(i) An owner or a
transporter, importing any goods for the purpose of sales inside the State of
Assam, is to furnish a Delivery Note, obtained by the importer dealer from the
Superintendent of Taxes of the area before the Officers-in-charge of the check
post with the declaration that the goods will be accounted for properly and the
taxes, as due will be paid. (ii) When any goods are imported by a person for
consumption or use, a Road permit, obtained in the same manner from the
Superintendent of Taxes of the area is to be furnished before the
Officer-in-charge of the check post. (iii) When any goods enters into the State
of Assam from the places out side the State of Assam and moves to the other
State or States through the corridor of Assam, the owner of the goods or the
transporter is to obtain a Transit Pass on application from the
Officer-in-charge of the entry check post of Assam, for each consignment of the
goods and to produce the same before the
Officer-in-charge of the exit check post and to obtain endorsement thereon
before such goods are moved to the places out side the State of Assam. The said
endorsed Transit Pass has to be surrendered before the
Officer-in-charge of the entry check post.
Liability to pay tax
When any consignment of
goods, taxable under the Act, is imported, the owner of the goods (dealer) is
to pay tax on the sale value of such goods. When any person imported any goods
for own use or consumption on presentation of any Road Permit, he is liable to
pay tax under the Assam Entry Tax Act, 2008 (Entry Act), if the goods are
taxable under the said Act. When any person obtaining the Transit Pass, fail to
surrender the same before the Officer-in-charge of the entry check post with
the endorsement of the Officer-in-charge of the exit check post within the
specified period of thirty days, the Officer –in-charge of the entry check post
is to presume that the goods did not move to the places out side the State of
Assam, as designed and the same was consumed in the State of Assam, he is to
levy tax and impose penalty after providing an opportunity of being heard.
Sales of goods in the
course of inter-State trade or commerce
The Central Act is to
govern the procedure of levy of tax on the sales of the goods made in the
course of inter-State trade or Commerce. The said Act has provided relaxation
(or exemption) in the matter of levy of tax in respect of the sales of goods,
effected by transfer of documents to the title of the goods during the movement
of such goods from one State to another, export of goods out of the territory
of India, sales of goods made to the exporter in the course of export, movement
of goods made to places out side the State of Assam not by virtue of sale in
the course of inter-State trade or commerce, but by way of stock transfer. Such
relaxation (or exemption) is, however, not admissible as a matter of right, but
it is subject to scrutiny and examination on the merit thereof.
The sales or purchase of
goods in the course of inter-State trade or commerce are of two folds, namely;
(a) by occasioning the movement of
goods from one State to other; (b) effecting sales by way of transfer of
documents of the title of the goods during the movement of the goods from one
State to another. The provisions of the Central Act further made it clear
that where any goods are delivered to a carrier or other bailee for
transmission, the movement of the goods shall, for the purpose of (b)
above, is deemed to have commenced at
the time of such delivery and terminate
at the time, when the delivery is taken from the carrier or bailee. Apparently, therefore, the sales made by way
of transfer of documents to the title of the goods can as well be affected,
when the goods are placed with the carrier for onward movements after the first
sale is affected. The Central Act further provided that when any sale of goods
is affected by transfer of documents of title to such goods during their
movement from one State to another, any subsequent sale made during such
movement by transfer of documents of the title to the goods to the registered
dealer, shall be exempted from tax under the Central Act, subject to production
of the requisite documents/declaration in this behalf.
Sales by transfer of
documents to the title of the goods-procedure thereof
(i) A
sale of goods, when affected between two dealers and moves to the first
purchaser of such goods, the first purchaser may enter into a contract of sale
or supply with a second purchaser in respect of such goods. The said first
purchaser in that case may make the sale of the said goods to the second
purchaser by transfer of the document to the title of the goods during the
movements of such goods by way of making endorsement of the documents relating
to such goods to the second purchaser of the goods. Any delivery taken by the
first purchaser and thereafter re-booked and despatched to the second
purchaser, will foil the purpose of such subsequent sales by way of transfer of
documents to the title of the goods and it amounts to be a fresh sale.
(ii)
A section of the first purchaser use to make contract of sale with the second
purchaser before the first sale is affected and advises the first seller to
send the goods to the destination of the second purchaser. The first seller,
while making the despatches of such goods direct to the address of the second
purchaser, in some cases even use to despatch such goods in the name and
address of the second purchaser and consign such goods to the destination of
the second purchaser on self consignment basis or in the name of the second
purchaser of the goods.
Such
deal amounts to be a pre-determined sale and not a sale by way of transfer of
documents of the title of the goods during the movement of such goods. The
so-called sale or purchase of such goods; can not thus be termed as sale during
the course of movement of the goods. The entire concept of sale in the course
of movement of goods in such case is beyond the spirit of the Central Act and
the purpose is thus obviously defeated.
Procedure
of sales by way of transfer of documents of the title to the goods
The
actual procedure pertaining to the sales of goods by way of transfer of
documents of the title to the goods during such movement of goods are, as
below:
(i)
In the normal course, the sale made by the first selling dealer to the first
purchasing dealer, who is to be a registered dealer, is to be supported by a
declaration in Form ‘C’ to be furnished by such first purchaser to the first seller, making it
convenient to get the benefit of tax at the concessional rate.
(ii)
In the case of the sales by transfer of documents to the title of the goods,
the first purchaser without taking the delivery of the goods, is to make
endorsement in the Consignment Notes (viz Road Receipts, Railway Receipts, as
the case may be) in favour the second purchaser, making it convenient on his
part to take delivery of such goods;
(iii)
The first purchaser (second seller) is to collect Form ‘C’ from the third
purchaser and is to obtain a declaration in Form E-I from the first seller so
as to establish his claim of sales by way of transfer of documents so as to
derive the benefit of exemption of tax. If such declarations are not furnished
and the transactions are not made in accordance with the procedure, laid down,
the benefit of any exemption of tax under the Central Act by the first
purchaser, that is, the second seller of the goods; will not be admissible.
(iv)
In relation to such deal (sale by way of transfer of documents of the title of
the goods), there should not be any variation of the quality and the quantity
of the goods.
Mysterious
ways of sales
Of late,
it could be learnt that a section of traders, industrial organization and the
public sector undertakings are importing the goods including the tools,
equipments, machineries etc by trucks from the places out side the State of
Assam for consumption or use within the State of Assam. The invoices in
relation to the purchases of such goods and the consignment notes covering the
movement of the goods by trucks contain three names and addresses. One is the
first out side the State of Assam, the other is the second person in Assam and the
third one is the person/organization within the State of Assam. This was learnt
to be a unique way of movement of the goods. When the existence of such three
persons in the same deal, came into question, they are said to have explained
mysteriously that these are the E-I sales deal and the middle person is
exempted from any tax and last person is liable to pay tax under the Entry Act.
Assuming that it was alleged to be an E-I sale (though such term is misnomer),
how the name of the third party (second
purchaser) could take berth in the original invoice and the despatch documents
(viz in the Consignment Note)? The existence of the third party in the original
invoice and the despatch documents obviously construes that the sale made to
the third party was pre-determined and, that too, before the original movement
of the goods was affected. As already discussed, this deal can not achieve the
quality and character of sale in the course of movement of goods by way of
transfer of documents to the title of the goods (in the language of the
party/parties E-I sale of goods). The second party is, therefore, not entitled
to any benefit of exemption of taxes under the Central Act. A number of such
parties could not face such legal stand and the second party had to pay tax on
the value of the goods and penalty for adopting such fraudulent means. Though
the actual magnitude of the tax and penalty could not be ascertained, it
extended to some lakhs of rupees. This
seems to be a big achievement on the part of the Officer-in-charge of the check
post in Assam.
The self-seeking tax-dodgers, therefore, designed their new way of action.
Circular,
issued by the Commissioner of Taxes
The
Commissioner of Taxes, Assam
at the instance of the Tax Bar Association, Public Sector Undertakings, dealers
issued a circular No.4/2014 on the 30th day of June, 2014,
the contents of which are, as below :
“Of
late several representations from the Tax Bar Association, Public Sector
Undertakings and dealers have been received regarding detention of vehicles
carrying goods meant for E-1 transaction at the check post o the ground that
the delivery note attached with other supporting documents was not issued by
the first buyer in Assam
but the subsequent buyer. The matter has been examined and the department is of
the view that in case of vehicles carrying goods meant for E-I transaction, the
check post authority shall also accept the delivery note/road permit issued by
the subsequent buyer. Non acceptance of the statutory Form by the check post
authority issued by the subsequent buyer may also result in loss of revenue in
the form of entry tax payable by an importer to the department.
Henceforth,
a check gate authority shall not detain any vehicle carrying goods meant for E-I
transaction and levy tax, penalty on the technical ground that the statutory
form was not issued by the first buyer in Assam but by the subsequent buyer.
In case any doubt or dispute, he shall refer the matter to the Apex office
without detaining the vehicles for necessary action.”
The
contents of the circular seem to be most amusing. It seems to be a product of
representations made from different angles, as reflected above. There is, in
fact, no term E-I sale in the Central Act, but the real term is ‘sale in the
course of movement of goods by transfer of documents to the title of the goods.’
Primarily, the term E-1 sale used in the circular was a misnomer and it
lacks legal support. E-I Form is one of the instruments to provide exemption of
tax on such sales in course of transfer of documents and it can-not be termed
itself as sale. As the tax-dodging preventive machinery at the inter-State
border, the Officer-in-charge of the check post is bound to examine the mode of
the deal and genuineness thereof and when any iota of doubt takes place
in his mind, he has the full authority to detain the vehicle for the purpose of
further enquiry or investigation. If after such enquiry or investigation, the
circumstances are so warranted, the Officer-in-charge of the check post shall
have no other alternative but to resort to measure of levy of tax and
imposition of penalty.
From
the tone of the circular, it transpires that the pertinent question involved in
the matter was on the genuineness of the deal of sales during the course of
movement of goods was ignored. It was already discussed that such sales
affected during the course of movement of the goods can not be pre-determined.
If the original booking documents and other connected papers like challans,
invoices were pre-destined, this can not be other than a pre-determined sale
and the interim dealer (the first purchaser of the goods) can not escape from
the liabilities to pay tax. Mere payment of tax under the Entry Act is not
enough and non-submission of Delivery Note can not be a technical ground and it
is not proper to draw up such conclusion. The Officer-in-charge of the check
post is the best authority to exercise his prudence and apply his best judgment and there should not be any
interference at any level. The taxation laws provided wide scope to file appeal
or revision petition by a dealer, when aggrieved by any order of the taxing
authorities. Hence, the representations from various angles, as stated and the
circular issued thereon amounts the curbing the power of the Officer-in-charge
of the check post in matter of prevention and checking of evasion of taxes.
This may be construed to be premature, prejudicial besides being detrimental to
the interest of the revenue of the State.
We
hope, a review may be made on the entire episode after examination of the facts
and materials for the best interest of the revenue of the State.
