Tuesday, June 1, 2010


Tax is a contribution, extracted by the Government in the form of revenue to the State Coffer. No Government can exist without taxation. This money, in fact, is to be levied to the people and the grand art consists of levying so as not to oppress.

The aim and object of the tax administration is to make generation as well to cause mobiliza¬tion of revenue resources for the purpose of augmentation to the State Coffer within the frame work of law, enacted by the Legislatures of the State in a systematical and methodical way.

The Commissioner of Taxes (Commissioner) is the supreme authority in the field of administration for carrying out the purposes of the taxation laws of the State. He is to be assisted by a set of officers, namely; the Additional Commissioners of Taxes, Joint Commissioners of Taxes, Deputy Commis¬sioners of Taxes, Assistant Commissioners of Taxes, Superintendents of Taxes and the Inspectors of Taxes, appointed by the Government, specifying its territorial jurisdiction. The Agricultural Income Tax Officer is assigned to carry out the administration of the Assam Agricultural Income Tax Act, 1939. The post is manned by the cadre of the Superintendents.

The Commissioner is an Ex-cadre post and the member of the lndian Administrative Service cadre ornaments this post He is entrusted to govern the tax administration with the help of the seasoned and veteran officers of the cadre posts. Primarily, he is not supposed to know the inner visions and techni¬calities and the taxing authorities, appointed to assist him, are to guide him in a right and proper way with unbiased briefs, clean and crystal projection of the facts. The notes are to be law, fact and docu¬ment based and are to be processed chronologically from the grass root level and onwards so as to adopt a constructive and judicious decision, implying thereby that, such a process is knowledge and experience oriented. Unless there is righteous advice and guidance, there may derailment or disrup¬tion in the walk on the main orbit smoothly and efficiently.

Taxation department is a post child after the independence of India. In pre-independence period, the taxation laws, namely, the Assam Agricultural Income Tax Act, 1939, the Assam Sales of Motor Spirit and Lubricants Taxation Act, 1939 and the Assam Amusement and Betting Tax Act, 1939 (operative since 1.4.1939,1.4.1939and 1.8.193 9 respectively), enacted under the Government of India Act, 1935, were administered by the Excise Department of the Government of Assam. After the enactment of the Sales Tax Law (the Assam Sales Tax Act, 1947) from 24.12.1947 under the Government of India Act, the taxation department took its birth. All the above taxation Laws including the Assam Professions Trades, Callings and Employments Taxation Act, 1947 (operative from 1.4.1947), enacted also under the Government of India Act, 1935, received proper safe guards under saving provisions, as envisaged in Article 277 of the Constitution of India (Constitution) adopted and effected from 26.1.1950. There are as many as nine taxation laws operative in Assam.

Two taxation laws, namely; the Assam Taxation) on Goods carried by Roads and Waterways) Act, 1954 and the Assam Tax on Luxuries Act, 1997 were nullified by the Hon'ble Supreme Court of India. A portion of the taxation law, namely; the Assam Entry Tax Act, 2001 was also declared to be null and void by the Hon'ble Gauhati High Court, but the State Legislature repealed the earlier Act and made re-enactment of the same in 2008, which became effective from 1.6.2008. The new Act is to give safe guard of the erstwhile incomplete proceeding and tax recovery of the old Act and the tax already collected, but all proceedings under the 2008 Act are to be taken up denovo for the purpose of admin¬istration of the new Act. Two other Acts, namely; the Assam Passengers and Goods Taxation Act, 1962 and the Assam Urban and Immoveable Properties Act, 1963 administered by the taxation department, were transferred to the Transport and Municipal Department in 1989 and 1971 respectively.

The power and functions of the taxing authorities are of three folds : (i) Executive, (iii) Quasi-judicial and (iii) Administrative. The former two are in relation to the administration of the taxation laws and the last one is for general administration.
The bifurcation of executive and quasi-judicial powers in the process of administration of the taxa¬tion Laws was essential, keeping in view, the mandatory provision of Article 50 of the Constitution, that is, the doctrine of Separation of Powers. The encroachment of powers by the executive exercising the quasi-judicial power at the same time may be counted to be pre-judicious, as will be evident from the verdicts of the Hon' ble Courts of law. An investing officer or any team of officers is not to exercise the quasi-judicial powers for the same issue.

The taxing authorities of the State are appointed by the State Government by notification in the Official Gazette with specification of the territorial jurisdiction. Only the Government can modify, extend or curtail such jurisdiction and none else. The Commissioner is to delegate his powers to the category-wise of officers subject to the conditions and restrictions imposed in the Act and the rules keeping in view the territorial jurisdiction, specified by the State Government. There should not be any overlapping or encroachments in the power delegation and power exercise scenario.

The Assam Value Added Tax Act, 2003 (VAT Act) came into operation from 1.5.2005. In the power delegation scenario, some shortfalls became obvious and reconciliation seems to be incumbent for proper and smooth administration of the VAT Act. For instance, the scope of power delegation has been restricted in rule 6 of the rules, framed under the VAT Act. This seems to have not been rightly observed. In the said rule, there is no scope for delegation of powers to the Assistant Commissioners of Taxes, but the Commissioner by Notifications dated 28.4.2005 delegated his powers to the said set of officers without any base. Unless rule 6 is amended and the words Assistant Commissioner is accom¬modated, some complications might be there in near future. The, Commissioner has not delegated his powers to the appropriate category of the officers to exercise the powers of registration, provisional assessment, best- judgment, assessment to the unregistered dealers, escapement of assessment, power of forfeiture, calling of returns, levy of interest and in many other aspects. Moreover, delegation of powers to compound offences to all categories of officers seems to be in contravention of the provi¬sions of rule 6. The definition of Assistant Commissioner and Superintendent has special significance in the matter of administration of the VAT Law, as such authorities are one and same in respect of a dealer in a particular area and there can not be any overlapping of territorial jurisdiction.

The department will have no measure of defence, if the exercise of powers without delegation or the powers delegated beyond the scope of rule is challenged.

The services of each category of official as well the taxing authorities are counted as indispensable for proper administration of the taxation laws of the State. None is inseparable from others and none is less important.

The grass root level officials are the members of the ministerial cadre. Unless the files are designed properly and systematically and moved with action, there may be dislocation in the system. In taxation department, the system of maintenance of records is very unique and very much methodical. The case records are to be maintained in double cover. The outer cover in side is meant for preservation of return at the first inside and preservation of the order of assessment in the last side. In between the first cover the correspondences and Miscellaneous or sheets are to be maintained period wise, year-wise, as the case may be. It is felt incumbent that a summery of the position of the files is maintained in side each case record. The Index Register and the Assessment, Demand and Collection Registers are like the mirror of a dealer and maintains the complete dossier. These records must have the parity with one another so that cross checking may yield a positive result.
The dealing assistants should make it a habit to make scrutiny of the case records from bottom to the top and to put up with action, wherever necessary. Where there is no action the portion is to be closed and tagged. Such scrutiny may ensure proper realization of tax,' if necessary by taking coercive measures. The records are to be maintained in such a way that no sort of entry is lost under any circumstances. }
The maintenance’ of case diary and put up diary are two basic requirements of the concerned deal¬ing assistants. The other records, like maintenance of Bakijai Registers, Register in relation to institu¬tion of court cases, composition of offences, imposition of penalty Register has a dire necessity. The summery at the end of each month is to be drawn up in the index Register, Assessment Demand and collection Register. The Assistant Commissioner or the Superintendents are to check the registers and records and ensure follow up action.

The field staff mainly connotes the Inspectors of Taxes. There main duty is to make survey of the area at least three times in a year. The survey should be made in respect of all the business of the dealers/assesses of the area. None is to be left out. Even a Pan shop or a Saloon should not be omitted. The detailed particulars are to be recorded in the survey register. Such survey register will present the complete picture of business position in the area. The survey should not be confined to the urban areas only, but it should be extended to the rural or semi urban areas, where there is flow of business. Survey Register should be maintained for each Act separately, so that complete picture of the assessees re¬mains visible. Such survey is subject to inspection by the superior authority at least twice in a year.
Enquiry in respect of any assessee and inspection of the business premises, godowns, loaded/un¬loaded trucks form the other parts of duties of the field officers. Such exercise is to be made with a sober approach but with firm stand.
The collection of particulars from different sources with verification of such collected particulars is another vital part of duty of the field officer.

The work of inspection, if necessary under the authority of search warrant and the preparation of the seizure list requires due prudence and proper application of mind. Likewise, the seizure of goods should follow the same footstep. It is to be made imperative that all inspection be recorded in the Register with the outturn thereof.

The powers and function of the Assistant Commissioners and the Superintendents of Taxes are quasi-judicial,. Registration, requirement to furnish security, administration of assessment proceed¬ings and penal proceedings, all are quasi-judicial ones. The power of the Civil Court has been vested upon the said authorities, who can enforce attendance of any person, administer oath or affirmation in connection with any proceedings, require production of documents and evidences for such purpose, as may be warranted.
The orders in each case must be law, facts and materials based with a self-speaking exposure There should not be any biasness in the contents of the orders, but with a judicious approach and out look. While administering the quasi-judicial proceedings, all facts are to be recorded properly. Though the Act has provided that the orders, instructions and direction of the Commissioner is binding to the officers subordinate to him, but a reservation is maintained, whether such imposition will ensure fair and judicious delivery of judgment. There is possibility of being influenced by any order, direction or instruction in the lawful administration of any quasi-judicial proceedings under the Act.

The Appellate Authority is a quasi-judicial authority, but it maintains its independent entity. The Commissioner is neither to delegate his powers nor to issue any instruction in administering the quasi-judicial appellate functions under the Act. The Appellate Authority is to dispose of the appeal petition after providing opportunity to the person appealed and the authority against whose order appeal peti¬tion has been filed. The order of the Appellate Authority is not be interfered, by the Commissioner but the Board of Revenue, Assam can entertain an appeal, if filed by the aggrieved party or the Commis¬sioner. The scope for filing writ petition before the High Court on the question of law and justice, however, remains open.

The power of revision of the orders of the Assessing Officer rests with the Commissioner or by the officers not below the rank of the Deputy Commissioner to whom such power is delegated by the Commissioner

The power of suo moto rests with the Commissioner or the persons appointed to assist the Commis¬sioner upto the level of the Deputy Commissioners. Three ingredients are necessary to invoke the powers of suo moto revision, (i) There must be an order (ii) the order must be erroneous and (iii) The order must be prejudicial to the interest of the revenue. Unless, these three ingredients exist, the invo¬cation of power of suo moto revisions is likely to be questioned. The order of suo-moto revision must reflect this vital requirement. When such ingredients are absent in the order, the order is likely to suffer from deficiency.

There had been an investigating wing in the taxation department, which was withdrawn in 1983 December without being re-designed or revived so far. Though the Sales Tax Laws of the State em¬powered the State Government to constitute such a wing for investigation and detection of taxes, the same has not been materialized. This has a dire necessity to check, detect and prevent evasion of taxes. An Audit Team has been constituted, which does not have any legal base and such functioning of the Audit team may invite controversy in the long run. That can be regularized by creating an investing wing with assignment of powers, inter-alia, for investigation, audit etc. Audit is a part of investigation and its limitation need not be confined to the case records only.

A discussion has already made that following the doctrine of Separation of Powers, the quasi-judicial powers of assessment and other allied matters are not to be exercised by the investing wing and the said power rests with the assessing wing in the units. This aspect requires a fresh consideration with proper review.

The operational aspects of the check post suffer from various shortfalls and lacunae. First, there is no Weigh Bridge; second, there is no proper platform to unload the goods with adequate man- power; third, there is no godown to store the goods, when seized. The misuse of Delivery Notes has become a regular phenomenon. It is believed that the check posts maintains the complete dossier of each dealer with registration numbers, commodities dealt in and other allied requisite information. How they can make it possible to evade payment of tax by furnishing false information in respecct of the goods carried by misrepresentation of facts? The particulars transmitted through inter-net may help to adopt follow up action and to apprehend such unscrupulous traders. It is however imperative that for the purpose of administration of the quasi-judicial proceedings or to bring criminal liabilities, the Deliv¬ery Notes must be physically available to the concerned Assessing Officers. Actually, the Check Posts are the competent authorities to arrest such foul play at source and to do away with the odds by initiating coercive measures like detention of vehicle, seizing of goods and forfeiture or disposal thereof.

There has been a good deal of deficiency in the matter of field inspectio, namely; at the business premises of the dealers, godowns, ware houses and carriers. The carriers place the pivotal role in indulging the evasion of taxes in collusion with the buyers and the sellers of the goods. Each officer is responsible for proper levy and collection of tax, checking, preventing and arresting evasion of taxes including collection of evaded and realization of outstanding dues in his area. In the past era, the good performances of the officer was a measuring scale to wards counting his efficiency and consideration for posting in suitable commercil areas. The inspection of cinema halls irrespective of any show was a regular phenomenon and it was made compulsory to maintain Register, to submit monthly statements in addition to submission of fornightly diaries.

In sixties and earlier, office inspection by the Commissioner at least three times in a year was regular phenomenon. Such inspections were marathon and very tough, but constructive. The inspec¬tion reports were to be typed half margin and preliminary following action reports were to be submit ted within a specified time. With the increase of volumnous works and strengthening the man power, such task was carried out by his juniors in an identical manner. This improved the work culture and accelerated the work efficiency.

The aim and object of audit are to detect the irregularities and to regularise thereof. When there is major lapses, the officers were answeable to that. The existing provisions of law were rectified to cure the defects. Now, the said culture has been changed. The audit encroaches its jurisdiction and makes excess.

Though the Assam Value Added Tax is a tax on the sales and purchase of the goods, but its aim and object is not identical to the previous ones. It is somewhat unique and technical and designed with a self-wheel-steering drive. The Act has, however, been designed identical to the previous sales tax law, whereby ample ambiguity and misconception prevail. For example, the spirit and intention of the Act was to levy tax on every stage of sales subject to credit of input tax. In the Act, contrary to the aim and object and the preamble, a tax measure for levy at the point of first point sales in respect of 23 items has been incorporated, though the Act has not specifically recorded anything about such departure from the main theme.
The VAT Law is for levy of tax on the sales or purchase of goods, but in the Act some measures of taxes were adopted to levy tax on exempted goods, production, total value of works contract, import of goods, which is beyond the spirit and intention of the Act. This type of payment of composition of tax obviously disrupted the levy of taxes at subsequent sales or inter-State sales making the whole process in the VAT system is anomalous and the process is likely to be foiled and frustrated.
The issue of Tax Invoice andivRetail Invoice are compulsory in the VAT regime to ensure proper accounting for and proper payment of tax thereof, but this has neither been complied with or not enforced for which trie leakage of revenue has become obvious.
The acceleration of activities in the field may discourage any such odds.

The administration of these two Laws are to be carried on under the VAT Law of Assam, but the aim and object of levy of tax under these Act are not identical tq VAT Law. It will be in the fitness of things to make provisions in the Act for independent process of administration to avoid any complications.

With a view to ensure correct and accurate levy of tax, the following important aspects requires to be looked into:
(i) There should be a survey in all tea gardens irrespective of big and smalls.
(ii) The accuracy of production of green tea leaves is to be verified with the volume of production of black tea, keeping in view the ratio 4.5 :1.
(iii) There should be cross verification of green tea production statement, furnished in the sales tax department with the statement furnished in the Central Excise Department.

The Central Sales Tax Act, 1956 has restricted the levy of tax in respect of the energy supplied outside the State, but contrary to this, the provisions for levy of tax on such supply, has been incorpo¬rated in the Assam Electricity Duty Act, 1963 in October, 1984.

The Assam Amusement and Betting Tax Act, 1939 is to be renovated and re-designed to make way for assessment, specification of violation of the provisions of the Act including evasion of taxes and penal measures thereof.

Actually, the above measure of tax is hot a tax on income, but it is a tax on Professions, trades, callings and employments. The income derived out of the same is counted as a measuring scale for the purpose of levy of tax. But with the amendment of the Act, 1992, there was a crack in the system and this required to be restored.

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