AN IMPERATAVIE NEEDS

‘Green tea leaves’ are like the ‘raw gold’ and the ‘black tea’ are the ‘precious ornaments’. The tea cultivation in Assam was started from the early part of the eighteen century. The East India Company before taking over the helm of power in Assam discovered numbers of tea plants in the jungles of Assam. They could guess that proper cultivation of tea and utilization of the same by industrial exercise will, no doubt, be a lucrative business. The yield of a substantial financial resource would thus be knocking at the door. Actually tea is one of the factor, which tempted the British Raj to install power in the hazardous area.
Tax on tea : On sales- The first measure of tax on tea was introduced from 1.4.1939 on the income derived from agriculture. The measure of tax on the sales of tax is a subsequent exercise. In 1970, a further measure of tax was adopted on the sales of tea in the Guwahati Tea Auction Market through the brokers. Again, from 1.1.1990, a new measure of tax was adopted on the land and productivity of green tea leaves was reckoned as the measuring scale for the purpose of levy of tax on the tea garden lands.The present tax structure on the sales of tea, an indigenous product of Assam, is as below:-(i) When sold locally in Assam - @ 5 paise in the rupee at the point of first point sale of tea in Assam under the Assam Value Added Tax Act, 2003 (VAT Act). Though the basic structure under the VAT Act was to levy tax at every point of sales in Assam subject to refund of tax paid at the point of the previous purchases, a departure has been made in the case tea and some other allied items like crude oil, petrol, diesel, petroleum products, coke, biscuit, liquor etc., where the tax measure has been introduced at the point of first sale in Assam.(ii) When sold in the course of inter-State trade or commerce- 2 paise in a rupee to a registered dealer and 10 paise to other than a registered dealer.(iii) When sold in the Guwahati Tea Auction Market- 2 paise tax in a rupee payable by the brokers. (iv) When such tea, purchased through the brokers either in the auction market is re-sold to the registered dealers in the course of inter-State trade or commerce- the tax paid is reimbursed.Such measure of exemption of tax on tea sold in the Guwahati Tea Auction Market and subsequently sold by such purchasers in the course of inter-State trade or commerce was introduced long 40 years back with a view to encourage proper growth of the auction market. Of course, there seems to be profound deficiency in the proper functioning of the said tea auction market at Guwahati.
Stock transfer of tea, a tax free deal :The practice of transfer of stock of tea to the Head offices or to the agents from the tea gardens of Assam is very much in vogue in the tea business scenario of Assam. It proved to be a farce in many cases. It may be used a legal weapon to evade payment of tax on the sales of tea made under the coverage of stock transfer of goods some times by way of manipulation of the documents. In fact, the Head offices of many tea companies control the whole episode of sales and the stock transfer of tea. It was well established in many cases that such transfer of stock was actually the sales in the course of inter-State trade or commerce in letter and spirit, but a foul play is adopted to evade payment of taxes by a camouflage exercise. If the taxing authorities accept such modus operandi of the tea companies as a challenge and go ahead in operation to unearth such modus operandi, many odds is likely to be unveiled and the mischief caused to this poor State by arresting the tax dodging activities. A substantial amount of revenue would have consequently poured to State coffer making way for augmentation of the State revenue. The active vigilance and mobilization in the field of activities would have totally cracked down such mal-practices with resultant positive out turn of revenue generation. Such a constructive measure is, however, absent. The Head offices of many tea companies, as it is found from experience, are directly involved in such unhealthy episode at the cost of revenue of Assam. A complete up-rooting of such episode may be possible, when the Head offices are shifted to Assam.
Tax on tea garden lands :The Government of Assam enacted the Assam Tax (On Specified Lands) Act, 1990 for levy of tax on tea garden lands taking into account the production of green tea leaves as the measuring scale, as discussed above. The rate of tax was initially fixed at 0.50 paise per kilogram of green tea leaves tea produced. A section of aggrieved tea companies challenged the validity of the Act before the Gauhati High Court and the Supreme Court of India pleading such exercise as illegal and unconstitutional. While the cases of litigation were pending before the Courts of law, the Government of Assam suddenly signed a Memorandum of Understanding (MOU) with the representatives of such tea companies, which had the consequential effect of abrupt reduction of the rate of tax from 0.50 paise to 0.18 paise. It is pertinent to mention that the Government of West Bengal also faced similar challenge for introducing such an identical measure of tax. The patience would have yielded a positive result, as verdict of the Supreme Court was in favour of introduction of such tax measure. The impatience and hurried decision forced the Government of Assam to surrender before the tea lobby and to depart from its original stand, causing an irreparable loss of revenue at the primary stage. Of course, the State Government has now raised the rate of tax to 0. 20 and 0.32 paise at different stages. The tax relief provided to the tea gardens owning lands not exceeding 40 hectares has also been withdrawn. The present measure adopted for levy of tax on land below 40 hectares to the tea the industrial units on sale consideration seems to be a controversial exercise.
A disparity between the production of green tea leaves and manufacture of finished tea is sometimes noticed, as the figures disclosed to the State tax department and to the Central Excise department records a big sphere of gap. An investigation and application of proper check tactfully may unveil many odds.
Tax on Agricultural Income :Article 246(1) read with entry 46 of List-II-State List of the Constitution provided exclusive power to the State Legislature to introduce the measure of tax on agricultural income. Article 366(1) of the Constitution defined agricultural income, which means agricultural income as defined for the purpose of the enactment relating to Indian Income Tax. The ball was thus thrown to the law making body of the Union. The definition of agricultural income, inter-alia, laid down two fold of income in the case of tea –(i) out of cultivation (ii) out of processing and trade activities. The specified ratio of income was determined at 40% for the Centre in the form of income tax and 60% for the State in the form of income on agriculture. The State can thus levy tax on 60% percent of income and that, too, left un-assessed by the income tax authorities without raising any question of dispute or dissention. The Government of India thus shares a substantial amount of revenue out of such agricultural income on tea. We remember that Sri Prafulla Kumar Mahanta, the then Chief Minister of Assam strongly urged upon the Government of India for removal of such discrimination in case of tea alone and pleaded for raising it to 100%. The fate on the said move is immediately not known. It is hoped that such demand should be revived once again for the interest of this poor State.The maximum rate of tax on agricultural income came up to 83 paise in a rupee in early seventies. The collection of such tax topped at the relevant times. Gradually the rate of tax was reduced to 30 paise in the rupee and other benefits and relieves were also provided in this respect. The result is that the collection of tax started receding. In making such relaxation, the interest of the tea companies was given priority at the cost of loss to the State.
State of Assam is deprived of the share of income tax :The Head offices of many OF THE TEA COMPANIES USE TO PAY INCOME TAX ON THE INCOME EARNED ON TEA, PRODUCED AND MANUFACTURED IN THE SOIL OF ASSAM, AT KOLKATA. UNDER ARTICLE 270(2) OF THE CONSTITUTION OF INDIA, THE GOVERNMENT OF WEST BENGAL USE TO GET THE SHARE OF SUCH INCOME TAX. IN THAT WAY ALSO, ASSAM IS DEPRIVED OF A SUBSTANTIAL AMOUNT IN THE FORM OF SHARE OF INCOME TAX ANNUALLY.IT IS PERTINENT TO STATE IN THIS CONTEXT THAT THE HEAD OFFICES OF THE OIL COMPANIES AND MANY OTHER INDUSTRIAL WINGS, CARRYING ON BUSINESS IN ASSAM, ALSO LIKEWISE USE TO PAY SUCH TAX ON INCOME OUT SIDE ASSAM ON THE PRETEXT THAT THE HEAD OFFICES ARE OUT SIDE ASSAM. IT IS THUS CLEAR THAT THE TEA COMPANIES IN ASSAM ARE ENJOYING THE MAXIMUM BENEFITS, BUT THEIR CONTRIBUTION TO THE STATE IS NOT UPTO THE MARK. THE FISCAL DISEQUILIBRIUM HAS REACHED TO DOLDRUMS THE STATE ECONOMY IS PRACTICALLY PARALYZED. IT IS HIGH TIME THAT THE MASS PEOPLE OF ASSAM SHOULD RISE ON THE OCCASION AND COME UP HARMONIOUSLY TO PROVIDE SAFE GUARD OF THE GENUINE CAUSES.
(Mrinal Kanti Chakrabartty) “Rudrs Bhawan”R.G. Barua Road,
Guwahati-24