Tuesday, February 11, 2014


Burning questions on the set-back of economy in Assam
Assam is rich of its visible and potential natural resources, but adequate measures have not been taken for the utilization of such resources and mobilization of the out turns. The growth of industry is quite negligible in Assam. The other infrastructures, connected therewith, could not as well be accelerated properly, as a consequence.  The fiscal out turn derived, are enjoyed by the people of the other States. The common people of Assam have practically to pass their days with hunger, beset with, acute darkness of poverty. The shyness of financial condition is utterly responsible for the same.  The indifferent attitude of the State political bosses as well the lack of dynamism of the administrative machineries, are mainly responsible for such set backs vis-à-vis the fallen economy of the State.
(Original history)
       Assam is blessed by nature with adequate numbers of Oil fields in its soil, particularly in the Upper Assam areas.  There may be some more in other areas of the State, but least efforts were made to unearth or unveil such potential resources. There was only one Oil refinery at Digboi of the present Tinsukia district of Assam since the British era. Consequent upon discovery of a number of new Oil fields in the Upper Assam area, namely; in Sivsagar, Dibrugarh and Tinsukia districts, a conspiracy was started at the instance of the Government of India (Central Government) to pump out the crude oil by extracting the same from such Oil fields, discovered in Assam to the Barauni Refinery of Bihar.  The Government of Assam (State Government) maintained a cipher role in such conspiracy to deprive the people of Assam on the points of installation of new industry, avenue of employment and other allied benefits. The mass people of Assam, therefore, awoke up against such attitude of the Central Government and started an agitation demanding installation of another Oil refinery in Assam for utilization of the crude oil to be extracted from the newly discovered oil fields. When it reached to the climax, the Central Government agreed to start a refinery in Assam.
Second refinery established in Assam
 A second mini refinery was established at Noonmati in the heart of the Gauhati City and it was commissioned in 1960. The project was started to refine the crude oil and to sale its finished petroleum products under the management of the Indian  Oil Corporation Ltd. (IOC), a pioneer Oil Entrepreneur of the country to console the people of the State. 
      A huge quantity of such crude oil, however, was being pumped out to Barauni to feed the Barauni Refinery, as originally planned.
Attempt to evade liabilities to pay tax
     Crude Oil is a taxable item of goods under the Assam (Sales of Petroleum and Petroleum Products, including Motor Spirit and Lubricants) Taxation Act, 1955 (Petroleum Act). The movement of such crude oil on sales out side the State of Assam in the course of inter-State trade or commerce, attracted liabilities to pay tax under the Central Sales Tax Act, 1956 (Central Act). The Oil Entrepreneurs, extracting such crude oil from the soil of Assam and making movement of the same on sales to Barauni in the course of inter-State trade or commerce, originally did not pay any tax on the sales of such goods. When required by the Superintendent of Taxes (taxing authority) of the area, the Oil Extracting Entrepreneur filed the case of litigation in the highest forum of law. Ultimately, a historic judgment was delivered by the Supreme Court of India (Apex Court), affirming the liabilities of the Extracting Entrepreneur to pay tax under the Central Act. The said Oil Entrepreneurs now involved in extracting operations are (i) The Oil India Ltd. (OIL) and (ii) The Oil and Natural Gas Corporation (ONGC)]. After the Apex Court’s verdict, they started to pay tax.
Establishment of third refinery with its modus-operandi
       In the meantime, another Oil Refinery was set-up in Dhaligaon of Bongaigaon, namely; the Bongaigaon Refinery and Petro Chemicals Ltd (BRPL). The sales of petroleum and petro-chemical products used to make a considerable inflow of revenue to the State Exchequer. There was, however, a mystery.  The sales of the petroleum products of the BRPL were restricted to the IOC only. It could not make sale of its products to any other Oil organization as well as to the consumers direct. It is to be routed through the IOC. That means, the BRPL was a manufacturing agency, while marketing agency of the BRPL lied with the IOC, which could only make sales of such products in the market.
Fourth refinery established in Assam
    The movement started by the All Assam Students Union (AASU), associated by the Gana Sangram Samitee in 1979 ,  inter-alia, for driving out the influx of the illegal foreigners into Assam, making entry into the soil of Assam from Pakisthan (now Bangladesh) came to an end, following a Memorandum Of Understanding (MOU), signed by them with the Central and the State Government on the 15th August, 1985. Along with the other terms, incorporated in the MOU, one of the terms was that a big sized refinery is to be set up in the State. The Numaligarh Refinery is the product of the said MUO. The out flow of crude oil to Barauni was discontinued after the Numaligarh Refinery was commissioned.
Price mechanism of petroleum products
        The Oil Co-ordination Committee (OCC), constituted by the Central Government under the Ministry of Petroleum, used to control the price mechanism of crude oil and other petroleum products. Prior to 24.09.1982 the taxes on the petroleum products were levied in Assam on the volume of the petroleum products sold. The said system was discontinued and the taxes were being levied on advelorem basis, that is, on the value of such goods sold.  There were two-folds of price mechanism in respect of such goods sold; Ex-refinery price and the Retention price. The ex-refinery price included; the cost of production, excise duty, freight and tax, while the retention price was fixed after taking into consideration the imported price of crude oil, cost of the indigenous crude oil, refinery cost and refinery margins, crude throughput, product patterns etc. The retention price was, therefore, much higher than the ex-refinery price. The BRPL sold its products to the IOC at the ex-refinery price, while the IOC sold such BRPL products along with its own manufacturing products at the retention price. The tax on the sales of the petroleum products is payable at the point of first sale made in Assam. No tax was, however, payable at the point of second or subsequent sales made in Assam in respect of the same goods, subject to discharge of onus that such tax was paid at the first stage of sale by the BRPL. The BRPL paid tax on the sales made the ex-refinery price, while the IOC charged tax on the sale value in respect of its own products and also the products, purchased from the BRPL at the ex-refinery price. The IOC paid tax on the sales of their own products only, while no tax was paid on the sales of such goods made out of the purchases made from the BRPL, on the plea that such sales were the second stage of sales made in Assam. The charge and collection of tax was, therefore, irregular. The IOC maintained that this had to be done to maintain the price equilibrium in the course of business of selling the goods, but in the eye of law, this was an unauthorized and illegal collection of tax made by the IOC without depositing the same into the State Coffer. There was no provision in the Petroleum Act to make forfeiture of such amount and to credit the amount into the Government account and also to initiate any penal action for such illegal collection of tax on the second sales of the petroleum products made in Assam. Naturally, such amount of tax was added to the margin of profit in respect of the business of the IOC. The State was deprived of such tax revenue, which were collected from the common consumers.
System of maintenance of accounts
         The BRPL, on the other hand, used to receive the difference of the sale price between the Retention price and the Ex-refinery price from the pool account of the OCC and credited such receipt in their accounts, as ‘the sales of goods produced’, which was duly projected in the Balance Sheet, maintained for the respective years. An explanatory note in respect of such difference of amount, received from the OCC, was recorded in the Balance Sheets of the relevant years as - ‘Sale includes,  inter-alia, excise duty, tax and freight etc., wherever applicable and the OCC Pool account adjustment, as allowed by the Government from time to time, as per petroleum pricing policy.” Apparently, from the tone of the language, reflected in the Balance Sheet, it appeared that the said amount , received from the OCC, was a part of the sale price of the same goods, sold by the BRPL to the IOC, which was credited in the account ‘Sales of the goods produced’.
Levy of tax and its consequential effect
         The Superintendent of Taxes, Bongaigaon (taxing authority), therefore, took into consideration the entire amount of sales, projected in this behalf  (viz the amount received on account of the ex-refinery price and the amount received from the OCC) and  levied tax to the BRPL from period ending 30.09.1982 and onwards. 
        No tax could, however, be levied to the IOC on the tax charged and collected illegally on the second stage of sales of such goods made in Assam.  No action could as well be taken for forfeiture of the excess tax collected and no penal measure as well could be initiated for such unauthorized and illegal collection of taxes by IOC. In fact, the provisions for forfeiture existed in the analogous tax laws on the sales and purchases of goods, operating in Assam, but conspicuously, the same was absent in the Petroleum Act, though this Act came into force long before in 1939, while the other sales tax laws came into force in 1947 and 1956.
     The dispute in regard to the levy of tax to the BRPL adding back the part of the sale price, as aforesaid, was ultimately dragged to the Apex Court. The Apex court finally provided relief to the BRPL saying that the said amount was nothing but a subsidy. The action taken in this behalf thus took a final halt there.  There are, however, some reservations as to the measure of defence taken at the State level.
       The State of Assam thus lost more than 100 crore of rupees, as a consequence from the period from 24.09.1982 to 30.06.1993 on this pertinent issue, initiated and ultimately closed down.
 Leakage could be averted
       The Petroleum Act was repealed and its place, a new Act with the amalgamation, consolidation and amendment of four taxation laws in respect of the sales and purchases of goods in force in Assam, which was designed as the Assam General Sales Tax Act, 1993 (AGST Act) and came into force from the 1st July, 1993. In the said new Act, provision was incorporated for forfeiture of the illegal, unauthorized and excess tax collected. Steps could therefore be taken for forfeiture of such amount of tax collected by the IOC from 01.07.1993 and onwards. This, however, seems to have not been done.
Levy of tax, when sale price exceed forty percentum over the purchase price
      Another provision was incorporated in the AGST Act effective from 01.07.1993, which laid down, as below:
“Where a person sells a substantial part of the goods, manufactured by him or imported by him to another person for sale under the brand name of such other person or for sale as distribution or selling agent or for sale for repacking or subjecting the goods to another process not amounting to manufacture and the price charged on sale exceeds the sale price by more than such percentage as may be prescribed in respect of such goods or classes of such goods, the re-sale exceeds the sale price by more than such percentage, as may be prescribed in respect of such goods or class of goods, the resale by such other person shall subject to the rules, if any, framed in this behalf, be deemed to be at the first point of sale within the State.”
      It was provided in the rules, framed under the AGST Act, that when such sales exceed forty percentum of the purchase value, a tax on such sales proceeds is leviable.
     The sales proceeds of IOC at retention price in respect of the goods purchased from the IOC at ex-refinery price exceeded forty percent over the purchase value. The taxing authority, Guwahati Unit ‘A’ (taxing authority) took resort to the said provisions of law and levied tax on such sales proceeds of goods derived out of the purchases made on ex-factory basis from 01.07.1993 and realized the tax, which to some extent safe-guarded the interest of the revenue of the State. However, for the indifferent attitude and lack of proper action, taken by the Government, a huge amount of such tax revenue from 24.09.1982 to 30.06.1993, as discussed above had to be lost.
New price mechanism and its shortfalls
        The price mechanism, adopted by the OCC, as discussed above, continued upto 31stMarch, 1998. The Central Government probably realized that such types of dual sale price on the petroleum commodity might give rise to further complicacies and the said price mechanism was dismantled from the 1st April, 1998. This would have safe-guarded well the interest of the revenue of the State, but the State Government suddenly took another new measure of levy of tax to petroleum entrepreneurs.
        Crude oil, petrol, diesel and other petroleum products are taxable at the point of first sale in Assam and no tax is leviable on the second or subsequent sales made thereof. The Legislatures of Assam made an amendment in the AGST Act effective from the 5th June,1998, whereby, it was laid down that the inter-se-sales of such petrol and petroleum products made by one Oil Company to another Oil Company in Assam are not be treated as the first point sale in Assam for the purpose of levying of tax.  That means, the sales made by the last Oil Company in Assam to the consumers are to be treated as the first point sale in Assam for the purpose of levy of tax under the AGST Act. Such a thought was given in the year 1993 and 1994, when the episodes were first detected,  but the same was not materialized, as there was apprehension that it might drag to some more complicacy. In fact, after dismantling of the price mechanism of the oil products from 1st April, 1998, which safe guarded the interest of the State revenue, such an amendment given effect from the 5th June, 1998, in true sense, was unwarranted. There was, however, a time gap between this period from 01.04.1998 and 05.06.1998 for which perhaps this amendment was made. However, this could have been withdrawn after the dismantling of price mechanism came to the light. This pertained to the levy of tax on sales by the one Oil Company to another company within the State, but when such purchasing Company makes sales of goods to other Oil Company in the course of inter-State trade or commerce or makes transfer of stock of goods to the principal, branch or agent from one State to the other, the State was likely to make loss of the revenue. A safe given in this regard pertained to the liabilities of the purchasing companies, but it is not applicable in the manufacturing sphere.
      In fact, though such oil products are the goods, taxable at the point of first sale in Assam, the mode of the taxation measures, adopted, is a departure from the norms and procedure.
Recurrence in the VAT Act
      The AGST Act was repealed from the 30th April, 2005 and in its place, the Assam Value Added Tax Act, 2005 (VAT Act) came into operation with effect from the 1st May, 2005. The VAT Act maintains that, it is a tax on the sale of any goods at every point in the series of sales made by the registered dealer with the provisions of credit of input tax paid at the points of previous purchases thereof. Contrary to this spirit of law, the Petrol, Diesel and other petroleum products were designed as the first point taxable goods in Assam. Again, keeping conformity with the mode of levy of tax on such oil products with the repealed AGST Act, the inter-se-sales between the Oil Companies were designed not as the first point sales of Assam. The inter-se- sales made by one Oil Company to the other Oil Company were designed not as the first point sale in Assam, but the purchasing Oil Company to the other and the consumers are to be treated as the first point sale made in Assam. The entire process seems to be unique and lacks conformity and failed to maintain proper conformity and consonance with the spirit and intention of the VAT measure.
Discriminations in the rates of tax
     The rate of tax on the sale of petrol is 27.5 paise in the rupee, while rate of tax on diesel is 16.5 paise in the rupee. In the case of sales of such goods to the registered dealers in the course of inter-State trade or commerce, the rate of tax is two paise in the rupee, while in the case of sales to other than the registered dealers, the actual rate of tax applicable in the State.
      The VAT Act laid down that after the purchase of any petroleum or petroleum products for resale within the State, if the purchasing Oil Company despatches any portion of the goods to a place out side the State except as a direct result of sale or purchase in the course of inter-State trade or commerce, then notwithstanding anything contained in the VAT Act, for that portion of the goods, the purchasing Oil Company shall be deemed to be the last purchaser within the State of Assam and it shall be liable to pay tax on such portion of goods at the rate of four paise in the rupee on the gross turnover of such purchase of goods.
     In fact, the purchasing Oil Company derived the benefit of tax @ 27.5 or 16.5 in the rupee, as the case may be, at the time of purchase of such goods. If it despatches such goods not by way of sale in the course of inter-State trade or commerce, but by way of transfer of stock of goods out side the State of Assam, it ought to have compensated the loss, by way of realization of tax actually due, but the VAT Act provided relaxation and specified the rate of levy of tax at four paise in the rupee instead of 27.5 or 16.5 paise in the rupee. This is obviously causing loss to the State.
Diversion of trade- Loss of revenue
 The rates of tax on the sales of petrol in Assam are 27.5 paise in the rupee, while the rate of tax of diesel is 16.5 paise in the rupee. This is much higher, compared to the rates of taxes prevalent in most other States of the North Eastern Region, where the rates of taxes are 20 paise and 12 paise in the rupee respectively. A consumer, therefore, prefers to purchase such goods on payment of lesser amount of taxes across the nearby boundary line; like Khanapara, Jorabat, Banrdowa and other areas to derive fiscal benefit. The boundaries of the North-State districts are not far away. So, apparently, there is a diversion of trade, causing loss of revenue to the State of Assam.
Transfer of stock of oil  products to other States
    The movements of goods to places out side the State in the course of inter-State trade or commerce, may take place in two ways- (i)  One by way of sales and the other by way of stock transfer for sale or other manufacturing activities in other State. The movements of goods on stock transfer are exempted from tax, but such claim of stock transfer is subject to enquiry by the taxing authority, allowing exemption of tax. Along with other documents and evidences to be produced under the statute of the Central Act  and the rules, framed under, it has been made imperative to obtain a declaration in Form ‘F’ by the transferor of the goods from the transferee, duly filled in verified and signed. Such declaration should contain, inter-alia, the particulars of despatch of the goods by railway, steamer or ferry, air port, post office, road transport. The number and date of invoice, challan and other documents under which in respect of the goods are to quoted in such declarations with the physical evidence of such documents.
Despatch of oil products through pipe lines- propriety thereof

         A section of the Oil Refineries of Assam are despatching the oil products, like, petrol and diesel to other States through the pipe lines, installed by them. Such despatches of the products through the pipe line partly included in respect of sales in the course of inter-State trade or commerce, while some related to the stock transfer of such goods out side the State. The provisions of the Central Act read with Form ‘F’ provided some restriction and limitation and the despatch of goods through pipe line did not get berth. The Form ‘F’ prescribed in the rules under the Central Act; did not specify that the movements of the goods through the Pipe lines are permissible. The despatch of the petroleum products through the pipe line is a unilateral process, adopted by such oil companies in making movement by way of stock transfer. Moreover, in such unilateral exercise, proper enquiry seems to be not possible. It is understood that the taxing authorities are allowing such stock transfer of petrol and petroleum products through pipe lines with out proper authority of law.
This pertinent aspect, therefore, requires a scrutiny and examination to safe guard the revenue of the State.
(Tax on declared goods)
         Under the authority of sub-clause (a) of clause (2) of Article 286 of the Constitution, Parliament declared a series of goods to be of special importance in the course of inter-State trade or commerce. “Coal, including coke in all its forms, but excluding charcoal” has been declared to be of special importance in the course of inter-State trade or commerce. ‘Raw Petroleum Coke’ (RPC) and ‘Calcined Petroleum Coke’ (CPC) are two different items of goods, which have independent use and identity in the commercial market. The said two goods have not been identified separately in the list of the declared goods. The Apex Court delivered a historical judgment affirming that the RPC and the CPC are the one item for the purpose of levy of tax as the declared goods, covering the broad term ‘ Coal including Coke in all its form.’  The identity and the commercial use of such goods, therefore, did not gain the momentum.
           The Central Act laid down ‘ Where a tax has been levied in respect of sale or purchase inside the State of any declared goods and such goods are sold in the course of inter-State trade or Commerce and tax has been paid under this (Central) Act in respect of sale of such goods in the course of inter-State trade or commerce, the tax levied under such law shall be reimbursed to the person making such sale in the course of inter-State trade or commerce in such manner and subject to such conditions, as may be provided in any law in force in that State.”
    In the tone of the identification of ‘Coke in all its forms’, the tax paid on the purchase of RPC is admissible for reimbursement, when CPC is sold in the course of inter-State trade or commerce and taxes has been paid.
       Parliament has already identified separately, the manufactured or processed items of goods out of iron and steel by making classification separately as rod, bars, rounds, hoops, strips, skelps, plates, tools, alloys etc. for the purpose of levy of tax separately on such iron and steel goods, but the same was not done in case of coal and coke in all their form. As a result, heavy drainage of tax revenue has been taking place from the State Coffer years after years for these technical reasons, the amendment or modification of which may avert such drainage of revenue.
    This is entirely a matter of the Central Government. The State Government took up the matter with the Central Government, but without any fruitful result.
Collection of tax on tea
    Tea is precious Agricultural product of Assam. Tea plants were discovered in the forests of Assam in the initial stage of the British regime in 1926. It had a wide spread and gradually extended to the whole of Assam.  Though there are more than 50 thousands of tea gardens (big and small) in Assam, the tea industrial units are in between 700 and 800. The tax revenue in Assam in the year 2012-13 was Rs. 28.11 crores under VAT Act and Rs. 14.48  crores under the Central  Act,, the total being Rs. 42.59 crores.
 The Head Offices of most of the tea gardens in Assam, located out side the State of Assam, use to make control over the business activities of the tea gardens of Assam, like sales and purchases of the goods including the avenue of employment. The garden managements do not have any say on the same and they have to remain cipher and to act like rubber stamps. A part from the sales of the manufactured tea, a huge quantity of such goods uses to move to places out side the State of Assam by way stock transfer to the Head Offices, Branch Offices or to the Agents out side the State of Assam for the purpose of sale out side the State of Assam or as the case may be. Such goods, moved to the places out side the State of Assam are exempted from tax under the Central Act, subject to discharge of onus that there was no element of sale in such movement of goods. The experience showed that in many cases, there were manipulations of such deal in as much as the tea garden entrepreneurs use to make sales of tea under the secret contract of sale, but disclose that such goods moved by way of stock transfer by manipulation of documents.  The entire episodes are carried on under the secret directions of the Head Offices, located out side the State. Crores of rupees are being drained out from the State Exchequers years after years. No proper investigations are made, proper inspections and raids are applied to prevent; arrest or detect such drainage of revenue.
The State of Assam would have earned between 50% to 100% more revenue, if the tax machineries are on the heels in this regard. 
To compensate loss for stock transfer of goods
 There had been acute murmuring from some producing States of the Union of India over the question of legalizing the process of the transfer of goods by incorporating such a provision in the Central Act from 01.04.1973. The affected States started hue and cry.  In order to safe guard the interest of the revenue of the State, the Constitution was amended and authority was provided to the Central Government to introduce law on Consignment Tax by incorporation such entry 92B in List-I (Union List) in the Seventh Schedule of the Constitution, which was effective from 02.02.1983.
     No law was enacted by Parliament during this long period of 31 years and the poor State like Assam has been suffering for not getting tax on its products like; petrol diesel, tea, coal, raw jute, superi, bamboo hides and skins etc.
 This deserves an effective consideration.
Tax on sale or purchases of green tea leaves
 The sales and purchases of “Green tea leaves” are exempted from tax under the VAT Act, which governs the levy of such tax. The production of such “Green tea leaves” is, however, taken into consideration as a measuring scale for the purpose of levy of tax under the Assam Taxation (On Specified Lands) Act, 1990 [Specified Lands] Act on the tea garden lands. Contrary to the provisions of the VAT Act, exempting the levy of tax on the sales and purchases of such green tea leaves, the Legislatures of the State introduced a measure of tax on the sales and purchases of such green tea leaves in the name of safe guarding the collection of tax under the said Specified Lands Act, tough the aim and object of the said Act to levy tax on some the specified lands only, herein refers to the tea garden lands of Assam. The necessity of levy of tax is there for the purpose of augmentation of revenue, but this is not to be done in a perverted way.
      This aspect of the measure of tax adopted is required to be reviewed.
Levy of tax on the income of tea
  A measure of tax on tax on the income derived out of agriculture was adopted in Assam with effect from 01.04.1939 during the British regime. The Assam Agricultural Income Tax Act, 1939 (Agricultural Act), governing such levy of tax is still in operation with the time to time modification thereof. In case of other income out of agriculture, the tax is levied on the 100 percent of such income derived. In the case of levy of such on the income of tea, however, the quantum of income has to be bifurcated. That is, 60 percent of such income is to be reckoned as the income out of agriculture and 40 percent as out of trade. This process is governed by the Indian Income Tax Act, 1961 (Income Act).  Under the statute of the said Income Act, the quantum of income is to be determined by the Income Tax Authorities of the Central Government, which has to bifurcate it to make levy tax on trade on the 40 percent of such income leaving the balance 60 percent un-assessed for the purpose of levy of tax by the Agricultural Income Tax authorities of the State Government, as the agricultural income.  Though the Agricultural Act projected its wide and independent vision, the provisions of the Income Act have been prevailing over it. Not only that, the power of assessment of tax vis-à-vis determination of the quantum of total income with bifurcation thereof; has been vested upon the Income Tax Authorities. The State Agricultural Income Tax Authorities can not make any excess and has to remain cipher in such exercise and carry on it function as the assessing authority like a rubber stamp. The quasi-judicial approach in  the proceedings of the Agricultural Act, thereby, suffers from acute set back.
      In case of the other income on agriculture, like; paddy, pulses, wheat, sugarcane, jute etc. such restrictions are not there, but it is applied in the cases of tea only restricting thereby the  free flow of revenue to the State Coffer.
      The State o Assam is, therefore, incurring heavy loss for bifurcation of such income derived from the income of tea in two folds, namely; agriculture and trade.
       A remedial measure seems to be imperative for the greater interest of the State of Assam.
     With a view to safe guard the interest of revenue in Assam, a measure of tax was introduced for levy of tax on the last point purchase of some local products of Assam from 03.07.1971 by way of enactment of the Assam Purchase Tax Act, 1967( Purchase Act).  Such items of goods were Raw Jute, Bamboo, Hides and Skins of animal, Bones of animals, reptiles, Superi etc. The said measure of tax continued upto 30th April, 2005 even after repeal of the  said Purchase Act on the 30th June, 1993 by virtue of the provisions of the Assam General Sales Tax Act, 1993 (AGST Act). The said measure of tax was abolished after the VAT Act came into force from 1st May, 2005. A provision was, however, incorporated in the VAT Act to the effect, which was, in fact, not specific but circumstantial. The said measure of tax can not ensure proper levy and collection of tax. There may difficulty to levy of tax in respect of the goods moved other than by way of sales, but by way of transfer of stock, as occurred in the VAT Act.
      To ensure better collection of revenue in respect of the items of local products, as stated above, the Purchase Act could have played the pivotal role in the generation of revenue of the State.
 “Brick” is an item of goods, taxable at the point of first point of sale in Assam and the rate of tax is five paise in the rupee.  The Government of Assam, however, allowed option to the producers of the bricks to pay tax under the Composition Scheme, that is; in a lump sum basis instead of paying tax at the Scheduled rate.
      In the Budget of 2013-14, the said rate of Composition of tax were enhanced as below :
   Category              Capacity of kiln             Previous annual rate                     Present annual rate                   
     A                     25 payas and above         Rs. 57, 500.00                                     Rs. 1,00,000.00
     B                     21 payas to 24 payas         Rs. 46,000.00                                      Rs.    80,000.00
     C                     Upto 20 payas                     Rs. 34,500.00                                     Rs.      60,000.00            
       Generally, three categories of bricks are manufactured in a brick field, the proportion of which are – 60%  -1st class : 20% -2nd class : 20% - 3rd glass (Jhama or broken). A brick field with capacity of 3 (three) lakhs produces bricks in each round, the following quantities of bricks:
                          1st class =        1,80,000 Nos.
                           2nd class =          60,000 
                           3rd class              60,000 
                                  Total         3.00, 000 Nos.
 Generally, three rounds of bricks are manufactured in a brick field and in that case, the production will be three times of the above.
 On a close analysis and in consideration of the prevalent price of such bricks, a brick field of having three lakhs capacity of bricks is to pay tax at Rs. 2,88,000.0 for three rounds of brick manufactured in a year. The same will be double, triple or even quadruple, when the capacities of such brick fields are bigger.
   The rate of tax under the Composition Scheme, as stated above, is, therefore, much lower, compared to the production of bricks and the price thereof..
   Moreover, the Scheme maintained silence as to what will be the fate of levy of tax on the subsequent sales made by the dealers within the State or in the course of inter-State trade or commerce.
      As the question of huge leakage of revenue is involved, this aspect of the measure of tax requires a review.
The Head offices of the Oil Companies, Coal Companies, Cement Companies and most of the Tea Companies are located in the places out side the State of Assam. They use to pay tax on the income derived in the State out side the State of Assam. The shares of such taxes are received by the States in which such income taxes are paid as envisaged in clause (2) f Article 270 of the Constitution. Consequently, Assam is deprived of such revenue derived out of income in the soil of Assam.  There of the Central taxes would have increased 50 percent, if not more, if such a episode would have not been there.
         Unless the Head Offices are shifted to Assam this set back, leading to irreparable loss of revenue will continue.
       Mrinal Kanti Chakrabartty

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