Evolution is an important phenomenon in the global politics. It may be a product of revolution or an automatic exercise. The global nations are having immense constituents to carry on the power scenario. The fundamental ingredients are that- there must be a territorial base, population, a Government and sovereignty. India is recognized as a Sovereign, Socialist, Secular, Democratic- Republic in the global map. The federal structured territory of India has as many as twenty ninth part-States with six Union territories. Assam is one of the part States of the Indian sub-continent, having a popular Government to rule the State subject to the powers exercisable exclusively by the Government of India by enactments made under Article 246(1) read with List-I (Union List) of the Seventh Schedule of the Constitution of India (Constitution). An evolution in political scenario is a time bound factor to ensure a healthy democratic set- up of Government for curbing any trend of high-handedness or autocracy by any political party or parties in power either at the national or at the State level. The Indian democracy is having this broad concept. The Congress Party, Janata Party, Janata Dal, Bharatiya Janata Party singly or with the constituents of the alliance parties are ruling the Indian sub-continent. It is noteworthy that no Government was ever over-thrown by any coupe like other neighbouring countries.
Assam, a part of the federal India, has been mostly under the political Government excepting the President Rules on three or four
occasions on account of political instability. The congress party ruled the State continuously since 1947 till the early part of 1978 under the
dynamic stewardship of the following august personalities:
1. Lokopriya Gopinath Bordoloi- 1947 to 5th August, 1950
2. Bishnu Ram Medhi- 1950 to 1957
3. Bimala Prasad Chaliha 1957 to 1970
4. Mahendra Mohan Choudhury- 1970 to 1971
5. Sarat Chandra Singha- 1972 to 1978
The Congress party failed to come to the power in 1978 election and the Janata Party, headed by Golap Barbara became the head of the
Government. This government was short-lived. Thereafter, Jogen Hazarika, the Speaker of the Assam Legislative Assembly formed a party under
the banner of Asam Janta Party and became the Chief Minister. After a few days, the said Government fell and Presidents Rule was imposed.
Thereafter, Syeda Anowara Taimur, Keshab Chandra Gogoi of Congress became the Chief Minister of Assam for short periods. Again President
Rule was imposed, which lasted about one year. In order to avert the constitutional crisis, election has held forcibly without the proper mandate of
the people of Assam, Hiteswar Saikia took over the helm of power after such illegal election of1983. Unrest took place in the soil of Assam
following a mass movement led by the All Assam Students Union (AASU) in collaboration with the constituent organizations under the banner of
Gana Sangram Samitee on the sensitive foreigners’ issue. In fact, Assam became a den of the foreign nationals after the cold and silent aggression
of a section of the Bangladesh nationals since after partition of India. It reached to the climax after the liberation movement in East Pakisthan and
creation of Bangladesh, which is still continuing. Almost all the indigenous people of Assam rose to the occasion, but the Government of India did
not care to make immediate solution though there was heavy blood shed. Ultimately, at the behest of Rajib Gandhi, the then Prime Minister
of India a negotiation was made by a treaty titled as ‘Assam Accord’ in the early hours of August, 15th, 1985. The illegally constituted Assam
Assembly was dissolved and a fresh election was held.
The people of Assam voted to power the newly formed Assam Gana Parishad (AGP) led by the AASU with other constituent ingredients of
the Gana Sangram Samittee and the said party took over reign of Asssam on December, 24, 1985 with the AASU leader Prafulla Kumar Mahanta
as the Chief Minister. Their modus operandi, however, disappointed the people of Assam very soon. They could not drive out the foreigners, the
the first and foremost promise projected in the election manifesto. Rampant corruption gained the momentum. A section of the revolutionist with
arm activities started to create the reign of terror. The Government of India had to promulgate the President Rule to overcome the unruly situation.
In the next phase, the Congress Party came to the power under the leadership of Hiteswar Saikia in 1991. This Government was not at all in
favour of driving out the foreign nationals; rather they were keen provide security of the Vote bank, created by the foreigners. After 5 years , the
people overthrew the Congress regime. The AGP party again came to the power. This time, the performances proved to be the worst. People were
constrained to believe that they have been cheated by this regional party since beginning. The Congress party thus again came to the power in
2001election under theleadership of Tarun Gogoi. Congress party was voted to power for the second time in 2006 as well. People of Assam are
well aware of the mal-functioning of this Government, but they had to exercise their franchise in favour of the Congress party, as they found no
other party choice able party was there.The deteriorating law and order situation, high price rise, rampant corruption is gaining the momentum
in this regime. People of Assam are now the silent spectators to all odds. The Assembly election of Assam is knocking at the door. The question
now arises, who will be installed in the power scenario in 2011 election?
In Assam, Congress party is predominating since the beginning. The AGP came to the power scenario like a comet. There had been
disintegration of the party on a number of occasions on power mongering issues. Though, of late, reunited, the party members could not yet give good bye to the internal disputes and differences for the party stability. The confidence of the people has not been restored, which is evident from the numbers of bye-elections., The Lok Sabha poll of 2009 proved all the exercise futile. The Bharatiya Janata Party was, no doubt, an ideal party, but the inner quarrel and conflict has been detrimental to the unity and integrity of the party. The party is also not well organized in Assam and it is yet to strengthen its base yard. The Leftist Parties are also not very much relevant in Assam politics. It has been seen, of late, that the Autonomous Districts, like Karbi Anglong, North Cachar and Bodo Land have their district base and entity and they are capable to influence the political power scenario of Assam to a great extent. The United Democratic Front occupied a sizeable berth in the last State Assembly election. These parties are thus playing the pivotal role in formation of the Government. No forecast is possible at this stage as to the formation of Government in 2011 election by other parties unless they change their style of functioning and are up and doing to gain the confidence of the mass people.
A regional party has a dire necessity to ventilate the will and aspiration of the people and safe guard the regional interest. This is possible, when the peoples’ trust is bestowed upon the party incumbents. The AGP at this moment with the present incumbents seems to be not to the utter choice of the people. The inner party requires a reformation and renovation with fresh bloods, beset with dynamism and integrity. There must be a grass- root organization with constructive works to win the hearts of the people. A section of the veteran leaders are eager to mend the shortfalls and to come up with the new visions with constructive approaches, but it will be possible, when the grass root level is organized properly and systematically and they are keen to remove the economic disparity of the weaker section with constructive outlooks.
(Mrinal Kanti Chakrabartty)
“Rudra Bhawan”
R.G.Barua Road, 10- Lakhimipath
Guwahati -781-024
Sunday, December 6, 2009
Review on Mrinal Kanti Chakrabartty’s book “Jiwan Darshan”
Review on Mrinal Kanti Chakrabartty’s book “Jiwan Darshan” in “ Asomiya Journalist” Magazine (7th Edition December’2009)
Saturday, July 4, 2009
TAX DODGING EPISODE- A CRIMINAL ACTIVITY
Tax dodging is a unique phenomenon to crush the economic discipline and austerity. Moved in an anti-clockwise motion in the normal and systematic way in the broad economic platform, a tax dodging activity can be well termed as a gross crime in the socio- economic scenario of national life. No applause or appreciation is ever hailed for such unhealthy, polluted, anti-social and anti-economic odds. A harmonious voice of condemnation is always warranted for such undesired workmanship. ‘Necessity is the mother of invention’- this symbolic gospel truth is always existent in the pre- concept of mind of the tax dodgers in the process. When any mal-activity is foiled, frustrated or apprehended, the tax dodgers search out new gallery to adopt new art of tax evasion. Tax dodging activities were very much in vogue in the ancient mythological era, it continues now and shall continue till eternity, of course, with some new, diverted or modified methods worked out in the formulated net-works. The tax dodging episode, in fact, is not a unilateral exercise. Some sort concurrence, connivance or collusion must be there at different angles more particularly with the tax machinery. The famous diplomat and economist of the Mauryya era Kautilya or Chanakya rightly recorded – “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 towns and the countryside.” This rigid view was, no doubt, a product of his valued experience and it obviously forms a guide line of the day in the field of economic regime.
In the British era, the tax measures in the States were adopted under the Government of India Act, 1935. Two tax laws, namely; the Assam Agricultural Income Tax Act, the Assam Sales of Motor Spirit and Lubricants Taxation Act were enacted in 1939 in Assam as the maiden venture to make yield of revenue. The tax law on the sales or purchases of goods - ‘the Assam Sales Tax Act, 1947’ came into force from 24.12.1947 in the post- independent period, while the Assam Finance (Sales Tax) Act, 1956 was enacted by the State Legislatures with the vested power under clause 54 of the State List in the Seventh Schedule of the Constitution of India, The Central Sales Tax Act, 1956, a Government of India Act, came into operation from 5.1.1957 under clause 92A of the Union List in the Seventh Schedule of the Constitution. The Central Sales Tax Act, 1956 still remains in force, while the sales tax laws enacted at different times, were repealed and ultimately the birth to the Assam Value Added Tax Act, 2003 took place from 1.05.2005. In fact, the State’s tax resources are generated from nine tax measures with the current tax yield of Rs. 3592.88 against Rs. 2864.44 in 2007-08.
‘Evasion and avoidance of tax are brothers twine’. When there is measure of tax, there is always attempt to evade or avoid tax. The traders try to derive extra fiscal benefits by adopting fraudulent means and thereby indulging the tax dodging activities. Tax collected on the sales or purchases of goods is an indirect one, and the burden of such tax ultimately falls on the consumers. A portion of the sale or purchase is not exposed in the books of accounts and is suppressed with result that the tax due is evaded. With the expansion of trade velocity and trade dimensions, the magnitude of evasion of taxes is gaining the momentum. In the present hi-tech era, the unscrupulous traders use to adopt a unique technique to evade tax through computer devises on which no easy access can be had by the tax machinery. Even odd transactions are removed from the computer at frequent intervals and restored in the C.D. to avoid easy reach of others.
The race of evasion of tax starts at the entry point and ends at the point of sales made to the consumers. Amongst innumerable ways, the import of goods in fake names with fictitious addresses, misclassification of the goods and suppression of sales in fraudulent way are prominently prevalent. A dearth of adequate preventive measures to arrest or avert the multifarious ways of evasion of taxes, has the consequential adverse effect in the revenue generation exercise. The check posts have not been equipped with skilled man- power, requisite amenities, facilities and other allied infrastructure. No compact/ comprehensive platform has been erected for inspection of the goods vehicles, unloading and verification of the goods as well as preserving the seized goods safely in a befitting manner. The lack of the officers’ sincerity, devotion and integrity is another reckoning factor. Pressure or influences at different angles in normal functioning of the officials with some ulterior motive behind, uses to demoralize them. Adequate counter-check in the way side, at the delivery point or at the godown is rarely undertaken. The race thus ends uninterrupted with a negative approach towards the State revenue making the State Coffer an utter victim.
The Value Added Tax (VAT) regime, currently operative in Assam, is a self-designed system of levy of tax with its self -steering wheels. The success in this revenue venture can achieve, only when (i) the traders ensure the correct and accurate maintenance of accounts initially by preserving purchase vouchers, issuing sales invoices, (ii) the interim purchasing traders and the consumers are alert against any foul play in the deals and (iii) the tax machinery keeps proper vigilance on different ways and style adopted for evasion of taxes. Any sloth, lapse or dereliction in maintaining rigidity, harmony, austerity, integrity and transparency, no doubt, pose to be a serious threat to the State revenue generation exercise. The paramount necessity of the day is that the concept of VAT should be made aware to all. The Government of India, of late, is contemplating to replace VAT, by ‘Service and Goods Tax’ from 1st April, 2010. It well construe that there is a ‘but’ in the operative VAT system.
The policy adopted by the Government of India to abolish central sales tax in a phase manner (the 50% of which has already been materialized), is nothing but an act quite detrimental to the revenue interest of the States. The austerity in fiscal discipline has already been cracked and it is likely to be demolished fully, when the policy to do away with the same, is fully implemented. A chaotic condition will be knocking at the door in absence of any liaison or co-ordination maintained in the inter-States deals including stock transfer or export. The scope for levy of consignment tax, as incorporated in the Union List (92B) of the Constitution in 1982, is yet to be implemented by a separate central enactment to avert or prevent any fake stock transfer.
within the ambit and competence. The taxing authorities, as appointed by the Government to assist the Commissioner are well competent to decide the merit of any such pertinent question of law and any imposition made at any corner on the statutory power exercise scenario seems to be an overlapping of jurisdiction or intervening of the powers. The unfortunate part of thing is that even though the Commissioner is said to have directed the taxing authorities to imposed VAT on purchases of Flat with a retrospective effect from May, 2005, that is, from the date of coming into force of the VAT Law in Assam, he has not equipped the taxing authorities, namely; the Assistant Commissioners of Taxes and the Superintendents of Taxes to exercise the powers for registration of the dealers liable to pay tax under the VAT Law, to make assessments of tax to the dealers (except the power of self- assessment) and other allied important powers in the day to day administrative scenarios. The officers, on the other hand, are either without having being unaware of this vital requirements or without being conscious at all on the consequential effect on such unvested power exercise, keen to exercise such unvested powers in the course of their routine course of action presumably without any conviction of mind that the whole administrative system will be paralyzed. When it is well settled from the above concept of law that Flat is not a moveable property and out side the definition of goods, the scope for levy of tax on Flat purchase is not there.
The definition of goods, inter-alia’ laid down that all materials (whether as goods or in other forms) involved in execution of works contract are goods. If the construction of Flats are constructed through the contractors, naturally, the transfer of property in goods involved in such works contract is covered by the definition of sale, which has its obvious Constitutional footings with proper authority of law and the levy of tax on such goods is well attracted. The promoter of the Flats, however, generally come up with strong plea that they construct the Flats out of their own and the question of execution of works contract does not crop up. The actual state of affairs will come to the light on the nature of contract in course of scrutiny and examination of the contract deeds executed between the land ‘owner and the promoter’ and ‘the promoter and the flat purchasers’. It can not be fully agreed that the promoters alone play the pivotal role in the entire Flat construction exercise and there may be some agencies as well to act as contractors. That will be a product of investigation and vigilance. The taxing authorities, it is presumed have the access to some investigation and vigilance.
The materials used or utilized in connection with the construction of Flat are, no doubt, out of the purchases made locally or in the course of inter-State trade or commerce. The taxing authorities have the power to examine the documents and evidences to ascertain whether VAT has been charged against such purchases of goods by the sellers to proceed with as part of duty to ensure charging, payment and levy of tax properly, when such purchased of materials relates to within the State of Assam. If any such goods, covered by the Schedule of the Assam Entry Tax Act, 2008 are purchased from places out side the State of Assam for use or consumption, the taxing authorities have full power to undertake operation in the matter of deciding the liabilities under the said Act and to ensure proper levy and collection of tax. The taxation laws have provided ample powers to the taxing authorities, but such powers are to be exercised within the frame-work of law. Any powers exercised arbitrarily beyond the ambit and competence invites controversy and naturally a catastrophe in the revenue earning exercise becomes inevitable.
(Mrinal Kanti Chakrabartty)
“Rudra Bhawan”
R.G. Barua Road, 10-Lakhimipath,Guwahati-781024
(0361) 2457734
98642-01684
In the British era, the tax measures in the States were adopted under the Government of India Act, 1935. Two tax laws, namely; the Assam Agricultural Income Tax Act, the Assam Sales of Motor Spirit and Lubricants Taxation Act were enacted in 1939 in Assam as the maiden venture to make yield of revenue. The tax law on the sales or purchases of goods - ‘the Assam Sales Tax Act, 1947’ came into force from 24.12.1947 in the post- independent period, while the Assam Finance (Sales Tax) Act, 1956 was enacted by the State Legislatures with the vested power under clause 54 of the State List in the Seventh Schedule of the Constitution of India, The Central Sales Tax Act, 1956, a Government of India Act, came into operation from 5.1.1957 under clause 92A of the Union List in the Seventh Schedule of the Constitution. The Central Sales Tax Act, 1956 still remains in force, while the sales tax laws enacted at different times, were repealed and ultimately the birth to the Assam Value Added Tax Act, 2003 took place from 1.05.2005. In fact, the State’s tax resources are generated from nine tax measures with the current tax yield of Rs. 3592.88 against Rs. 2864.44 in 2007-08.
‘Evasion and avoidance of tax are brothers twine’. When there is measure of tax, there is always attempt to evade or avoid tax. The traders try to derive extra fiscal benefits by adopting fraudulent means and thereby indulging the tax dodging activities. Tax collected on the sales or purchases of goods is an indirect one, and the burden of such tax ultimately falls on the consumers. A portion of the sale or purchase is not exposed in the books of accounts and is suppressed with result that the tax due is evaded. With the expansion of trade velocity and trade dimensions, the magnitude of evasion of taxes is gaining the momentum. In the present hi-tech era, the unscrupulous traders use to adopt a unique technique to evade tax through computer devises on which no easy access can be had by the tax machinery. Even odd transactions are removed from the computer at frequent intervals and restored in the C.D. to avoid easy reach of others.
The race of evasion of tax starts at the entry point and ends at the point of sales made to the consumers. Amongst innumerable ways, the import of goods in fake names with fictitious addresses, misclassification of the goods and suppression of sales in fraudulent way are prominently prevalent. A dearth of adequate preventive measures to arrest or avert the multifarious ways of evasion of taxes, has the consequential adverse effect in the revenue generation exercise. The check posts have not been equipped with skilled man- power, requisite amenities, facilities and other allied infrastructure. No compact/ comprehensive platform has been erected for inspection of the goods vehicles, unloading and verification of the goods as well as preserving the seized goods safely in a befitting manner. The lack of the officers’ sincerity, devotion and integrity is another reckoning factor. Pressure or influences at different angles in normal functioning of the officials with some ulterior motive behind, uses to demoralize them. Adequate counter-check in the way side, at the delivery point or at the godown is rarely undertaken. The race thus ends uninterrupted with a negative approach towards the State revenue making the State Coffer an utter victim.
The Value Added Tax (VAT) regime, currently operative in Assam, is a self-designed system of levy of tax with its self -steering wheels. The success in this revenue venture can achieve, only when (i) the traders ensure the correct and accurate maintenance of accounts initially by preserving purchase vouchers, issuing sales invoices, (ii) the interim purchasing traders and the consumers are alert against any foul play in the deals and (iii) the tax machinery keeps proper vigilance on different ways and style adopted for evasion of taxes. Any sloth, lapse or dereliction in maintaining rigidity, harmony, austerity, integrity and transparency, no doubt, pose to be a serious threat to the State revenue generation exercise. The paramount necessity of the day is that the concept of VAT should be made aware to all. The Government of India, of late, is contemplating to replace VAT, by ‘Service and Goods Tax’ from 1st April, 2010. It well construe that there is a ‘but’ in the operative VAT system.
The policy adopted by the Government of India to abolish central sales tax in a phase manner (the 50% of which has already been materialized), is nothing but an act quite detrimental to the revenue interest of the States. The austerity in fiscal discipline has already been cracked and it is likely to be demolished fully, when the policy to do away with the same, is fully implemented. A chaotic condition will be knocking at the door in absence of any liaison or co-ordination maintained in the inter-States deals including stock transfer or export. The scope for levy of consignment tax, as incorporated in the Union List (92B) of the Constitution in 1982, is yet to be implemented by a separate central enactment to avert or prevent any fake stock transfer.
within the ambit and competence. The taxing authorities, as appointed by the Government to assist the Commissioner are well competent to decide the merit of any such pertinent question of law and any imposition made at any corner on the statutory power exercise scenario seems to be an overlapping of jurisdiction or intervening of the powers. The unfortunate part of thing is that even though the Commissioner is said to have directed the taxing authorities to imposed VAT on purchases of Flat with a retrospective effect from May, 2005, that is, from the date of coming into force of the VAT Law in Assam, he has not equipped the taxing authorities, namely; the Assistant Commissioners of Taxes and the Superintendents of Taxes to exercise the powers for registration of the dealers liable to pay tax under the VAT Law, to make assessments of tax to the dealers (except the power of self- assessment) and other allied important powers in the day to day administrative scenarios. The officers, on the other hand, are either without having being unaware of this vital requirements or without being conscious at all on the consequential effect on such unvested power exercise, keen to exercise such unvested powers in the course of their routine course of action presumably without any conviction of mind that the whole administrative system will be paralyzed. When it is well settled from the above concept of law that Flat is not a moveable property and out side the definition of goods, the scope for levy of tax on Flat purchase is not there.
The definition of goods, inter-alia’ laid down that all materials (whether as goods or in other forms) involved in execution of works contract are goods. If the construction of Flats are constructed through the contractors, naturally, the transfer of property in goods involved in such works contract is covered by the definition of sale, which has its obvious Constitutional footings with proper authority of law and the levy of tax on such goods is well attracted. The promoter of the Flats, however, generally come up with strong plea that they construct the Flats out of their own and the question of execution of works contract does not crop up. The actual state of affairs will come to the light on the nature of contract in course of scrutiny and examination of the contract deeds executed between the land ‘owner and the promoter’ and ‘the promoter and the flat purchasers’. It can not be fully agreed that the promoters alone play the pivotal role in the entire Flat construction exercise and there may be some agencies as well to act as contractors. That will be a product of investigation and vigilance. The taxing authorities, it is presumed have the access to some investigation and vigilance.
The materials used or utilized in connection with the construction of Flat are, no doubt, out of the purchases made locally or in the course of inter-State trade or commerce. The taxing authorities have the power to examine the documents and evidences to ascertain whether VAT has been charged against such purchases of goods by the sellers to proceed with as part of duty to ensure charging, payment and levy of tax properly, when such purchased of materials relates to within the State of Assam. If any such goods, covered by the Schedule of the Assam Entry Tax Act, 2008 are purchased from places out side the State of Assam for use or consumption, the taxing authorities have full power to undertake operation in the matter of deciding the liabilities under the said Act and to ensure proper levy and collection of tax. The taxation laws have provided ample powers to the taxing authorities, but such powers are to be exercised within the frame-work of law. Any powers exercised arbitrarily beyond the ambit and competence invites controversy and naturally a catastrophe in the revenue earning exercise becomes inevitable.
(Mrinal Kanti Chakrabartty)
“Rudra Bhawan”
R.G. Barua Road, 10-Lakhimipath,Guwahati-781024
(0361) 2457734
98642-01684
Friday, June 19, 2009
My first experience
The Internet has been first handled by me. Previously my nephew Rupam Sarma uploaded my articles in my blog on my behalf. Indeed, I feel joy for this first episode in my life. I thank the visitors, who kindly visited my blog, read my article. I am early waiting for their valuable comments on my writings.
Wednesday, June 17, 2009
KARMA JIWANAR PARISHAR ANTAHEEN
KARMA JIWANAR PARISHAR ANTAHEEN is an article in Assamese, written by me (Mrinal Kanti Chakrabortty) to make an analysis on the philosophy of human life, keeping in view some
verses of Sree Sree Madbhagawat Geeta. Action in human life comes to an end, when one
breaths his last.
Please click here http://sites.google.com/site/rupamsite/karma
verses of Sree Sree Madbhagawat Geeta. Action in human life comes to an end, when one
breaths his last.
Please click here http://sites.google.com/site/rupamsite/karma
VAT BYABASTHA...
“VAT BYABASTHA- KSHAMATA PRADAN-KSHAMATA PRAYOG ARU KSHAMATAR ATISHAYYA”- This article is written by me (Mrinal Kanti Chakrabortty) pointing out some draw-backs in the Assam VAT Law, deficiencies in power delegation scenario and excessive exercise of powers by the tax officials.
Please click here http://sites.google.com/site/rupamsite/vat-byabastha
Please click here http://sites.google.com/site/rupamsite/vat-byabastha
Thursday, June 4, 2009
VAT ON FLAT PURCHASE
Recently a news item was published in the Assam Tribune under the caption “H.C. rejects VAT on Flat purchase”. Quoting a release issued by Assam Real Estate & Infrastrure Development Association, the release said that a Division Bench of the Gauhati High Court ordered the Commissioner of Taxes, Assam not to impose VAT on the purchase of Flats. The release added that recently the tax department started raids demanding that all Flat purchasers are liable to pay VAT with retrospective effect from May, 2005.The fundamental concept of VAT, as envisaged in the preamble of the VAT Law, is that it related to the imposition and collection of tax on the sales or purchases of goods in the State of Assam. Sales and purchases are, in fact, co-related. When there is purchase there is sale and vice versa. No dispute is existent on this concept of law. The basic question is, however, what is goods? ‘Goods’, as defined in the VAT Law means- all materials, commodities and articles and all other kinds of moveable property, whether tangible or intangible and includes, inter-alia, all materials (whether as goods or in some other form) involved in the execution of works contracts. ‘Flat’, as occurred in Oxford Dictionary, means- a set of rooms forming an individual home within a larger building. ‘Building’, on the other hand, is a structure with roof and walls with all requisite amenities and facilities. It is, therefore, a fixed asset and not a moveable property and naturally, it does not come under the purview of the definition of goods. A Flat is conclusively nothing but an immoveable property and as such the definition of goods is not attracted. The order, issued by the Commissioner of Taxes, if any, is thus not within the ambit and competence. The taxing authorities, as appointed by the Government to assist the Commissioner are well competent to decide the merit of any such pertinent question of law and any imposition made at any corner on the statutory power exercise scenario seems to be an overlapping of jurisdiction or intervening of the powers. The unfortunate part of thing is that even though the Commissioner is said to have directed the taxing authorities to imposed VAT on purchases of Flat with a retrospective effect from May, 2005, that is, from the date of coming into force of the VAT Law in Assam, he has not equipped the taxing authorities, namely; the Assistant Commissioners of Taxes and the Superintendents of Taxes to exercise the powers for registration of the dealers liable to pay tax under the VAT Law, to make assessments of tax to the dealers (except the power of self- assessment) and other allied important powers in the day to day administrative scenarios. The officers, on the other hand, are either without having being unaware of this vital requirements or without being conscious at all on the consequential effect on such unvested power exercise, keen to exercise such unvested powers in the course of their routine course of action presumably without any conviction of mind that the whole administrative system will be paralyzed. When it is well settled from the above concept of law that Flat is not a moveable property and out side the definition of goods, the scope for levy of tax on Flat purchase is not there.The definition of goods, inter-alia’ laid down that all materials (whether as goods or in other forms) involved in execution of works contract are goods. If the construction of Flats are constructed through the contractors, naturally, the transfer of property in goods involved in such works contract is covered by the definition of sale, which has its obvious Constitutional footings with proper authority of law and the levy of tax on such goods is well attracted. The promoter of the Flats, however, generally come up with strong plea that they construct the Flats out of their own and the question of execution of works contract does not crop up. The actual state of affairs will come to the light on the nature of contract in course of scrutiny and examination of the contract deeds executed between the land ‘owner and the promoter’ and ‘the promoter and the flat purchasers’. It can not be fully agreed that the promoters alone play the pivotal role in the entire Flat construction exercise and there may be some agencies as well to act as contractors. That will be a product of investigation and vigilance. The taxing authorities, it is presumed have the access to some investigation and vigilance.The materials used or utilized in connection with the construction of Flat are, no doubt, out of the purchases made locally or in the course of inter-State trade or commerce. The taxing authorities have the power to examine the documents and evidences to ascertain whether VAT has been charged against such purchases of goods by the sellers to proceed with as part of duty to ensure charging, payment and levy of tax properly, when such purchased of materials relates to within the State of Assam. If any such goods, covered by the Schedule of the Assam Entry Tax Act, 2008 are purchased from places out side the State of Assam for use or consumption, the taxing authorities have full power to undertake operation in the matter of deciding the liabilities under the said Act and to ensure proper levy and collection of tax. The taxation laws have provided ample powers to the taxing authorities, but such powers are to be exercised within the frame-work of law. Any powers exercised arbitrarily beyond the ambit and competence invites controversy and naturally a catastrophe in the revenue earning exercise becomes inevitable.
Mrinal Kanti Chakrabartty
“Rudra Bhawan”R.G. Barua Road, 10-Lakhimipath,Guwahati-781024
Mobile: 098642-01684
Mrinal Kanti Chakrabartty
“Rudra Bhawan”R.G. Barua Road, 10-Lakhimipath,Guwahati-781024
Mobile: 098642-01684
Thursday, May 28, 2009
Tuesday, May 26, 2009
AVERT DIVERSION OF OIL TRADE-TAX REVENUE SAFEGUARD IS IMPERATIVE
Tax on oils, namely; crude oil, petrol, diesel and other petroleum products; plays a pivotal role in the revenue generation scenario of Assam. Taxes on sales and other allied matters are governed by the Finance Taxation Administration of Assam by way of enforcement of the enacts introduced in this behalf. The collection of tax revenue during the last three years were, as below:-2006-07 – Rs.3046 crore2007-08 - Rs.2864 ”2008-09 - Rs. 3526 ” The shortfall of collection in 2007-08 was, inter-alia, due to inadequate supply of crude oil vis-à-vis the consequential production outturn and sales threto. However, this has been recouped and took an accelerative turn in 2008-09. If things goes on rightly, the tax revenue collection may undoubtedly achieve Rs. 5000 crore within a couple of years. The trend of extracted crude oil sometimes poses to be discouraging and equally, therefore, import of such crude oil from othe States becomes essential. Contrary to the spirit and intention of the Value Added Tax (VAT) ideology, which maintains the steadfast theme of levy of tax on the every stage of sales of taxable goods, subject to the credit of input tax paid at the point of previous purchase of such goods, the State Legislatures accommodated levy of first point tax in the VAT Law of Assam with exemption of such tax at the subsequent stage on discharge of the onus of payment of tax at source without, however, any relaxation or modification, whatsoever on the basic theme, incorporated in the Law.. Simultaneously, therefore, a two-tier system of levy of tax, that is, one at the multi-point sales of goods and other at the first point, has been operating side by side without any fundamental change of ideology and structure in the VAT Law. Obviously, a clash and conflict between the two in the VAT Law has been apparently visible. In the system of levy of tax on the first point sales of oil products, some relaxation has as well been provided in the case of inter-se-sale deals between one oil company and other, implying thereby that, such inter-se-sales between one oil company and other shall not be held as the first point sales in Assam, but the subsequent sales made to the others or to the consumers shall be treated as the first point sales in Assam for the purpose of levy of tax under the VAT Law of Assam. When a particular Law has been framed for a particular purpose for levy of tax, such a deviation without relaxing of the basic theme or vision of the Law seems to be a unique and an unprecedented exercise of power. Clumsiness, complication and controversy on the system are, therefore, well existent. The ideology formulated and maintained in relation to the non- levy on the first sales in the course of inter-se sales between the oil companies obviously defeated the purpose of levy of tax at the point of first sales in Assam and it is doubtful if such a provision did necessarily warrant. The terms set-forth in the VAT Law to provide the tax relief by the first point seller oil company are : (a) that, the purchaser oil company will pay tax on the sales within the State or in the course of inter states sales under the VAT or the Central Sales Law, as the case may be (b) that, in case the purchaser desptaches such purchased oil products to other States not by way of sales, liability to pay tax on the purchase value of such goods, as provided in the VAT Law shall be cropped up. Despatch of goods to other States not by way of sale is apparently a transfer of stock of goods to other State for sale. Article 286(1)(a) of the Constitution of India restricted any levy of tax for sale out side the State. Section 6A of the Central Sales Tax Law, on the other hand, provided the granting of exemption of tax on such stock transfer of goods subject to discharge of onus in this respect. The propriety of levy of tax on the same goods meant for stock transfer on the purchase value is thus a controversial matter. The rate of tax on the purchase value of oil products meant for stock transfer has been specified at 4 paise in the rupee against the normal rates of tax (@ Petrol Rs. 25.75 paise in the rupee and Diesel Rs. 15.50 paise in the rupee) while in the case of other commodies despatched for identical purpose has been specified as per the prevelant rate of tax, specified in the Schedules of the Act.. So, a disparity and discrimination has obviouly been maintained leaving scope for dispute. There has been mysteriously large scale transfer of stock of oil products by the producing oil companies to other States. The entertainment of such claim of stock transfer is subject to enquiry and achieving satisfaction by the Assessing Officers. The Central Sales Tax Rules formulated some guidelines for the same as well. Whether such transfer of stock is consquent upon any pre-contract of sale is a vital point to be examined and ascertaied as any despatch on the basis of such a contract the character and quality of stock transfer is likely to be defeated. The VAT Law also provided benefit of tax at the concessional rate to the inter-se-purchaser oil companies to make stock transfer and thus to indulge the tax dodging activities by adopting frauduleny way of stock transfer. It stands a routine way of life for a section of traders/cosumers to purchase oil products at lower rates of tax at Khanapara Meghalaya), Bandardowa Arunachal Pradesh) and Dimapur (Nagaland) etc. taking advatange of the geographical location and an acute diversion of trade activities is in sight.It is high time that all these aspects may be considered by the State tax administration and to ensure that no drainage of Assam State revenue is there, but proper safe guard is guaranteed at any cost of augmentation of revenue of the State.
(Mrinal Kanti Chakrabarty)10, Lakhimi Path, R.G. Barua RaodGuwahati – 781024, India98642-01694 (M)
(Mrinal Kanti Chakrabarty)10, Lakhimi Path, R.G. Barua RaodGuwahati – 781024, India98642-01694 (M)
WORKS CONTRACT AND LEASE :: WHETHER VAT COMMODITIES ?
VAT is a multiple system of tax leviable at every stage of sales of goods made by a dealer, subject to credit of input tax paid at the time of previous purchase of the goods. ‘Input tax’ and ‘Output tax’ are one and the same thing. The tax paid by the purchaser to the seller is input tax, while the tax realised by the seller from the purchaser and paid to the Govt. is output tax. A controversy is prevalent as to whether ‘Works Contract and Lease’ are VAT Commodities and the taxability on such item come under the purview of VAT tax-net.Following a number of litigations and the Apex Court decisions against levy of the tax on Works Contract and Lease, the Constitution of India was amended in 1982 and ‘the transfer of property in goods involved in ‘Works Contract’ and ‘the transfer of right to use any good without transfer of ownership’ have been brought under the purview of the definition of ‘Sales of goods’. The problem thus got a halt and tax on such transfer of property in goods and transfer of right of goods was well being levied under the Assam General Sales Tax Act, 1993. With the introduction of the Assam Value Added Tax Act, 2003, the basic principle of levy of tax, which has been discussed above, the levy of tax ‘Works Contract’ and ‘Lease’ has become irrelevant in as much as the ‘Works Contract and Lease’ maintain their independent entity and separate bearing. The multiple system of sales clockwise or stage wise in such deal become irrelevant. The VAT Act mainly dwelt in the basic principle of levy of tax on every goods at every stage of sale. It has not accommodated the principle of levy of tax on ‘the transfer of property in goods’ involved in ‘Works Contract’ and the ‘transfer of right to use any goods involved in Lease. There ought to have a provision dispensing with the main theme of VAT so as to accommodate this extra-ingredients in the tax-net of Assam. The scope for levy of tax under the VAT Act has been specified in the Schedule attached to the Act along with the category of taxable goods not specified in other Schedules of the Act with the broad term ‘Works Contract’ and ‘Lease’. The basic principle of levy of tax has not been accommodated. ‘Works Contract’ and ‘Lease’ are not the goods and the concept of levy of tax on ‘Works Contract’ and ‘Lease’ seem to be a deviation from the main spirit and intention of levy of tax on the sales of goods in the VAT ideology.Assuming, but not admitting that the legislatures, while incorporating such measure of tax on ‘Works Contract’ and ‘Lease’, intending to levy tax on the transfer of property in goods involved in Works Contract and on the transfer of right to use such goods involved in lease, the rates of tax specified in Schedule at 12.5 paise in the rupee, is not at par with the rate of commodity-wise tax, specified in the other Schedules of the Act. For instance, the rate of tax on the sales of declared goods is always 4 paise in the rupee and it can not exceed the rate declared by the Govt. of India by enactment of the Central Sales Act, 1996 under the authority of the Constitution of India. Pipes of all varieties, pumps, tractors, ships vessels and many other allied articles, pertaining to ‘Works Contracts’ and ‘Lease’ do not have the rate of tax beyond 4 paise in the rupee. Naturally, there has been strong clash between the rate of the tax specified at 12.5 paise involved in ‘Works Contract’ and ‘Lease’ and the rate of tax of goods specified in the Schedules of the same VAT Act. There can not be double rate of tax on the same commodity for the purpose of ‘Plain Sale’ or ‘Sale in the course of Works Contract’ as well as the alleged sales on ‘Lease’. Obviously, discrimination has been well maintained in tax-net scenario under the VAT Act of Assam.The VAT law in Assam provided the measure of Composition of tax on works contract to be exercised by the works contractors at their own option in dispensing with the requirements of making payment of tax on the sales element under the VAT Act. The rate of tax payable as Composition of tax under such Scheme has been specified at 4 paise in the rupee on the gross value of ‘Works Contract’. Apparently, this is abusive of the principle of levy of tax, as enumerated in the Constitution read with the definition of VAT Act.A transfer of property in goods involved in ‘Works Contract’ is liable to be taxed. A tax is leviable on the taxable commodities and not on the exempted ones. Moreover, labour charges, transport charges and other allied charges involved on the works contract can not be brought under the purview of taxability.Transfer of right to use any goods in connection with lease is not a permanent sale of good. It is casual deal without maintaining any continuity. A lease deal on the same commodity may be frequent on the expiry of the specified period of time, but it may not be on chain system. This has provided scope for levy of tax on the same item leased without any scope for any credit of input tax. The legislatures have not specified the items to be taxed on lease and the levy of tax on lease has been made wide and open. It may naturally have an adverse effect to the lessesors and lessee when to be taxed on small deals of lease. No ‘taxable quantum’ has also been specified on lease deals. A confusion always prevail over the question of ‘Hire’ and ‘Lease’, as it has not been well analysed in the system. In absence of that creation of confusion to the dealer and exercise of powers by the taxing authority arbitrarily can not be ruled out in the matter.Our above projection explaining the propriety of taxability in ‘Works Contract’ and ‘Lease’ ought not to have incorporated in the VAT Act of Assam, which maintain a separate aim and object with separate way of functioning. On the other hand, the levy of tax on transfer of property in goods involved Works Contract and transfer of right to use good on lease can not be given a good bye, as a substantial amount of tax revenue pours into the state coffer annually.A separate enactment of law is considered to be imperative for the sake of better tax administration vis-à-vis proper augmentation of revenue of the State without any scope of disputes or controversy.
(Mrinal Kanti Chakrabarty)
10, Lakhimi Path,
R.G. Barua Raod
Guwahati – 781024, India
98642-01694 (M)
Subscribe to:
Posts (Atom)
