Monday, November 24, 2014

Present glory- Look back to the past

              Past, present and future are the three inherent components of human life.  One’s glorious present might have a dark past. This eventuality must always be remembered and reckoned with right earnest. Such person may be elevated to the mount of glory. He may have acquired immense fortune, but he should remember the past and the sacrifices made for him by the elder, primarily playing the pivotal role in building of his maiden career with hard toils and immense hardship. With such a creeper like growth and expansion of career, he may reach to the climax, but the remembrance of the past with a profound gratitude will always be counted to be a noble and healthy gesture. While ascending to any glorious position with man power, money power by occupying a high status in the society, a number of such persons may have the occasion to lose his mental equilibrium and makes the past to be buried into the grave. He is engrossed with his present glory and grandeur and it rather becomes ornamental to him with, however, a hollow in-look. He forgets his originality, past way of life; sacrifices made by the elders. With so called high profile, he becomes profusely confused and becomes proud. He fails to recognize the main ingredients and also that of the real builder of his life, derecognizes the sacrifices and the benevolence by speaking public nonsense against such person, by ignoring and insulting and even some times adopting the hostile attitude at the conspiracy and instigation of the inmates and other self- interested persons.
           That, no doubt, makes the way of his moral degradation, his glory and grandeur of life use to recede and this ultimately becomes instrumental to the gradual sorrowful and gloomy hours of life with the landslide fall. God is almighty. He has always blessing to the nobles, but becomes unkind to the evil doers with odd dealings, whoever it may be.

Friday, November 21, 2014

Letter to Shri Narendra Modi, the Hon’ble Prime Minister of India

Shri Narendra Damodardas Modi,
Hon’ble Prime Minister of India,
NEW DELHI-110-011

Respected Prime Minister Sir,
                   At the out-set, I take the privilege to convey my high regards to you. After your assumption of office as the Prime Minister of India, I wrote a letter to your good-self on the 30th May, 2014 and pointed out some genuine problems of the State of Assam, wherefrom I hail. I was favoured with the acknowledgement letters dated 21.07.2014 and 29.08.2014, issued from the Prime Minister’s Secretariat. In fact, we are glad to find, in the meantime, that you are providing a profound and dynamic leadership of the great Nation, the Sovereign, Socialist, Secular, Democratic, Republic of India and you have been implementing many of yours noble thought- provoking- visions in the global platform as well as in the internal scenario of the country with zeal and enthusiasm. Your deep sense of fraternity towards the common people and maiden efforts for uprooting the acute curse of poverty of the poor and downtrodden people of the sub-continent with other prevailing odds irrespective of any class, creed, cadre and religion so as to achieve a ‘Swachha Bharat’(Clean India), have obviously touched the hearts of the mass people. We found from the media publications and projections that you are on the heels to implement the various plans and programmes, designed by your Government, restlessly, but with utter zeal and efficiency. We congratulate you for your sincere and honest efforts and endeavours for such wonderful gesture and modus-operandi towards our mother land, India. We are also looking forward that the hard days, experienced by the people with various criticalities, complexities and eventualities, will very soon come to end. Our moral support and good wishes will persist in such constructive missions.
Sir, you are aware of the fact that the North Eastern region of the country is very much backward, compared to the most other States of India. Even though there are immense visible and potential resources in the region, these could not be utilized and mobilized properly for some obvious reasons, which you must have ascertained by this time. The political and administrative doldrums are also the causes of such odds, which I need not explain any more. There had been exploitations at various angles from in and out since the British era and this has not made a halt even after 67 years of post -independent period of the country. The people of Assam are being deprived in many aspects of the avenue of employment and the efforts for eradication of the shyness of fiscal condition have been quite meager. The main agricultural and mineral based industries, like; tea and petroleum are not for the poor classes of people and the honey is suck by the privileged ones. The predominance of capitalism is getting the momentum and the concept of socialism, as ensured in the preamble of the Constitution of India seems to be nothing but almost a farce. The lacks of sincere endeavour on the part of the Government of Assam as well as the cipher attitude of the Government of India towards the people of this poor State of Assam are entirely and profoundly responsible for these odds. The people of Assam naturally desire that a proper study, research and analysis on the causes of economic deficiencies of this region will soon be taken up by the newly installed Government of India, of which you are the head at present, so as to bring out the designed and suitable way for its proper and lasting solution and onward way of remedy.
Sir, Assam is a part- State of India, which is full of ancient historical and mythological legendary. The holy temples like  Kamakhya, Bhubaneswari, Bagalamukhi, Chhinnamasta, Dhumawati, Ugratara, Sukleswar, Bhairabi, Umananda, Nabagraha and Basistha in greater Guwahati, the holy temples of Lord Vishnu (Ananta Sayan) and foot- prints of horses of Vir Arjuna on his way back from Manipur, located at Aswaklanta on the Brahmaputra river bank, Madan Kamdev, Doulgovinda and Dirgeswari temples of North Guwahati, the Agnigar Hills (Usha- Anirudda’s meeting place), Bamuni Hills (King Ban’s royal palace), Mahabhiarab temple, the foot steps of Shiva Shankar in Hari-Har battle at Tezpur, the Mahamaya temple, near Dhubri, the Sree Suryya and Tukreswari temples near Goalpara are proclaiming the glory of the Ramayana and Mahabharat and other allied eras. In fact, Guwahati is known as the Pancha tirtha ( five pilgrimage) with the combination of (i) Umachal, (ii) Aswaklanta; (iii)Sukleswar; (iv) Umananda and (v) Manikarneswar.  It is, however, painful to note that adequate development of communication facilities with other requisite infrastructures are yet to be achieved and many of these places of historical and mythological legendary are yet to take berth in the Tourism Maps of the State and the country.
Sir, it might have been in your knowledge that another mythological pilgrimage of the Hindus exists about 35 kilometers away from the north-east boundary point of Assam, that is, in the Lohit district of Arunachal Pradesh. This holy place is known as ‘Parashuram Kund’. The mythological events involved are that the river Brahmaputra originally hailed from Manas-Sarowar of China and made a halt in the aforesaid hilly area of North East Frontier Agency (now Arunachal Pradesh). In this halted water-pool, Parashuram, who after killed his mother by an axe at the instance of his father, the great sage Jamadagni and could not part with the axe from his hand, came to this pool and took his bath. Strangely enough, the axe was parted with from his hand immediately after the bath. The mythological events projected in this behalf was that, the said water-pool, which remained  halted, started moving onward to the west, while Parashuram went ahead by walking after taking his bath. The course of the onward flow of the river became known as ‘Lohit’. A few miles after, it took the name ‘Brahmaputra’ and it rolled through the State of Assam and finally merged with the Bay of Bengal crossing the territory of Bangladesh with a separate name ‘Meghana.’  Since centuries back after this miraculous event, this ‘Parashuram Kund’ was recognized as the pilgrimage of the Hindus. In the‘Makar Sankranti’ period (juncture of Poush-Magh month in the middle of January), many religious minded people (pilgrims) use to come to this Kund from the various parts of India, not to speak alone of the North Eastern States of India, assemble in this holy place and take the baths and makes prayer with devotion. There have been a heavy congregation of the people and the festival is observed with a grand fare (mela) and other cultural functions apart from the religious ones. Surprisingly enough, the water of this Kund, full of current, is always visible with a sky blue colour. No body could unveil the mystery of existence of this unique colour. Recently, I had the occasion to go to this beautiful, but hazardous area to have a full glimpse of the site and I partly took my bath in its water.
Sir, as I stated earlier, this pilgrimage is located in Arunachal Pradesh, but the said Government, as I learnt, does not take any interest or initiative for the development of this area including the ways to reach the last point through the insecure cement-built steps. There is no smooth path and the lower portion near the water level is very much tough and dangerous.  It is hardly possible on the part of the teen agers, the ladies and not to speak of the old aged persons like us (of about eighty years of age) to reach to this hazardous place safely. I learnt that in every mela time (in mid January), the holy minded people of Tinsukia and surrounding areas use to make some cleaning and reforming activities, but that is not enough.
            Sir, it is not out of the place to state that with the co-operation of the Government of Arunachal a Buddhist Pagoda and a Buddhist Meditation Centre nearby at Chowkham, beset with, modern and sophisticated constructions, having other modern infrastructures, have been set up, but the said Government, as I learnt did not take any interest and initiative for the reformation and renovation of this old religious heritage even for the sake of ensuring the theme of secularism. Similar case, you will find in another Hindu temple, namely; ‘Malini Temple’ (a deity of Devi Durga) in Arunachal Pradesh, not far from Dhemaji-Chilapathar area, where a temple is there, which is, however, on the point of decay due to lack of proper maintenance and providing other allied infrastructures.
            Sir, such an indifferent attitude was as well projected in the Madhupur Satra of Shri Shri Sankar Deva, the great Vaishnava Saint of Assam at Coochbehar in West Bengal, but the Government of Assam took up ample measures for construction of buildings with other infrastructures, which has now reached almost to a finishing stage. It is not known as to why the Government of Assam did not pay any importance in the matter of reformation and renovation of these holy Parasuram Kund and Malini temple in collaboration with the Government of Arunachal Pradesh so as to perpetuate the heritage of this historical and mythological legendary. Like Hardwar and other hilly areas of India, if a Rope Way system is introduced over the said holy Parasuram Kund the entire scenery will be more attractive and enjoyable for the devotees visiting the area. I have deep conviction of mind that the Government of India would have surely come forward and projected healthy gesture to make reformation and renovation of these heritages and taken proper steps to make it a protected area with proper developments, if the matter would have been taken up earnestly by the Government of Assam since decades back. In fact, the Government of Arunachal, which is mainly manned by the Buddhists and Christians, may hardly take any keen interest in the matter.
            Sir, as a sensitive citizen of India, I crave for your kind indulgence to bring this fact to your kind notice. I shall be very happy and thankful to you, if you kindly look into this matter personally and include these reformation and renovation programme in your road map agenda of the Government towards making a ‘Swachha Bharat’ (Clean India) and execute the same with all modesty, impartiality and sincerity at your command.   

With best regard.                     
Yours sincerely                                                                                                          
(Mrinal Kanti Chakrabartty)
Mrinal Kanti Chakrabarrty
R.G.Barua Road,10-Lakhimipath,
Guwahati-781-024, India

Monday, November 17, 2014

Friday, November 14, 2014


Human life is full of complicacy. One has to work hard to attain success in his struggle for existence. In such a process, he has to sacrifice a lot without caring for his personal gain or comfort. Side by side, he has to take care to uplift the position of a downtrodden family with his untired efforts and immense sacrifices. But when there is any up-rise of the standard of the family and all members get well established, the beneficiaries use to forget the past, find it difficult to recall one’s past sacrifices and is very much conscious to maintain the present aristocratic way of life with so called austerity of his official position and gorgeousness in public life. The past sacrifices made by the chief architect are buried into the grave. He not only ignores the ardent sacrifices of the sailor of the boat, which was, in fact, practically the ladder of his prosperity, but also does not hesitate to use abusive words to make insultation in various ways. His position in public eyes, however, does not accelerate, but all use to condemn such prideful gesture and practically, he becomes a laughing stock amongst all.

 These types of happenings are not rare now days, but are frequently visible.

Mrinal Kanti Chakrabarrty
R.G.Barua Road,10-Lakhimipath,

Saturday, September 13, 2014


Dealers’ Accounts, Returns, Documents, Evidences Are To Be Treated As Confidential-Otherwise?

   The sales tax laws, currently operative in the State of Assam, are the Assam Value Added Tax Act, 2003 (VAT Act) and the Central Sales Tax Act, 1956 (CST Act). The former governs the sales and purchases of goods including the levy and realization of tax with other allied matters within the State of Assam, while the latter identically governs the sales and purchases of the goods made in the course of inter-State trade or commerce. Except some few provisions like registration, requirement of security, institution of case in the court of law, imposition of penalty, stock transfer and export of goods etc. all other provisions of the CST Act are governed by the VAT Act. A dealer, registered under the VAT Act and/or the CST Act, has to submit return in accordance with the provisions of said Acts in the prescribed manner after which, the taxing authorities of the State of Assam (the Assistant Commissioner of Taxes or the Superintendent of Taxes) takes up the proceedings for assessment of tax under the Acts, as detailed in the VAT Act. A dealer may at any time, require appearing before such taxing authority for the purpose of verification of the books of accounts with other documents and evidences. He may also require to appear accordingly for the hearing of the assessment proceedings and to produce the books of accounts, documents and evidences etc. pertaining to the return submitted by him for verification or examinations by the said taxing authority for the purpose of levy of tax with entertainment of the claims of sales made at the concessional rate of tax or for exemption of taxes, as the case may be.  If the taxing authority finds any disparity, discrepancy or irregularity in the books of accounts and it has the reasons to suspect that there was evasion of taxes, the said authority may seize such books accounts etc. assigning specific reasons to be recorded in writing and grant such dealer a receipt, pertaining to such seizure. Such seized books of accounts can be retained in the custody of the seizing authority for so long as it may be necessary, but it can not be retained beyond one hundred twenty days without the approval of the Commissioner of Taxes, Assam. No books of accounts can be retained by the taxing authority merely by granting a receipt without making any formal seizure and this may be counted as illegal and unauthorized possession.

The VAT Act provided that all particulars contained in any statement, return furnished or accounts or documents, produced by a dealer in accordance with the said Act or in any record of evidence given in the course of any proceedings under the Act (other than the proceedings in the criminal court), or any proceedings relating to the recovery of demand, for the purpose of the VAT Act, are to be treated as confidential and notwithstanding anything contained in the Indian Evidence Act, 1872, no court saves, as aforesaid, is entitled to require any Government servant to produce record or any part thereof or give evidence before it in respect. The said Act, however, relaxed the restrictions and laid down that this can be made available for the following purposes:

(i)for the purpose of any prosecution under the Indian Penal Code, 1860 or the Prevention of Corruption Act or this Act or any other law for the time being in force; (ii) for furnishing any particulars to the Government or person in execution of the VAT Act; (iii) such disclosure may be occasioned by lawful employment under the said Act or of any notice or the recovery of any demand; (iv) for any such particulars  to the Civil Court in any suit to which the Government, which relates to any matter arising out of the proceeding of the VAT Act; (v) any particulars to the officers, appointed by the Comptroller and Auditor General of India for the purpose of audit; (vi) to the authorities conducting the departmental proceedings against the taxing authorities; (vii) to the Central and the State Government authorities for the purpose of levy and realization of tax; (viii) to Bureau of Investigation (Economic Offence) and the Statistical authorities; (ix) to the Central Government for administration of any law in force in India and (x) for publication of any particulars of the dealers in the public interest. These restrictions and relaxations of the VAT Act as well will govern in the books of accounts, documents and evidences under the CST Act, as enunciated in the CST Act. The Act also provides in this context that if any employee of  the Government discloses any of the particulars, referred to the above, he shall on conviction be punished with imprisonment, which may extend to six months or with fine or both. Such prosecution is however, to be instituted without the previous sanction of the Government.

When in course of verification or examination of the accounts, a taxing authority is primarily convinced that there is any evasion of taxes or any attempt thereof or any misuse of the declaration issued or any false or fabricated documents and declaration were produced by him or there is any other violation of the provisions of Acts is there, the taxing he may  provide such dealer an opportunity to submit his written reply as well as of being heard, specifying the charges for institution of a case in the court of law or for imposition of penalty under the provisions of the Act. The offence may as well be compounded, if such dealer offers any prayer and subject to a mutual agreement, arrived between the two to a departmental compromise in this respect with quantum of composition money to be paid. This applies to the cases under the CST Act, which are governed by the VAT Act. There is, however, restriction in respect of the cases under the CST Act where restrictions are obviously there for imposition of penalty or compounding the offences. The institution of cases in the court of law is the ultimate course of action in such cases. In the case of institution of case under the VAT Act, previous sanction of the Commissioner is to be obtained, while previous sanction of the State Government is necessary in respect of the cases exclusively governed by the CST Act. However, before taking up any coercive measure, the assessment of tax is to be completed and the quantum of tax liabilities is to be ascertained. The contemplated penal measure is to be recorded in the said order in absence of which it may be construed that the latter action is product of after thought of the taxing authority.

         A news item pertaining to the evasion of taxes amounting to about ten crore of rupees by two dealers of Guwahati was published in a section of dailies at the instance of the taxing authorities of Guwahati stating , inter-alia, that Ezahars were lodged before the Dispur Police Station in that respect.  No good citizens will ever appreciate or encourage such tax dodging activities by any unscrupulous dealers and will always appreciate the coercive measures to be taken in this behalf in accordance with the provisions of the law enforced in this respect.  The following pertinent questions have dragged us to utter confusion :-

(a) Whether the delinquent dealers were provided with any opportunity of being heard for the alleged foul play adopted by them before lodging ezahar, as in the quasi-judicial proceedings it it seems to be very much incumbent?

(b) Whether they were informed of their additional liabilities to pay the evaded tax to the extent of about ten crore of rupees by serving the demand notice after assessment, which is the normal custom of the taxation department?

( c) Whether there has been any amendment of the VAT Act as well as the Central Act relaxing the mandatory provisions that the returns, accounts, documents and evidences submitted by the dealers before the taxing authority have ceased to be confidential making the same access to the police officers by way of filing F.I.R. under the Indian Penal Code ignoring or superseding the restrictions under the VAT and the CST Act, if already there?

As an officer working in the tax department for long thirty two years and enjoying more than 18 years of post retirement period, we are very much confused for adoption of such a way of action. We hope, the benign Government will kindly be pleased to clarify for our future knowledge.

(Mrinal Kanti Chakrabartty)
R. G. Barua Road, Lakhimipath,Guwahati-781024

Friday, September 12, 2014

Taxation Department- Power Exercise Scenario (Upliftment of economy in a righteous way)

Appointment and Delegation of powers
 The tax administration of Assam was being carried on in a disciplined way within the ambit and competence of the taxation laws, operative in the State. There are as many as nine taxation laws eight of which were enacted by the State Legislature, while one being by Parliament. Each law plays the pivotal role towards the augmentation of revenue to the State Exchequer. The Commissioner of Taxes, Assam is the supreme authority for the purpose of administration of the taxation laws and is appointed by the Government of Assam for the purpose of carrying out the purposes of the Act along with the officials of different cadres right from the rank of the Additional Commissioners of Taxes to the grass root level, the Inspectors of Taxes, specifying the area of functioning in respect of each of the officers. The Commissioner is equipped with the supreme powers to carry on the administration of the Acts, while for the smooth conduct of the administration; he has been empowered to delegate his powers to the officers, appointed to assist him befitting to their status, subject to the conditions and restrictions, as envisaged in the Acts and the rules framed thereunder. It is the prerogative of the Commissioner to assign the powers, to detail the functions of the taxing authority to the best of his judgment in consideration of the knowledge of law, working ability and other allied factors. In the past, the posting of the officers in the important revenue areas were made in consideration of seniority and capability to run the revenue administration, beset with, the neck of proper collection of revenue including the arrear taxes as well as to prevent, detect and arrest the evasion of taxes by the tax dodgers. A dossier of the officers was maintained thereon. As the days are going on, such mode of consideration has been taken a good bye. In the past, the opinion and recommendation of the Commissioner in the matter of posting and transfer, used to gain priority, but now in reverse to that the political views and recommendation are gaining the momentum in many cases. The posting of officers in the check posts and other important areas depends on the choice of the officers and not in the interest of public service. Naturally, erosion has been taken place in the proper and zealous functioning and there has been gradual deterioration of the administration. The Commissioner sometimes fails to exert power and a set-back becomes obvious.
Duties and resposibilities
The duties and responsibilities of the taxation officers have been widely tabled. In a brief (i) an Inspector of Taxes is meant for survey, inspection, checking, preventing and arresting  the evasion of taxes, collection of particulars from different sources for the purpose of verification of the same in the field as well as to take note at the time of assessments of taxes, besides other allied works; (ii) an Assistant Commissioner of Taxes or a Superintendent of Taxes of the unit is responsible for registration of a dealer, for realizing security money to ensure proper payment of tax and proper custody of statutory declaration forms; to make assessment and realization of tax including the arrears taxes, inspection, checking  and detection of evasion of taxes; general supervision of administration in the area and other allied works; (iii) a Deputy Commissioner of Taxes of the zone is to supervise the works of the officers of the units in all spheres including inspection of offices, looking into the position and progress of  collection of revenue with arrears, chalking out special drive for collection of revenue including the arrear taxes and maintenance of liaison with the Commissioner of Taxes,(iv) Deputy Commissioner of Taxes (Appeals) is to function as the appellate authority against the order of assessment imposition of penalty, passed by the Assistant Commissioners of Taxes and the Superintendents of Taxes, when aggrieved by a dealer,. The powers and functions of the Deputy Commissioner (Appeals) are independent and he is not act  by virtue of the powers by the Commissioner, but under the statute of law; (v) Joint Commissioner of Taxes is to discharge the powers and functions, assigned by the Commissioner on different subjects, to make inspection of the subordinate offices, hear revision petition and other allied matters; (v) Additional Commissioner of Taxes is to render assistance to the Commissioner in different matters including inspection, general and law administration,  hearing of revision petition and other allied matters. Each of the officers except the Deputy Commissioner(Appeals), as stated above, is equipped with the powers, delegated by the Commissioner befitting to their status as well as in consideration of the administrative needs.
Enforcement wing
(Repeal Act)
An Enforcement wing was created in the taxation department in the year 1964 for the purpose of checking, preventing and arresting evasion of taxes. In fact, there was no specific provision in the sales tax laws operative in the State to create such wing at the relevant times and the same used to run as a matter of convention. The wing was centrally operated, being manned by one Assistant Commissioner of Taxes with numbers of the Superintendent of Taxes and the Inspectors of Taxes, subject to the supervision and control of the Commissioner of Taxes. An Inspector of Taxes was posted in each unit for the purpose of collection of information and to provide assistance in different aspects to the central wing. In 1967-68, the said wing was decentralized and each zonal Assistant Commissioner was entrusted to head the zonal wing in their respective zones with the Superintendent of Taxes and Inspectors of Taxes placed at his disposal. In the year 1981, in addition to the existing set-up, another Enforcement wing was created centrally under a Deputy Commissioner of Taxes with the numbers of the Superintendent of Taxes. There had been complaints at different corners about the mal-functioning of the officers of the central wing as well harassment to the traders. A section of traders and professional personnel were on the heels to abolish the Enforcement wing. They could manage the bureaucratic and the political set-up of the relevant time and succeeded to dismantle this important wing including the zonal level wings late in December, 1983. Instead of bringing the officers, alleged to have been involved in mal-functioning, to book, the abolition or withdrawal of the wing was unfortunate and was detrimental to the interest of the State revenue. The officers might be bad, but the aim and object of the wing was revenue oriented. The funniest part of thing is that, the Government did not revive the said organization during these long 31 year and encouraged a section of unscrupulous traders to move freely towards evasion of taxes.
(AGST Act)
Previously, four taxation laws in relation to the sale and purchases of the goods were operative, but the same were amalgamated, consolidated to give birth to a single Act, namely; the Assam General Sales Tax Act, 1993 (AGST) with effect from the 1st July, 1993. This Act empowered the State Government (Government of Assam) to constitute a Bureau of Investigation or Vigilance or Enforcement wing consisting of the Officers, appointed by the Government for the purpose of collection of intelligence, enquiry and investigation in connection with the evasion of taxes. A vigilance group was constituted by the Commissioner of Taxes and the officers comprising of such group, were delegated with the powers, but the same was not constituted by the State Government, as laid down. The officers entrusted in the group as well created some displeasure in the name of checking of evasion of taxes, which created out rage amongst the different section of tax payers.
(VAT Act)
The AGST Act was repealed and in its place the Assam Value Added Tax Act, 2003 (VAT Act) came into operation from the 1st May, 2005. In the said Act, a provision to create a vigilance wing was incorporated as well. Unlike the AGST Act, the power to constitute a vigilance wing was vested to the Commissioner, but such group is to be constituted out of the officers, appointed by the State Government to assist the Commissioner. The vital part of such appointment is that the territorial jurisdiction of the officers is to be specified in such appointment made by the Government. The constitution of the vigilance wing by the Commissioner, therefore, has a pre-condition that the appointment of the tax officers for carrying out then purposes of the Act must contain the territorial jurisdiction, as notified by the Government. While constituting such vigilance wing the Commissioner can not specify the area out of his own, but it is relevant to the appointment. Within five days of coming of the VAT Act into force, the Commissioner by a notification delegated his powers to a set of officers to exercise powers under the said Act. The salient feature of such delegation of power was that, it was not preceded by any notification pertaining to the appointment made by the Government with the territorial jurisdiction. The said notification seemed to be not proper in the eye of law. However, with the transfer of the entire group of the officer, this wing ceased to function.
The delegation of power, as stated in the pre-para included,  inter-alia,  the power to make provisional assessment, re-assessment on the escaped or evaded taxes, to undertake the special mode of recovery, to levy interest, to purchase goods in case of under valuation, to compound offence, to impose penalty etc. Actually, the doctrine of separation of power, as envisaged in the Constitution and the definition of the term ‘Superintendent’ left no scope for such delegation of powers of assessment, re-assessment, imposition of penalty etc. Apparently the said delegation of power suffered from shortfall and impropriety.
Functioning of taxing authorities without legal authority
Presently, there is no such vigilance wing, constituted by the Commissioner in the manner, discussed above. It has been, however, learnt that a set of officers are being detailed to roam and function in the matter of inspection of the traders’ business premises, godown, transporters’ godown premises, to make interception of the goods vehicles and inspection thereof throughout the State of Assam. No appointment of such officers under the Act with the territorial jurisdiction was made by issue of notification by the Government and no delegation of power was conferred by the Commissioner in this respect. This seems to be a unique way of functioning currently, where the legal provisions have been given a good bye and some unwritten jungle laws have been introduced.
We have full moral support to undertake checking activities with drastic measures against the tax dodgers, but as a retired officer of the taxation department having prolonged profound experience in the taxation department, we do not deem it proper to keep our eyes closed on such ways of functioning, having no legal base or entity. We have no other ways, but to express our views in writing no matter if it reaches to the deaf ears. The proceedings undertaken for registration, requiring furnishing of security, orders pertaining to assessment, re-assessment, rectification of assessment, penalty, compounding of offences etc. by the officers, suffer from immense lacunae and are found to be fallacious. There is no effort or endevour to make the new comers adequately trained up for want of requisite infrastructure, such as providing training, holding workshops etc.
The prosperity of a State largely and fully depends on the utilization and mobilization of the resources available at its disposal and to make proper use thereof. The revenue collection is always incremental, but the trend of evasion leaps no bound. Unless the tax machinery is active and sincere and moves in a proper and righteous way, the drainage of revenue will continue by way of tax dodging activities.

(Mrinal Kanti Chakrabartty)

Tuesday, July 15, 2014

Sales during the Movement of Goods From one State to other By Transfer of Documents to the Title of the Goods (An analysis and discussion)

Setting up of the check posts-functions thereof

The Government of Assam set-up a number of check posts, inter-alia, at the inter-State border points of Assam and erected barriers with a view to preventing or checking evasion of taxes. The Government as well appointed the taxing authorities for carrying out the purposes of the Acts, namely, the Assam Value Added Tax Act, 2003 (VAT Act) and the Central Sales Tax Act, 1956 (Central Act). The ‘Officer-in-charge of the check post’ is the persons, appointed by the State Government and posted at the check post . Such officers are not to be below the rank of the Superintendent of Taxes. Each check post is to be manned by a set of officers in the cadre of the Inspectors of Taxes for the purpose of smooth operation of the check post round the clock by way of stopping the goods vehicles, keeping the vehicles stationary, as long it is necessary, opening the package or packages to ascertain the correctness and accuracy of the goods carried, if necessary and also to inspect and examine the records and documents so as to ensure that there is no evasion of taxes. A part from the power of operation of the check post, the officer-in-charge of the check post has been equipped with the power requiring production, inspection of books of accounts, search and seizure in the territorial jurisdiction of Assam. In such an exercise, when there is any doubt in relation to the movement of such goods, the Officer-in-charge of the check post has the power to detain the vehicles and when any evasion of taxes is established due to adopting of some malpractices, unfair or fraudulent means under the Acts, such Officer-in-charge has the power to seize the goods, which can be released only after the evaded tax and the penalty are paid or realized. When such tax levied and penalty imposed are not paid, the Officer-in-charge of the Check post has the power to dispose of such seized goods by way of public auction and to credit such auction money pertaining to the sale value of the goods into the State coffer.
Delivery Notes, Road permits and Transit Passes
(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.

Monday, July 7, 2014

Export Of Goods Out Side The Territory Of India ( Tax dodging activities)

Sub-clause (b) of clause (1) of Article 286 of the Constitution of India ( Constitution) laid down that no law of a State shall impose or authorize imposition of, a tax on the Sale or purchase of goods, where such sale or purchase takes place-in the course of ** export of goods out of, the territory of India. Clause (2) of the said Article, on the other hand, provided that Parliament may by law formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in clause (1). Parliament, in fact, formulated such principle in Section 5 of the Central Sales Tax Act, 1956 (Central Act), which reads, as below :
            Sub-section (1)- ‘A sale or purchase of goods shall be deemed to take place in the course of  export  of goods out of the territory of India only if the sale or purchase either occasions such export or is effected by transfer of documents of the title to the goods before the goods have crossed the customs frontiers of India’.
           Sub-section (3)- ‘Notwithstanding anything contained in sub-section (1), the last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of the territory of India shall also be deemed to be in the course of such export, if such last sale or purchase took place after, and was for the purpose of complying with, the agreement or order for or in relation to such export.’
          Direct export and also the sales to the exporter have thus been categorized in the category of export of goods outside the territory of India. No declaration form has been prescribed to substantiate the claim of export out of the territory of India, while it has been made obligatory to furnish declarations in the course of sales made to the exporter inside or out side the State, as the case may be. The Bills of Lading or other export documents are to be endorsed by the customs authorities of both the territories at the international border point and such endorsed documents are to be submitted to the taxing authorities to get of the benefit of exemption of tax.
         In Assam, a substantial quantity of the goods including coal is being exported to Bhutan under the banner of export and the exporters are enjoying the benefits of exemption of tax by way of production of documents with endorsements, as aforesaid. In fact, such endorsement ought to have been obtained from the customs’ authorities at the incoming and the out-going countries in the territorial border, but fantastically in many cases endorsements are obtained from the incoming custom authorities of Bhutan only. Such one sided endorsement sometimes transpires to be fraudulent one in as much as, this simply reflects a paper work without the physical movement of the goods to the destined territory.
        Article VII of the Agreement on trade, commerce and transit made between the Government of the Republican of India and the Royal Government of Bhutan, on the other hand, contains that the trade between India and Bhutan will continue to be transacted in Indian Rupees and Bhutanese Ngultrums’.  The payments of the sale value of such goods by cheques or Bank drafts have not been incorporated therein.
         It is in the air that a large section of unscrupulous tax dodgers, are  claiming exemption of tax by producing such one sided endorsement in the custom frontier, some of which are fake, and that too, without any physical movement of goods across the customs frontier of India. The relaxation provided to make payment by cash help them in such fraudulent exercise. The claim of exemption of tax and entertainment thereof is farce are learnt to be regular phenomenon. The leakage of tax revenue in the name export has thus been obvious.
       Of late, the State taxing authorities are said to have adopted some pick and choose practice and those persons, who failed oblige such taxing authorities in a meaningful way, are pushed behind the bars without taking up any scrutiny and assessment proceedings under the sales tax law , operating in the State. The State taxing authorities ought to have adopted a rational and judicious way to apprehend all such unscrupulous traders and to realize taxes instead of such premature action without determining the tax liabilities first. Any crack in the process may have far reaching till consequence resulting in loss of revenue.
      The Budget Session of Parliament is knocking at the door. It is high time that the Government of India will examine the shortfall and consider to in corporate such rigid conditions and restrictions in the Central Act on such movement of goods by way of export so that any leakage of revenue is averted.
       The State taxing authorities may as well apply proper scrutiny, enquiry and verification in all such cases at least for the permissible limit of last eight years instead of adopting any pick and choose  process, as at present.

Wednesday, March 26, 2014

Restriction Of Input Tax Credit And Admissibilty Of Tax Set-Off On Liquor And Tea (Causing drainage of revenue)

The levy of tax on the sales or purchases of the goods within a State along with the other allied and ancillary matters is governed by the Assam    Value Added Tax Act, 2003. ‘Value Added Tax’ means ‘a tax on the sale of any goods at every point in the series of sales made by the registered dealer with the provision of credit of input tax paid at the points of previous purchases thereof’. ‘Output -tax’ in relation to a registered dealer means ‘the tax charged or chargeable under the Value Added Tax Act in respect of the goods sold by a dealer’. ‘Input -tax’, on the other hand, means- ‘the amount paid or payable by way of tax under this Act by a purchasing registered dealer to a selling registered dealer on the purchase of goods in the course of business.  The ‘Out put tax’ and ‘the Input tax’ are the two sides of the same coin. The former is a tax on sales of goods, while the latter is a tax on the purchases of same goods without any numeral change. For the seller it is an out-put tax and for the purchaser it is an input tax.
         The Value Added Tax (VAT) is thus a tax, which is to be levied on the series of sales made from the manufacturers’ level to the consumers’ level or from the importers’ level to the consumers’ level. Such tax is to be levied at each stage of sale, subject to credit of input tax paid at the time of the previous purchases made. The State gets the rightful and legitimate tax on the deals; the traders are benefited by making payment of the difference of the amount of tax; but the burden of multiple of tax is to be shouldered by the consumers, which results in heavy price hike of the commodities.
         By making a deviation on the principle of VAT law even without any proper explanations thereof, a series of goods were brought under the purview of the First point sale of goods in Assam in the Fourth Schedule of the said said Act. Crude Oil, Petrol, Diesel, Petroleum products, Foreign liquor, (whether made in India or not), Pre-owned cars, Tea and many other commodities were identified in the first point tax-net of Assam, meaning thereby; that no tax is payable on the subsequent sales of such commodities, subject to discharge of onus that the taxes were paid at the point of the first sale made in Assam.  No in-put tax credit is admissible in respect of the tax paid on the previous purchase of such goods, covered by the Fourth Schedule of the VAT Act, as laid down in section 14 (1) of the said Act.
       Our point of discussion in this instant paper is on the question of input tax credit/ set off in respect of two commodities, namely; ‘Foreign Liquor’ and ‘Tea’. An idea on the concept of input- tax credit has been given above. ‘Set-off’ means a thing heightening the quality by contrast, to serve as a contrast or foil for enhance. Sub-Section (6) of Section 14 of the VAT Act of Assam laid down- “No input tax credit shall be claimed by a registered dealer or shall be allowed to him for- the tax paid purchases of goods used in exploration, extraction, manufacture, processing or packing of goods specified in the First and Fourth Schedule (First Schedule contains the list of the goods, exempted from tax, while the Fourth Schedule is in relation to the goods taxable at the point of first sale in Assam.)  Naturally, therefore, the input credit taxes are not admissible on the sales of Foreign Liquor and Tea, sold in the State of Assam in view of the restriction, imposed.
            That being the spirit of the VAT Act, some contradictory provisions are found to have been incorporated subsequent to the original enactment:
            Potable liquor- Section 10 (1A), was incorporated in the VAT Act, which reads:- “Notwithstanding anything in this Act, the retail ‘on’ license holder for potable liquor mentioned in the fourth Schedule, except country spirit, shall pay out- put tax on sale made by him at the applicable rate specified therein and he shall be eligible for set-off of the amount of tax paid by him at the time of purchase of such potable liquor from the bonded warehouse.”
          Tea- Clause (iii) of sub- section (3) of Section of the VAT Act was amended and reads- “A dealer, who purchases tea through such tea auction centre and then sells such tea inside the State shall be deemed to be the first point seller and he shall be entitled to get set-off of the amount of tax paid on purchase, from the amount of tax payable by him on sale under this Act”.               
          Section 10 of the Act is a tax charging measure. It provided the power of levy of tax on the sales of the commodities, as per the Schedules, annexed to the Act. There ought not to have been question of allowing any set-off of the tax, side by side. In the said Section of the Act, it was specified that the inter-se-sale of the petroleum products from one Oil Company to the other, are not to be treated as the first point of sale in Assam and no tax was chargeable or leviable on such sales, subject to production of a declaration in this respect. This is obviously a departure from the real spirit of the said law.  This seems to be a unique exercise in the tax scenario of Assam. In the case of potable liquor, however, the tax was to be charged and paid, but it was subsequently inserted that the taxes, so paid, will be admissible for set-off. Likewise, in the case of tea, the tax was to be charged, paid and the amount of tax so paid is admissible for set-off.
          There seems to have been some extra curriculum activities ignoring the basic principle and all such enactments/amendments were designed to provide fiscal benefits to the traders at the cost of revenue of the State. Consequently, there has been huge drainage of revenue years after years from the State Exchequer. The State tax machineries ought to have examined these practical aspects of law and to come forward so that the revenue of the State is properly safe-guarded.
           In fact, liquor and tea have multifarious stages of sales and the State could have earned a substantial amount of revenue on such series of sales, but mysteriously enough, the said commodities were brought under the purview of the first point tax -net of Assam with provisions for set-off of the amount of tax paid, which obviously paved the way for the loss of revenue.