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.
