act was solely extended for the Urban areas, which were under the Municipal or the Town Committees and it is leviable to the the owners of the lands and buildings on the rental value of such lands and buildings, determined by the Municipality or the Town Committee authorities.
       The power of administration of this Act was transferred to the Municipal and Town Committee authorities in the year1971-72, as it was more relevant to the said authorities.
           5.The Assam Electricity Duty Act, 1964-  from 1.4.1965-  Entry 53 Lst II (State List) of the Seventh Schedule of the Constitution of India empowered the State Legislature to levy tax on consumption or sale of electricity.With such power conferred, the Legislature of Assam enacted the Assam Electricity Duty Act, 1964 to levy tax on the generation, consumption and distribution of electrict energy. This tax is leviable in units.
        The Act is till now operative within the State of Assam.The users, consumers, in fact, are to bear the burden of this measure of tax.
       A section of persons in the electricity board is enjoying the benefit of free payment of rent for consumption of electricity. Likewise, in some temporary supply  of electricity for different purposes, the rents are being paid on lump sum basis. A pertinent question arises  whether duty, as due for consumption, use or supply are being paid to the State Coffer properly or not ?
           6. The Assam Purchase Tax Act, 1967- from 3.7.1971- The Constitutional back ground of this Act is the same, as is in the case of the Assam Sales Tax Act and other two laws on sales and purchases of goods within the State of Assam.  This measure of tax  was on the last point  purchase of  jute, raw hides and skins and paddy.  The  Act was originally given effect from 29.5.1968, but following the cases of litigation in the Court of law and disposal  thereof against the State further amendment of the Act was necessary .It was thus given effect from 3.7.1971 causing loss of revenue for three years.
    This Act as well  reached the same fate as in the case of other three Acts, namely; the Assam Sales Tax Act, the  Assam Finance (Sales Tax)Act and  the Assam (Sales of Petroleum, Petroleum Products including Motor Spirit and Lubricants )Taxation Act, 1955. 
          7. The Assam Tax on Luxuries  (Hotels, Lodging Houses And Hospitals Act, 1989- from 1.4.189 original Act and from 29.8.2009, the Hospital Act. The tax on luxuries has the same base like that of the amusement and betting tax, as envisaged in entry 62 List II (State List) in the Seventh Schedule  of the Constitution of India. Taxes are leviable under this Act on the accommodations, services and amenities provided in the Hotels, Lodging Houses and Hospitals (other than the Government Hospitals).
     This Act was merged with Goods and Services Tax Act,2017 with effect from 1.7.2017.
            8.The Assam Taxation (On Specified Lands) Act,- from 1.1.1990. This Act was introduced by virtue of power conferred to the State Legislature vide entry 49- List II  State List) in the Seventh Schedule of the Constitution of India.  Originally, this measure of tax was introduced on the lands taking into consideration the quantum of production of green tea leaves and extraction of coal.The weight pertaining to the production or extraction was a measuring Scale for determining the tax on land. The item coal was withdrawn from the tax scenario for a short time, but it was reintroduced. Other items, added in this respect ,were crude oil, natural gas, lime stones etc.
            The Act was challenged before the Hon’ble High Court and the Supreme court of India on the plea that it is not a tax on production of tea or extraction of coal, but it is a tax on the land. However, after a Memorandum  of Understanding signed by  the appellants and the State Government of Assam, the cases were withdrawn and the rates of tax were reduced from 50 paise to 18 paise per kilogram of tea produced. That, it was a levy of tax on land and not on the green tea leaves was confirmed by Hon’ble Calcutta High Court, in some identical case in West Bengal, but the  Government. Had nothing to do following the Memorandum of Understanding signed hurriedly.This Act is operating till now yielding a substantial amount of revenue to the State coffer, though there has been a shortfall, as no power of inspection and seizure of goods were incorporated in this Act.
            9. The Assam General Sales Tax Act, 1993-  from 1.7.1993. This has the same constitutional base, as has been discussed in the cases of the four taxation  laws in relation to the sales and purchases of goods in Assam. Following the dire necessity felt to mininimize the work load of administration, which involved time factor as well, these four  taxation laws  in relation to  the sales and purchases of goods operative in Assam, were amalgamated, consolidated and amended in Assam and the Assam General Tax Act, 1993 to give birth to this new Act for operation in the State of Assam. This has the same constitutional base as in othe sales and purchase tax Act.
       This Act was an ideal one and continued to be operative till the Assam Value Added Tax Act,2003 on 1.5.2005, which was subsquently replaced by the Goods and Services Tax Act, 2017  from 1.7.2017.
             10. The Assam Taxation  (On Luxuries) Act, 1997 –from 1.8.1997- The constitutional base of this taxation Act is identical to the Tax on Luxuries (Hotels, Lodging Houses and Hospitals) Act,1989, but the subject matter, mode and manner of the measure of tax is different. The tax was leviable on the  stock value of luxuries, namely, of Cherrots, Cigerettes, Cigar, Scented  Tobacco including Zarda, Smoking Mixture for Pipes and Cigerettes, Mill made Textiles and Fabrics. The operation of this Act got yield of a substial amount of revenue to the State.
          The Hon’ble Supreme Court of India by a judgment and order passed on 21.1.2005 declared the incorporation of the items tobacco and Gudka as ultra-vires and the Act thereafter ceased to be effective.
           11.The Assam Entry Tax Act, 2001- from 1.10.2001. The  Assam Entry Tax Act, 2001 was introduced under the authority of  Entry 52-List II (State List) in the Seventh Schedule of the Constitution of India. Originally, the aim and object of this Act was was to levy of tax on some specified goods entered into any local areas of Assam from the places outside the State of Assam for use or sale. The intention of this Act was to prevent a section of traders  or consumers to purchase goods in places outside the State of Assam  and to bring such goods into Assam for onward sale or  use depriving the State of its revenue.   After 18 days of coming into force of the said Act, the Act was, however, amended abruptly and apart from entry  of goods  into Assam, the entry of goods from  one local area in Assam to any other local area in Assam  were  made  liable to be taxed. Thus apart from the character of tax  on entry of goods, it was simultaneously designed with  the character of Octroi tax.
            A  portion of this Act was declared ultra-vires by the Hon’ble Gauhati High Court on  17.11.2006 for the constutional lapses, which decision was upheld on appeal by the larger Bench of the said Court. The Act was thus repealed and a fresh law on  Assam Entry Tax was enacted and given effect from 13.4.2008 with the power of the  State to realise the earlier taxes.
     With the introduction of the Goods and Services Tax Act, 2017 from 1.7.2017, this Act ceased to be operative.
       12. The Assam Value Added Tax Act, 2003-  from 1.5.2005- This is a new measure of levy of tax on the sales and purchases of goods. It is a tax leviable at every stage of sale made by a registered dealer to another registered dealer with the provision of credit of input tax paid at the points of purchase of such goods made, It is leviable at different stages like (i) sale of raw materials (ii) manufactured or finished products and (iii) the goods imported from the places outside the State of Assam and sales thereof. The issue of Tax Invoices in case of whole sale and Retail Invoices were made imperative in relation to the transaction. With the addition of value added tax, the prices of the commodities naturally went up. The dealers were benefitted, the State Government used to get the legitimate amount of tax,  but the consumers had to suffer multiplicity of tax following the merger of tax in each stage of sales (i.e value added tax). Though the aim and object of this Act was to provide transparency, but in the field of activities it was not as good,as it was assured to be. Though the items pertaining to Petroleum and petroleum Products were excluded from the purview of this Act,  the administration in relation to the said measure of tax were being carried  on under the said Assam Value Added Tax Act with the identical system of administration.  This was indeed contrary to the main ideology of the operative law .The Act was repealed following the introduction of the Goods and Services Tax Act, 2017, while petroleum, diesel etc. maintained their own base. 

The Central taxation laws
            1. The Central Sales Tax Act, 1956-  Prior to 5.1.1957, there was no measure of tax on the sales and purchases of the goods made in the course of inter-State trade or commerce. Article 269 (3)(g) read with entry 92A of List I (Union List) in the Seventh Schedule of the Constituion of India empowered Parliament to make laws for  levy of tax on thes sales or purchases of goods made in the course of inter-State trade or commerce.  Parliament enacted the Central Sales Tax Act, 1956, which  came into force from 5.1.1957. The items of goods, which were taxable under State taxation Laws were as well to be levied tax under  the  this Act, when sold in the course of inter-State trade or commerce. Two categories of the rates were persistant, namely; for sales to the registered dealers under the Act and sales  to other than the registered dealers. The transfer of stock of goods were not be taxed under this Act subject to the conditions and restrictions , as imposed. The State Governments were empowered to grant exemption of tax on certain commodities or to certain areas under the provisions of this Act.
      This taxation law ceased to be existent following introduction of the Goods and Sevices Tax Act, 2017 from 1.7.2017.
         2. The Goods and Services Tax Act, 1917- from 1.7.2017- The Government  of India gave a new thought to make restructure of a series of the Central and State taxation Acts not only in respect of sales  or purchases the goods and other ancillaries,connected therewith, into one Act under a single tax net as a measure of simplification of administration as well as growth of economy for the entire the country as a whole. The central taxes intended to be merged were the Central Excise Duty; Additional Excise Duty; Exice Duty levied under the Medicinal and Toiletories Preparation; Service Tax; Additional Customs Duty commonly known as Countervailing Duty; Special AdditionalDuties of Customs ; Surchage and Cess; Central Sales tax, while of the States, the Sales tax, Entertainment tax, Luxury tax, Lottery, Betting and Gambling tax , Cess and Surcharges, Entry tax.
        A series of items of services was incorporated in this new Act for the purpose of levy of tax.
      There had been wide dispute and dissention over the question of introduction of this consolidated tax measure, but after wide deliberation, ultimately,  a consensus was arrived at and it was  introduced unanimously.
      The Constitution of India was amended  with the requisite Articles and the entries of the Schedules thereof before the enactment of the Goods and Services Act.
       The Goods and services Act has been designed into three aspects, as below
          (1)State Goods and Services Act (SGST)-  enacted to be administered by the State authorities in the line of the Central Goods and Services Act;
           (2) Central Goods and Services Act (CGST)- enacted to be administered by the Central  authorities;
            (3) Inter State Goods and Services Tax Act (IGST)- enacted to  be administered by the Central authorities in the matter of inter-State deals.
           Though  two years have  been over after implementation of the Goods and Services Tax Act, it is yet to attain maturity and the common people are yet to be made aware of the pros and cons of this measures of tax. This tax measures did not yield a very positive result and according to media report, the collection of revenue is now in a lower side.
         The State taxation laws, as exhibited above, which were not incorporated in the Goods and Services Tax  are continuing their operation and administration independently, as before.

         The ‘Goods and Services Tax’ is a self-designed omnibus with multifarious Central and State apparatus and components, propelled by designed engine with self-moving arrangements, having its full control over the methodical journey, which is rarely be astrayed or cracked in reaching the destination. Such designed omnibus may not, however, always ensure safe and proper  journey and to yeild a positive result due to unhealthy apparatus and irregular ingredients and components. The outside vicious atmosphere may also influence adversely in the loading components. Our suspicious vision is that there may be  foul play in the process. ‘Good will and bad will’; ‘honesty and dishonesty’ may in either way influence the race. ‘Evasion and avoidance are ‘brothers twine’. Our intention is to say that full  sphere of honesty and trustworthy must prevail upon the operating traders in the course of their journey of trades and services activities.
        The law making authorities have given due stresses on the on the honesty, integrity and trustworthyness of the traders and discouraged the functions of the ‘Inspector Raj’, the field officers  on the plea of the alleged high handedness and corruption. Even if any raid is to be undertaken, that is also to be done only with the prior orders or approval of the Joint Commissioner of Taxes, normally remaining far away from the spot in such process, there will be a time gap and the whole exercise may be foiled and frustrated . The law, on the other hand, maintained utter silence on the question of erection and operation of the check posts, which played a pivotal role in preventing, detecting and arresting evasion of taxes in the erstwhile law regimes. Accordingly, all check posts have been made effective making way for free movement of the goods.’The earth would have been a heavenly abode had there been no evasion or avoidance of taxes’. But whether it can be rightly presumed or assumed?
          Some raw materials, like jute, superi, tea leaves as well as timbers, bamboo, cane and furniture thereof besides coal, dhania, jeera, haldhi, ginger, hides and skins and bone of animals, raptiles  etc. which are the  non-excisable commodities use make clandestine movements from one place to another and from one State to another on sales or sock transfer, whatsoever, we believe, hardly pay tax righteously and legitimately. One can- not assure that the finished products derived thereof are being accounted for properly to be incorporated in the tax net. The  reports of unaccounted movement of coal and detention thereof are frequently published in the news media. Functioning of unauthorised syndicates and collection of unathorized  and illegal tax are also gaining the momentum. ‘Necessity is the other of invention’. So, tax evader or avoider will try to make new ways and means to evade payment of taxes. This vital point requires a proper review by the law making and law enforcing authorities.  
           At the conclusion, we add two famous sayings-
           Frederick the Great of Russia- “No Government can exist without taxation. This money must necessarily be levied on the people, and grand art consists of levying so as not to oppress.”
        Kautilya or Chanakya- “ Thus the king shall first reform the administration, by punishing appropriately  those officers, who deal in wealth, they duly corrected shall use the right punishments to ensure the good conduct of the people of the town and countries.”

Mrinal Kanti Chakrabartty
R.G. Barua  Road, 10- Lakhimipath’
Guwahati-781-024 (Assam)

Respected Readers ! I welcome you all.

I used to project my writings in this block since a long time back, Suddenly, an unwarranted set-back cropped up. I suffered from an acute heart ailment, consequent upon which, I had to undergo an open heart- surgery at  Kolkata. I am now about to complete 82 years of age and naturally,this set-back can-not be completely repaired or restored. Of late, though I continued to write  articles in English and Assamese for publication in news papers, magagines and journals, I utterly neglected to  take resort  to this inter-net platform for makinging a vision by the interested readers. I now dare to renew this exercise and request our respected readers  to spare time to go through  the same and to record their valued  comments/views, as may be warranted on the same.

With regards.
Mrinal Kanti Chakrabartty
R.G.Barua Road, Lakhimipath,
Guwahati-781-024 (Assam)

Friday, June 8, 2018

New thoughts of mind ….

A man expresses his vision through writings. Sri Mrinal Kanti Chakrabartty, a retired Tax officer expresses from time to time his thought of mind through writings. In this process, he published as many as twenty books of different tastes. Presently, he will bring out  two books titled as “ Biwartanar Ruprekha “ and “ Chinta Taranga “ which will be made available before the august readers. All are request to extend their kind help and co-operation in his noble mission.

Saturday, October 1, 2016


GST, an abbreviation of the words Goods and Services Tax, is proposed to be introduced in the Indian sub-continent, replacing the Value Added Tax Regime (VAT regime) currenenly opertive since April, 2005. The vision on GST could not go ahead since last 13 years, as there was lack of consensus amongst most of the Indian States on the apprehension that the States’ fiscal auonomy of the States would be seized by the Government India (Central Govt.) to make them cipher. Floods of dialogues yielded, a consesus barring a few States and the foundation of such new project was built up with the 122nd amendment of the Constitution of India (Constitution). The Central Govt, in the meantime, drafted out the Model  GST Law on the procedural and administrative aspects, but the legal and technical aspects, pertaining to the liability, levy of tax and other allied matters, are yet to be sorted out by the GST Council, set-up by the Central Govt. with the Minister of Finance, as its Chairman and the State Finance Ministers and others, as the members. The Council is now on the heels on a war footing devoted exercise to give its birth to the GST Act on 01.04.2017. The Council has already finalized the taxable quantum to accrue tax liability in respect of the North Eastern States at Rs. 10 lakhs in place of Rs. 6 lakhs, as at present and Rs. 20 lakhs in respect of other States. The rates of tax and other ancillary matters are still under examination. The marathan trainings to the law operating machineries are being imparted, batch by batch, in full swing,
        GST, in fact,  is prospective measure to levy a single consolidated tax on the sales of the goods and the services. It is designed as an admixure of the Central and States laws.   The central laws are (i) the Cenrtal Excise Duty Act, (ii) Additional Central Excise Duty Act (iii)Excise Duty levied under the Medicinal and Toiletries Preparation Act (iv) Service Tax Act, (v) Additional Customs Duty, commonly known as the Countervailing Duty- levied under the Customs Act, (vi) Special Additional Duty of Customs under the Customs Act, 1962,(vii) Surcharge and (viii) Cess, while the State laws are  (i) The Value  Added Tax Act (VAT Act), (ii) The Sales Tax Act, (iii) Amusement and Entertainment tax Act, (iv) Luxuries Tax Act, (iv) The tax on lotteries and betting. (v) Surcharge (vi) Cess and (vii) Entry Tax. The law on sales tax will include as well as Central Sales Tax Act, 1956 (Central Act).
      GST law will be simple and uniform measure of tax to provide relief to the industrialists, traders and consumers from multiplicity taxes. Unlike the VAT Act, the consumers will get the benefit of deduction of tax paid on previous purchases made making way of arresting  price rise to a great extent. The commodities like, crude oil, petrol oil, diesel oil with other petroleum products and liquor will be excluded in the GST net-work and the taxability of these goods will be governed by a separate road map with an independant tax-net, as was existent prior to 01.07.1993. In such  a case, in order to govern the inter-State sales and stock transer of such goods, the continuance of the Central Act may be imperative..   
      The proposed GST regime will have three tier system, that is, three administrative laws will be there. (1) SGST  Act (State Goods and Services Tax Act)-to levy tax under the State Goods and Services Tax Act), (ii), CGST Act  (Central Goods and Services Tax Act)- to levy tax under the Central Goods and Services Tax Act), (iii) IGST (Integrated Goods and Services Tax Act) to levy tax under the Integrated Goods and Services  Tax Act (Inter-State Sales), The IGST  and CGST Act  will be enacted by Parliament, while SGST Act by the State Legislatures. The  taxing authoritiies under the IGST & CGST Acts will be appointed by the Board ( the Central Board of Excise and Customs, constituted under the Central Board of Revenue Act,1963)while the State Govt. will  appoint the SGST officials.
         The prolonged system of the goods, declared to be of special importance in the course of inter-State trade or commerce, providing the tax  benefits and other facilites, will be dismantled to make equal stature in the tax scenario. The consolidated rate of tax will be uniform and within the range of 20 to 22 paise in a rupee. The consolidated rate of tax may be much lower, which is now in and around of 30 paise. The present mode of stock transfer of goods to other States with tax free movement will attract tax-net, but the formulation is to be waited. The bogus deals of prevelant stock transfer of tea, coal, bamboo, superi etc. in Assam may require to bid a good bye. The GST is a methodical and chain system of deals, but the chrnonic long continued practice of avoidance or evasion of taxes with the nexus at different levels can not be ruled out. The functioning of the Vigilance Wing and Check Post machinery will, therefore, have a dire necessity for succssful implementation of the projects.
              Assam is mainly a consuming State. The recurring cost in course of movement of goods viz. transporting cost, labour cost, gratification at different angles, abnormal profit, tax elements may yield heavy price hike. The quantum of tax, collected will be lesser, as the earlier taxes paid will be admissible for credit or reimbursement. In 2015-16, the total collection of tax under the State taxation department was Rs.8614.00 in which Rs. 7641.00 includes  VAT & CST, while Rs. 567.00 is Entry tax.  VAT and CST amount of Rs.7641.00 includes about 33% of Crude Oil and Petroleum etc. tax, that is, Rs. 2521.00. The other tax on sales stands  Rs.5120.00. While addiing Rs. 567.00 (Entry tax), Rs.19.00 (Amusement tax) and Rs. 10.00 (Luxury tax), it will come to s 5716.00. This was the collection of tax revenue in 2015-16 of the respective Acts proposed to be transferred to GST. If the collection of tax on the proposed GST measure go up, this is well and good; otherwise, the State will have to remain at the mercy of the Central Govt. for compensation, as assured. In fact, this may be a far cry.
          GST  will, no doubt, bring a drastic economic evolution, It is a simple, uniform and  is anticipated to be transparent. However, if the economy of the poor State like Assam gets any set back, the hope and asipiration of the people of Assam will be frustrated and it may turn to a catastrophe. We are to wait and see.
                                                                                      (Mrinal Kanti Chakrabartty)
                                                                 R.G.Barua Road, Lakhipath,  Guwahati-781-024

Saturday, April 16, 2016

Smooth Revenue Administration Yields Plenty Revenue Augmentation

‘Taxation’ is the main source of revenue of Assam. The administration of  as many as nine taxation laws including the tax on the sales and purchases of the goods, namely; the Assam Value Added Tax Act, 2003 (VAT Act) is carried on by the officers of the taxation department. The said officers, on the other hand, have as well  been empowered to carry on the administration of the Central Sales Tax Act, 1956 (Central Act), a Government of India Act.
Tax on sales and purchases of goods
The quantum  of  tax, collected by the taxation department of Assam in the years 2013-14 and 2014-15 was Rs.7719.62 and Rs. 8177.16 respectively out of which the tax on the sales and purchases of goods under the VAT Act and the Central Act were, as below:

Year                                       VAT                            Central                      Total
2013-14                     Rs. 6288.54 crore                 Rs.559.47crore    Rs.6848.01crore
2014-15                     Rs. 6859.28     ,,                    Rs. 492.01 ,,        Rs. 7351.29  ,,

The tax, collected on the commodities like petrol, diesel, crude oil and other petroleum products, as were included above are, as below :

Year          Commodities           VAT                         Central                        Total
2013-14           Petrol               Rs. 410.84Cr.              Rs.22.31 Cr.                Rs. 433.15 Cr.
                        Diesel               Rs. 702.34 ,,                Rs. 88.91,,                   Rs. 791.25 ,,
                        Crude Oil        Rs. 465.49   ,,                     =                            Rs. 465.49 ,,
                        Others             Rs. 369.57  ,,                Rs. 27.31 ,,                  Rs. 396.88  ,,
                        Total               Rs.1948.24 ,,              Rs.138.53,,                 Rs 2086.77,,
2014-15           Petrol               Rs. 451.41 ,,                Rs. 17.22,,                   Rs.468.63
                        Diesel               Rs. 752.91,,                 Rs. 96.68,,                   Rs.849.59,,
                        Crude Oil        Rs. 434.01,,                       =                             Rs.434.01,,
                        Others             Rs. 379.41,,                  Rs. 28.32,,                   Rs.407.73 ,,
                        Total               Rs. 2107.74  ,,             Rs.142.22,,                 Rs.2149.96,,
The taxes on the above commodities are reckoned as 27.03 and 26.78 percent respectively  of the  taxes, collected on the sales of goods, as  appended above.
Tax under the other taxation laws
The taxes collected under other taxation laws, administered by the taxation department of Assam are, as below :
Names of the taxation  laws                          2013-14                       2014-15
Entry tax                                               Rs. 404.69 cr.                          Rs. 382.88 cr.
Professions, trades, callings
& Employment                                     Rs. 186.36 ,,                            Rs. 191.38  ,,
Electricity Duty                                     Rs. 40.54 ,,                              Rs. 44.00,,
Amusement                                          Rs. 38.93,,                               Rs. 44.37,,
Luxury (Hotels, inns &
Private nursing Homes)                         Rs. 8.67 ,,                                Rs. 10.55 ,,
Specified Lands                                    Rs. 102.43 ,,                            Rs  101.66
Agricultural Income tax                         Rs. 89.99,,                               Rs. 51.07
                        Total                           Rs. 871.61,,                            Rs.  825.91

Uprise of tax collection
The collection of tax is incremental and it is always in an ascending position. A study on the collection figures will speak for it-self :-
  Year                                                                  Quantum of tax collection
  1959-60                                                             Rs. 5.24 Cr.
  1969-70                                                             Rs 18.05,,
  1979-80                                                            Rs. 59.01,,
  1989-90                                                            Rs. 288.02,,
  1999-2000                                                        Rs. 949.70,,
  2009-2010                                                        Rs.4404.91,,
It is is expected that the collection of tax revenue will exceed Rs. 10,000.00 within a couple of years. There has been the fast growth of industry in the State of  Assam. Roads, bridges and railways and various other construction projects have as well been undertaken and some are running in full swing.  The tax revenue in Assam is thus on the way of fast up-rise.
Evasion of taxes
It also, on the other hand, a gospel truth that mounting evasion of taxes under the various taxation laws of Assam have simultaneously been gaining the momentum. The numbers of the cases of detection of such evasion of taxes seem to be very meagre. The following projection will make the position very clear:

Year          Numbers of cases detected     Amount of tax, penalty realized
2013-14          2817  Nos.                                        Rs. 15.10 Cr.
2014-15           2577   ,,                                            Rs. 16.41 ,,

Numbers of assessees under different taxation laws
 The  numbers of assessees under the nine taxation laws operative in Assam are :
1. VAT                                                                             1,39.932  Nos.
2. Central tax                                                                  44, 401  ,,
3. Entry tax                                                                                 5,772 ,,
4. Professions, trades, callings & Employment  tax              67,022 ,,
5. Electricity Duty                                                         629 ,,
6. Luxury tax (Hotels, inns, private nursing home)                557 ,,
7. Amusement tax                                                          220 ,,
8. Agricultural Income tax                                                        771 ,,

It can not be, however, agreed that all the tax payers are honest and perfect without being associating  with or indulging in any tax -dodging activities. The amount of taxes, as shown realised above, are only 0 .19 and 0.20 percent of the total amount of tax collected. The above projected amount, however, included three times of penlty imposed on the evaded taxes. So, the element of tax is very small.  Our firm conviction is that the episode of tax dodging activities are going on in full swing and there is dearth of  of checking activities to apprehend and arrest the clandestine ways of  evasion of taxes.
Cadre strength
       The cadre stregth of the tax machineries are, as below :
1. Commissioner of Taxes :                                                 1 No.    (from I.A.S.cadre)
2. Additional Commissioner of Taxes :                  2 Nos  (from  departmental cadre)
3. Joint             ,,                ,,                          5   ,,                ,,        ,,
4. Deputy         ,,                 ,,                          15   ,,                ,,        ,,
5. Assistant       ,,                 ,,                        25   ,,                 ,,         ,,
6. Superintendents of  Taxes                                    166  ,,                  ,,         ,,
7. Inspectors of Taxes                                               343  ,,                 ,,         ,,
(The Agricultural Income Tax Officers are deputed to administer the Agricultural Income Tax Act, 1939  from the cadre of the Superintendents of Taxes by rotation.)
The taxation department is thus equipped with adequate man power to carry on the revenue generating administration in the extensive area of functioning for profound activities.
Functioning of the tax officers
(i) The inspectors of Taxes are to– (a) make survey in respect of each of the assessees, (b) maintain a mirror-like survey register, (c) collect particullars from different sources, (d) inspect the business premises and godowns  of the assessees on the basis of specific information, (e) undertake search operation and seizure of the suspected books of accounts and goods, under the authority of search warrant, obtained from the competent authority, when the circumstances are  so warranted and (f) inspect transporters’ godowns, goods vehicles and take identical actions, where there is evasion of taxes.
The Inspectors  of Taxes are, in fact,  to play the pivotal role in the matter of revenue administration of the taxation department.Their mode of functioning are unlimited, but in such exercise, discipline ought to be maintained without projecting any high handedness or autocracy and thereby harassing the tax-payes to make them disgruntled.
(ii)The Superitendents of Taxes and the Assistant Commissioners of Taxes are to exercise the quasi-judicial functions in the matter of the administration of taxation laws. Their primary duty is to (a) make registration to a dealer, liable to pay tax, (b)realise security money, when they feel it necessary to do so with a view to safe -guard the interest of the revenue, (c)  make scrutiny of the periodic returns, (d) make  hearing of assessment proceedings, (e) make assessment, when there is compliance by the assesses, (f) make best judgment assessment, when there no compliance by the assessees.
In the process of assessment, hearing of the penal proceedings, which are quasi-judicial in nature,  the  consideratioin of the field reports (Survey & inspection) and other information, received or collected from different sources, are imperative.In all cases, there must be a judicious approach. Both the cadres of the above officers are to exercise the identical powers, but they are of separate ranks with separate status. Such officers have the power of the civil court under the Code of Civil Procedure in the field of administration.These two  cadres of  officers are as well empowered to undertake the field activities besides supervising the works of the Inspectors of Taxes and bear the burden of  full responsibity of the revenue administration of the area.
Recovery of arrears
A section of the Superintendents of Taxes are entrusted to work as a Recovery Officer and to exersise the powers under the Assam Land and Revenue Regulations, 1886 and the Bengal Public Demands Recovery Act, 1913 for the purpose of  recovery of the arrear dues. An active co-operation from the tax authorities of the concerned area ought to exit for successful recovery of the arrear taxes.
(iii) The Deputy Commissioners of Taxes are the zonal officers-(i) They are responsible for– (a) supervision of the works of the Inspectors of Taxes, Superintendents of Taxes and the Assistant of Commissioners of Taxes of the units and the zones; (b) inspection of unit offices and check post offices, (c) inspection of field works and check post works, (d) exercise powers of suo-moto revision on the erroneous orders, passed by the officers under him, while any such orders are found to be prejucial to the interest of revenue, (e) maintain liaison with the Commissioner and other superior officers in the field of administration.
(iv) The Deputy Commissioners of Taxes (Appeals), an officer authorized by the Government from the cadre of the Deputy Commissioner of Taxes.-They are to-(a) hear appeals, filed by the aggrieved dealers aassees any orders passed by the Superintendents of Taxes and the Assistant Commissioners of Taxes and deliver judgments by administering the quasi-judicial proceedings.
(v) Joint Commissioners of Taxes– They are responsuble to – (a) supervise the works of the zonal officers, (b) to hear revision petition filed by the aggrieved assessees (c) to assist the Commissioner of Taxes in different ways of administration, as allotted or assigned.
(vi) Additional Commissioners of Taxes- As the semi head of the department, they are to– (a) assist the Commissioner of Taxes in different ways, as allotted or assigned, (b) maintain co-ordination with unit, zonal officers and also with  the Government, (c) hear revision petition, filed by the aggrieved assessees.
   (vii)Commissioner of Taxes is a member of the I.A.S. cadre deputed to carry on the administration of the taxation department with the officers appointed to assist him. He is over all responsible for smooth performance of  the revenue administration of the department. He delegates his powers to the officers, appointed to assist him right from the cadre of the Inspectors of Taxes to the Additional Commissioners of Taxes. The delegatation of power rests the prerogative of the Commissioner.
Outstanding dues
The outstanding dues, as stood on 01.04. 2015 are as below :
1. VAT/repealed AGST & CST-                                   Rs. 2760.38 Cr.
2. Entry tax    -                                                               Rs. 210.86   ,,
3. Professins, trades etc. tax -                                      Rs. 2.33   ,,
4. Amusement  tax -                                                      Rs. 0.20  ,,
5. Luxury tax -                                                                Rs. 3.62  ,,
6. Specified Lands tax -                                                Rs. 1,088.22 ,,
7. Agricultural Income tax -                                         Rs. 55.22 ,,
      Total -                                                                      Rs. 4,120.83,,            
The quantum of arrears under the sales tax laws and the specified  land laws is very heavy. The aggrieved assessees take resort to the legal forum, when they feel that levy of tax or imposition of penalty are arbitrary and prejudial to their interest. If the recovery proceedings are stayed and the disposal of the cases are delayed, the accumulation of arrears becomes automatic.
Enforcement or Vigilance wing
Almost in all States of India, apart from the general wing ( Survey, inspection, assessment etc. wing), an Enforcement or a Vigilance wing has been functioning, side by side, to apprehend, arrest and prevent evasion of taxes in their respective States. In Assam, an Enforcement or a Vigilance wing was functioning since the year 1964 to 1983 at the unit level, zonal level and the central level. Following some complaints of mal-activities and highhandedness, the  Government of Assam withdrew the said wing in December, 1983 and it remains inoperative since last 33 years.
The officers might be bad, but the administrative machineries were certainly not bad. They could have controlled delinquent officers.If any faulty activities were substantiated, coersive measures could have been taken. The withdrawal of the wing was not at all desirable. It was a destructive measure. A rumour was prevailing that the wing was made inoperative with the nexus of a section of businessmen, politicians and administrative bosses. Such alleged mal-practices, high-handedness equally exist in other departments including some working wings of the police department. The officers were punished, but the wing was  never demolished or dismantled. This instant exercise was, no doubt, detrimental to the interest of the revenue. The said wing, therefore, should be revived and allowed to be functioned under the direct supervison of  the Commissioner of Taxes.The department is equipped with adequate man- power. The sincere, efficient, energetic and tactful revenue minded officers may be identified, selected and entrusted for the purpose.  The tenure of service may be limited for one year the maximum.
Bureau of Investigation (Economic Offence)
 During the ‘period of Internal Emergency in 1975, as a part of 20 Point programme of the then Prime Minister of India, a Bureau of Investigation (Economic Offence) was set-up in Assam to apprend the economic offenders under various departments like forest, excise, transport, taxation, weight and measure etc. The said wing is still functioning presently under the stewardship of  an Additional Director General of Police, but the performances of the bureau are not upto the mark. In the case of taxation wing, there is acute dearth of man power. Even those tax officers deputed toin the bureau, they have not been equipped with requisite powers to check the  goods vehicles, transporters’godowns, railway godowns or to apprehend the suspected goods vehicles on the road. The works of the bureau have thus to  be performed in a half-hearted manner. When augmentation of revenue is the main aim and object of the Goverment, it is imperative that the drainage of revenue should be plugged  and the modus-operandi of tax evaders are to be  be averted with stern, but hygienic way of action.
Check posts set-up
The Government of Assam  set-up numbers of check posts including ten established check posts at the inter-State border area. None of the bcheck posts except the Composite Check Post at Damra( Sreerampur) has proper checking yard for  the purpose of unloading of the goods vehicles, carrying unacounted and suspected goods with adequate labour components for the purpose of checking.  The check posts have not been equipped with any ‘Way Bridge’ for weighing the vehicles, suspected to have carried loads above the disclosed weight. The lack of proper infrastructure has caused immense set-back towards proper functioning as well to to achieve proper revenue yields in such revenue generating venture.  The officers posted at the check posts on many a occasion  have to work under political and administrative influence and pressure besides the threats of anti-socials and ultras.  Unless the improved ways of functioning of the check posts are designed with  requisite infrastructure,the odds will continue sine-die.
The collection of revenue in the ten check posts were Rs. 118.17 crore in 2013-14 and Rs. 59.70 crore in 2014-15. The shortfall, as learnt, has been due the restriction imposed on the movement of coal. Out of the non-coal moving check posts, the Boxirhat check post topped the list of collection with tax collection of Rs. 2.55 cr. and Rs. 2.42cr. in 2013-14 and 2014-15 cr. respectively.  There is immense scope to increase revenue  at the Khanapara check post at Jorabat, but for the  presentgeographical location, absence of requisite man power and lack of proper infrastructures, acute set-back persists towards its proper functioning.
Ways of evasion of taxes
A section of the tax dodgers generally maintains the moto-‘ Necessity is the mother of invention’. They work out the new art of evasion of taxes, when one is foiled or frustrated. The ways of evasion of taxes are of manifolds- (a) import of unaccounted and mis-classified goods, (b) import of goods in fake names with false addresses, (c) suppression of goods in the challan manifests, (d) import of goods by declaring under weights, (e) import of goods declaring under valuation, (f) import of goods in the name the traders of other neighbouring  States, but consuming in Assam by adopting the fraudulent means, (g) fake deals in the name of export and import of goods to and from Bhutan (h) misuse of the concept of sales made during the movement of the goods from one State to another by adopting the concept of pre-determined sales, (i) maintenance of parellel sets of accounts (duplicate sets), credit accounts, bunches of loose sheets, symbolic transactions (j) maintenance of hidden accounts in the computer, (k) hoarding of unaccounted goods in some undisclosed godown and business premises.(l) import of goods through on line transactions direct (m) inter- State sales designed as stock transfer by manipulation  and suppression of actual documents, (refers  mainly the  garden tea  and partly coal, jute, superi, bamboo,hides and skins), (n) stock transfer of petroleum, diesel etc. through pipe lines in a unilateral way without due adherance to the provisions of rule 4(4) of the Central Sales Tax (Assam) Rules and the Form ‘F’
A clear concept of  law, dedication and enthusiasm to work with the clinical visions for generation, mobilization and augmentation of revenue obviously will provide substantial yields.
Tax on entry of goods
 A measure of tax on the entry of goods was adopted in Assam , namely; the Assam Entry Tax Act, 2001 (Entry Act) from 01.10. 2001 for the purpose of levy of tax on the goods imported (a) from places out side the State of Assam to a local area of Assam or (b) from  one local area of Assam to another local area of Assam  for consumption, use or sale in Assam. No tax liability to pay  entry tax accrues on the goods,  imported from places out side the State of Assam, if such goods are (a) sold in Assam and makes payment of VAT to the satisafaction of the taxing authority, (b) sold in the course of inter-State trades or commerce ,(c) moved to places out side the State of Assam on stock transfer , (d) sold in the course of export out of the territory of India.
Following the  restriction imposed in Article 286(1)(b) of the Constitution of India that no tax is to be levied by the States on the sales or purchases of goods taking place in the course of import of any goods from out side the territory of India, the tax on such import under  Entry Act was exempted. Suddenly, on 18-12-2014, the  Legislature of the State of Assam introduced a measure of tax under the said Act in respect of entry of crude oil, imported from the places out side the territory of India to the State of Assam. It could learnt that such a measure of taxes was adopted, on the pretext that, the entry tax measure  is related to the entry of the goods and not on the sales or purchases of the goods, so imported. This seems to be controversial. The measure of entry tax in such case ought have been taken earlier and the goods other than  crude oil ought to have been brought under purview of the entry tax-net.
The  revenue derived out of the entry tax, are as below;
                                           Year                                     Tax
                                         2011-12                                 Rs. 512.75 crore
                                         2012-13                                 Rs. 364.14  ,,
                                         2013-14                                 Rs. 404.69   ,,
                                         2014-15                                 Rs. 382.44 ,,
The collection of tax seems to have a downward trend.  A good number of industrial and construction projects have been undertaken  in Assam and many of them are in the process for which the import of machinery, materials etc. are being made regularly for use or consumption. The quantum of entry tax, therefore, ought to have been in a higher side. It requires examination whether a portion of such goods are being shown imported in the name of the neighbouring States, but delivered and consumed in Assam by diverting the course of trade by way of manipulation of papers and documents.
Tax on Specified Lands
 A mesure of tax on the tea gardens lands and coal mining lands by enactment of the  Assam Tax (on Specified Lands)Act was introduced on 01.01.1990. The taxes on coal mining lands was, however, withdrawn from 01.02.1994. Again, a  measure of tax on coal mining lands, lime stone mining lands, crude oil mining lands and natural gas bearing lands  were introduced 29.12.2004 with a retrospective effect from 01.01.2004. The collection of tax was, as below :
                    Year                                                                Tax
                 2003-04                                                         Rs. 56.94 crore                             
                 2004-05                                                         Rs. 45.29  ,,
                 2006-07                                             Rs. 53.18 ,,
                 2009-10                                                         Rs.  78.87 ,,
                 2012-13                                                         Rs.  99.72 ,,
                 2013-14                                                         Rs. 103.43 ,,
                 2014-15                                                         Rs. 101.66,,
The Economic and Statistic Department of the Government of Assam recently published a booklet on the Economic Survey of Assam,2014-15, based on the survey made in various fields of activities for the year 2013.
An analysis on the Survey Report
It was disclosed in economic survey report that –
A. (i) the total numbers of tea garden in Assam were 69,220 Nos (big and small).  [It also could be learnt from other sources that there are about 750 nos industry-based tea gardens in Assam, which were included above.]
(ii)Total area of tea garden lands is–                           3, 22, 000 Hector
(iii)Total production of tea is–                         62, 90, 50,000  Kilogram (Kg )
The yields of tea (black tea) was from the industrial processing activities of the green tea leaves produced. The ratio of production of black tea leaves from green tea leaves is 4.5 Kg : 1 Kg. The production of green tea leaves in the tea garden lands can, therefore, be calculated out of blkack tea as- 62,90,50,000 Kg  X 4.5 Kg = 283,07,25,000 Kg.. The tax on the tea garden lands is calculated on the annual production of  the green tea leaves produced. The rate of tax  on green tea leaves producedced varies from 0 .25 paise to 0.32 paise per Kg. Even if the minimum rate of tax is calculated @ 0.27 paise per Kg, the amount of tax comes upto Rs. 76,42,95,750.00.
 B. The booklet further  projected the production and use of the lands of following categories :
   (a) coal mining lands : Coal extracted -           6,65,000  Metric tons
   (b) lime stone mining lands:  Lime stoneextracted-       2,08,000     ,,      ,,                    
   (c) crude oil mining lands:  Crude oil extracted-            47,18,000    ,,       ,,
   (d) Natural gas bearing lands: Gas used-                26, 55 ,00 ,000 Cubic meter
The figures, published by the Economic and Statistics department, Government of Assam on the basis of economic survey must have some rigid base and these are clear and authentic.
The rate of tax on coal mine lands is Rs. 50.00 on the extraction of per metric ton of coal, on lime stone lands is Rs. 10.00 on the extraction of per metric ton of lime stone, on crude oil lands is Rs. 200.00 on the basis of extraction of per metric ton of crude oil, while on natural gas bearing lands is Rs. 100.00 on the use of per thousand cubic meter.
C.    The tax liabilities, therefore, come up, as below :-
(i) Coal
    (6,65,000 X Rs. 50.00                                  = Rs. 3, 32,50,000.00
(ii) Lime Stone
      (2,08,000X Rs. 10.00                                 = Rs. 20,80,000.00
(iii) Crude Oil
     (47,18,000 X Rs. 200.OO                           = Rs. 94,36,00,000.00
(iv)    Natural Gas
 (26,55,00,000 X Rs. 100.00)               =  Rs.  2, 65,50,000.00
         1000                                               Rs.100,54,80,000.00
The tax element, as already worked out in respect tea leaves oif thergarden lands was
Rs. 76,42, 95, 750.00. If the above amount of tax Rs. 100,54,80,000.00 is
added to the same, the total amount of tax comes to Rs. 176,97,75,750.00 (say; Rs. 176. 98). The collection of tax on the specified lands, as per tax department record for the year 2014-15 was shown at Rs. 101.66. So, in consideration of both the Government records, a conclusion can be drawn up that there was an under payment of tax Rs. 176.98- Rs. 101.66 = Rs. 75.32 crore only.
Shortfalls existed
The Specified Lands Act suffers from various lacunae. First, there is no provision of survey, inspection of accounts in the field. Second, no provisions  for search of the premises, yards and godowns, seizure of the books of accounts and goods is existent. Third, the assessees (specified land owners) were given the liberty to pay tax uniliterally out of their own without any inspection or checking. Fourth, in the production of green tea leaves and use thereof in the industry along and the out turn derived can not be verified in a methodical way. Fifth, sometimes disparity or discrepancy, may exist between the figures of production of green tea leaves and that of manufactured black tea, but the same can not be verified and ascertained . Sixth the returns submitted before the State taxing authority are never verfied with the statements/returns submitted to the central excise authority to make counter check and to ascertain the accuracy.
Forthese shortfalls, therefore, under payment of tax.
Conflicts over taxability on sales of green tea leaves
Green tea is an exempted goods under the sales tax laws of Assam since 1947. No tax was leviable at any time on the sale or purchase of such goods. Even entry 41 of the First Schedule of the VAT Act makes it clear.  Strangely enough,  a provision has been inserted in the Specified Lands Act from 12-02-2009, which reads, as below :
“ Section 6A-Deduction of tax at source- Every person engaged in manufacture of tea and responsible for making any payment or discharging any liability on account of any amount purported  to be the full or part payment of sale price or consideration of purchase of green tea shall  at the time of credit to the account of or  payment to the seller of such amount in cash, by cheque, by adjustment or in any manner, what soever deduct tax caculated at the rate of 25 paise per kilogram and deposit the same in the State exchequer in such manner, as may be precribed.”
 A strong clash ,therefore, exists between the provisions of sales tax law (VAT) and the specified land law, which are being administered under the same roof of the tax administration in Assam. The said  measure, as we believe, was inserted in the Specified Lands Act probably with a view to ensure proper payment of tax by the small tea gardens owners, but it can not ignore or supersede the restrictions imposed in the principal Act, governing the sales and purchases of the goods to the effect that no tax is leviable on the sales or purchases of the green tea leaves. The power to deduct and deposit such tax has been vested to some non- Government organizations [private tea industries] for which the accuracy of the production, sales made by the small tea gardens and deduction of tax at source remain controversial.
Tax on luxury
A measure of tax was introduced on the luxury provided in the hotels and lodging houses, carrying on the business on commercial basis, by way of enactment of the Assam  Taxation (on Luxuries Hotels & Lodging Houses) Act, 1989 since 01.04.1989. The luxury included accommodation, amenities,facilities and the services provided therein. The owners of the hotels and lodging houses are to be made liable to pay tax under the said Luxury Tax Act on the turnover receipts of a hotelier.
The private hospitals, which provide accommodation , amenities, facilities and services on commercial basis were also brought under the puview this tax –net with effect from 29.08. 2009 and has been liable to pay tax on the the turnover in respect of such luxuries received.
        The taxes collected under this law are :
                             Year                                                                Collection
                             2007-08                                                         Rs. 3.11 Crore
                             2008-09                                                         Rs. 5.75  ,,
                             2009-10                                                         Rs. 5.17  ,,
                             2010-11                                                         Rs. 5.42  ,,
                             2011-12                                                         Rs. 7.48  ,,
                             2013-14                                                         Rs. 8.67  ,,
                             2014-15                                                         Rs. 10.55 ,,

  In superseesion of the earlier rates of tax, the following rates of taxes were introduced in respect of the hoteliers with effect from 29.08.2009 :
(i)            Where the charge of luxury in a hotel
 is less than Rs. 300.00per day per room
                                                                                                                                                                                                                                         .. Nil
(ii) More than Rs. 300.00 and not more than
Rs.1000.00                                                                     …5% of the turnover
(iii) More than Rs. 1000.00 and not more than
Rs. 2000.00                                                                    ..  8%       ,,
(iv) More than Rs. 2000.00                                          ..12%       ,,
With the introduction of tax on private hospitals in the luxury tax scenario with effect from 29.08.2009, the rates of tax were designed, as below:
(i)            Where the charges of luxury provided
In a hospital is less than Rs.1000.00
  per day per room                                                           Nil
(ii) More than Rs.1000.00, but less than
Rs. 2500.00                                               .. 5% of the turnover
(iii) More than Rs. 2500.00                           .. 8%        ,,
The collection of tax, though is in a higher side, seems to be not very much encouraging particularly after the private hospitals were brought under the purview of this tax net. One reason of such shortfall might be that, the rate of tax on the hoteliers, as earlier prevailed, were reduced from 10%, 15% and 20% to 5%, 8% and 12% respectively, which might have caused lower yield of such tax revenue. The new measure of tax on private hospitals could not adequately compensate the loss.
The rate of luxury tax in respect of the hoteliers were further modified with effect from 12.05.2015 by reducing the margin of tax exemption quantum from Rs. 1000.00 to Rs. 2000.00 with the rates of tax from above Rs. 2000.00 to Rs.5000.00 a@ 10% and above Rs. 5000.00 @ 14%.  We are to see the future impact of revenue on account of such modification.
 A part from Guahati city, where there are numbers of  star hotels, standard luxurious hotels with unique and adequate facilities of modern era, in other district, subdivisional and commercial towns also, many standard and sophisticated hotels, lodging houses, resorts and inn are operating. In National Parks and Game sancuaries, numbers of such hotels, lodging houses are there. The marriage celebrating houses were also brought under the purview of this Act.The accommodation, amenities, facilities and services charges in the modern and sophisticated hotels and private hospitals are very high.
    From some data available, is found that the numbers of tourist Indian and Foreign) in the five National Parks with revenue collections were, as below :
Year       NationalPark  Indian tourists   Foreign tourist    Revenue
2012-1300     Kaziranga       93, 747                      7418            Rs. 205.76
2013-14           ,,                    119, 289                     6922            Rs. 268.66 
2012-13        Manas              15,890                        218              Rs. 25.48
2013-14           ,,                    20,527                        211              Rs. 30.93
2012-13  Rajib Gandhi Orang  1,847                      70                Rs. 2.76 
2013-14            ,,                    2,329                         16                Rs. 2.43
2012-13   Dibru-Saikhowa       2,656                      19                Rs. 1.08
2013-14            ,,                        4,230                     54                Rs. 2.09
2012-13       Nameri                 4,370                   528              Rs. 4.54
2013-14            ,,                   5,866                          806                 Rs.11.56
This is a simple instance. It can be well imagined what will be numbers of borders and quantum of collection in the hotels, lodging houses, inns, resorts and private hospitals etc.
The luxury Act provided that inspection, search and siezure of the place business of such assessee are to be carried on by virtue of the provisions of the VAT Act. The Luxury Act and rules have not incorporated any independent provision thereon. It is not known, if such exercise of bpowers in respect of the assessees are being carried on. What we believe is that, a preventive way of action will  make  rise to the collection of tax revenue under this law.

Augmention of revenue to a higher quantum is possible, if there is proper mobilization of resources, utilization of man power and plugging of the legal lacunae. At present, man power in the taxation department is quite adequate., but it is not known how their services are being utilized. In the past, each of the taxing officers were on the heels to ensure proper and ascending  revenue collection in their respective areas. They were answerable for any shortfall or lapses, whatsoever. The maintenance of survey register, inspection of places of business of the assessee including transport establishments, places of entertainmentsis the primary duty of the tax officers and it was  imperative to maintain such records and registers, submit the periodic diaries, statements  of performances including inspection, detection of evasion of taxes, tax involvement  with realisation thereof, disposal of assessment cases, collection of revenue with arrear taxes, which were being reviewed by the superior authorities at frequent intervals  by way of inspection to assess their  performances individually. The maintenace Index Register, Assessment, Demand and collection (including arrear collection)Register, Detection and Prosecution Registers, Field Survey, Field inspection Register is a must The periodic marathan inspection offices from the rank of the Deputy Commissioner of Taxes (previously the Assistant Commissioners of Taxes) to the top was a regular feature. It is not known, if such traditions and culture  are still being maintained.

(Mrinal Kanti Chakrabartty)
“Rudra Bhawan”
R.G. Barua Road, Lakhimipath,
Guwahati -781024 (Assam)
(M) 98642-01694