Saturday, October 1, 2016
GST, an abbreviation of the words Goods and Services Tax, is proposed to be introduced in the Indian sub-continent, replacing the Value Added Tax Regime (VAT regime) currenenly opertive since April, 2005. The vision on GST could not go ahead since last 13 years, as there was lack of consensus amongst most of the Indian States on the apprehension that the States’ fiscal auonomy of the States would be seized by the Government India (Central Govt.) to make them cipher. Floods of dialogues yielded, a consesus barring a few States and the foundation of such new project was built up with the 122nd amendment of the Constitution of India (Constitution). The Central Govt, in the meantime, drafted out the Model GST Law on the procedural and administrative aspects, but the legal and technical aspects, pertaining to the liability, levy of tax and other allied matters, are yet to be sorted out by the GST Council, set-up by the Central Govt. with the Minister of Finance, as its Chairman and the State Finance Ministers and others, as the members. The Council is now on the heels on a war footing devoted exercise to give its birth to the GST Act on 01.04.2017. The Council has already finalized the taxable quantum to accrue tax liability in respect of the North Eastern States at Rs. 10 lakhs in place of Rs. 6 lakhs, as at present and Rs. 20 lakhs in respect of other States. The rates of tax and other ancillary matters are still under examination. The marathan trainings to the law operating machineries are being imparted, batch by batch, in full swing,
GST, in fact, is prospective measure to levy a single consolidated tax on the sales of the goods and the services. It is designed as an admixure of the Central and States laws. The central laws are (i) the Cenrtal Excise Duty Act, (ii) Additional Central Excise Duty Act (iii)Excise Duty levied under the Medicinal and Toiletries Preparation Act (iv) Service Tax Act, (v) Additional Customs Duty, commonly known as the Countervailing Duty- levied under the Customs Act, (vi) Special Additional Duty of Customs under the Customs Act, 1962,(vii) Surcharge and (viii) Cess, while the State laws are (i) The Value Added Tax Act (VAT Act), (ii) The Sales Tax Act, (iii) Amusement and Entertainment tax Act, (iv) Luxuries Tax Act, (iv) The tax on lotteries and betting. (v) Surcharge (vi) Cess and (vii) Entry Tax. The law on sales tax will include as well as Central Sales Tax Act, 1956 (Central Act).
GST law will be simple and uniform measure of tax to provide relief to the industrialists, traders and consumers from multiplicity taxes. Unlike the VAT Act, the consumers will get the benefit of deduction of tax paid on previous purchases made making way of arresting price rise to a great extent. The commodities like, crude oil, petrol oil, diesel oil with other petroleum products and liquor will be excluded in the GST net-work and the taxability of these goods will be governed by a separate road map with an independant tax-net, as was existent prior to 01.07.1993. In such a case, in order to govern the inter-State sales and stock transer of such goods, the continuance of the Central Act may be imperative..
The proposed GST regime will have three tier system, that is, three administrative laws will be there. (1) SGST Act (State Goods and Services Tax Act)-to levy tax under the State Goods and Services Tax Act), (ii), CGST Act (Central Goods and Services Tax Act)- to levy tax under the Central Goods and Services Tax Act), (iii) IGST (Integrated Goods and Services Tax Act) to levy tax under the Integrated Goods and Services Tax Act (Inter-State Sales), The IGST and CGST Act will be enacted by Parliament, while SGST Act by the State Legislatures. The taxing authoritiies under the IGST & CGST Acts will be appointed by the Board ( the Central Board of Excise and Customs, constituted under the Central Board of Revenue Act,1963)while the State Govt. will appoint the SGST officials.
The prolonged system of the goods, declared to be of special importance in the course of inter-State trade or commerce, providing the tax benefits and other facilites, will be dismantled to make equal stature in the tax scenario. The consolidated rate of tax will be uniform and within the range of 20 to 22 paise in a rupee. The consolidated rate of tax may be much lower, which is now in and around of 30 paise. The present mode of stock transfer of goods to other States with tax free movement will attract tax-net, but the formulation is to be waited. The bogus deals of prevelant stock transfer of tea, coal, bamboo, superi etc. in Assam may require to bid a good bye. The GST is a methodical and chain system of deals, but the chrnonic long continued practice of avoidance or evasion of taxes with the nexus at different levels can not be ruled out. The functioning of the Vigilance Wing and Check Post machinery will, therefore, have a dire necessity for succssful implementation of the projects.
Assam is mainly a consuming State. The recurring cost in course of movement of goods viz. transporting cost, labour cost, gratification at different angles, abnormal profit, tax elements may yield heavy price hike. The quantum of tax, collected will be lesser, as the earlier taxes paid will be admissible for credit or reimbursement. In 2015-16, the total collection of tax under the State taxation department was Rs.8614.00 in which Rs. 7641.00 includes VAT & CST, while Rs. 567.00 is Entry tax. VAT and CST amount of Rs.7641.00 includes about 33% of Crude Oil and Petroleum etc. tax, that is, Rs. 2521.00. The other tax on sales stands Rs.5120.00. While addiing Rs. 567.00 (Entry tax), Rs.19.00 (Amusement tax) and Rs. 10.00 (Luxury tax), it will come to s 5716.00. This was the collection of tax revenue in 2015-16 of the respective Acts proposed to be transferred to GST. If the collection of tax on the proposed GST measure go up, this is well and good; otherwise, the State will have to remain at the mercy of the Central Govt. for compensation, as assured. In fact, this may be a far cry.
GST will, no doubt, bring a drastic economic evolution, It is a simple, uniform and is anticipated to be transparent. However, if the economy of the poor State like Assam gets any set back, the hope and asipiration of the people of Assam will be frustrated and it may turn to a catastrophe. We are to wait and see.
(Mrinal Kanti Chakrabartty)
R.G.Barua Road, Lakhipath, Guwahati-781-024
Saturday, April 16, 2016
‘Taxation’ is the main source of revenue of Assam. The administration of as many as nine taxation laws including the tax on the sales and purchases of the goods, namely; the Assam Value Added Tax Act, 2003 (VAT Act) is carried on by the officers of the taxation department. The said officers, on the other hand, have as well been empowered to carry on the administration of the Central Sales Tax Act, 1956 (Central Act), a Government of India Act.
Tax on sales and purchases of goods
The quantum of tax, collected by the taxation department of Assam in the years 2013-14 and 2014-15 was Rs.7719.62 and Rs. 8177.16 respectively out of which the tax on the sales and purchases of goods under the VAT Act and the Central Act were, as below:
Year VAT Central Total
2013-14 Rs. 6288.54 crore Rs.559.47crore Rs.6848.01crore
2014-15 Rs. 6859.28 ,, Rs. 492.01 ,, Rs. 7351.29 ,,
The tax, collected on the commodities like petrol, diesel, crude oil and other petroleum products, as were included above are, as below :
Year Commodities VAT Central Total
2013-14 Petrol Rs. 410.84Cr. Rs.22.31 Cr. Rs. 433.15 Cr.
Diesel Rs. 702.34 ,, Rs. 88.91,, Rs. 791.25 ,,
Crude Oil Rs. 465.49 ,, = Rs. 465.49 ,,
Others Rs. 369.57 ,, Rs. 27.31 ,, Rs. 396.88 ,,
Total Rs.1948.24 ,, Rs.138.53,, Rs 2086.77,,
2014-15 Petrol Rs. 451.41 ,, Rs. 17.22,, Rs.468.63
Diesel Rs. 752.91,, Rs. 96.68,, Rs.849.59,,
Crude Oil Rs. 434.01,, = Rs.434.01,,
Others Rs. 379.41,, Rs. 28.32,, Rs.407.73 ,,
Total Rs. 2107.74 ,, Rs.142.22,, Rs.2149.96,,
The taxes on the above commodities are reckoned as 27.03 and 26.78 percent respectively of the taxes, collected on the sales of goods, as appended above.
Tax under the other taxation laws
The taxes collected under other taxation laws, administered by the taxation department of Assam are, as below :
Names of the taxation laws 2013-14 2014-15
Entry tax Rs. 404.69 cr. Rs. 382.88 cr.
Professions, trades, callings
& Employment Rs. 186.36 ,, Rs. 191.38 ,,
Electricity Duty Rs. 40.54 ,, Rs. 44.00,,
Amusement Rs. 38.93,, Rs. 44.37,,
Luxury (Hotels, inns &
Private nursing Homes) Rs. 8.67 ,, Rs. 10.55 ,,
Specified Lands Rs. 102.43 ,, Rs 101.66
Agricultural Income tax Rs. 89.99,, Rs. 51.07
Total Rs. 871.61,, Rs. 825.91
Uprise of tax collection
The collection of tax is incremental and it is always in an ascending position. A study on the collection figures will speak for it-self :-
Year Quantum of tax collection
1959-60 Rs. 5.24 Cr.
1969-70 Rs 18.05,,
1979-80 Rs. 59.01,,
1989-90 Rs. 288.02,,
1999-2000 Rs. 949.70,,
It is is expected that the collection of tax revenue will exceed Rs. 10,000.00 within a couple of years. There has been the fast growth of industry in the State of Assam. Roads, bridges and railways and various other construction projects have as well been undertaken and some are running in full swing. The tax revenue in Assam is thus on the way of fast up-rise.
Evasion of taxes
It also, on the other hand, a gospel truth that mounting evasion of taxes under the various taxation laws of Assam have simultaneously been gaining the momentum. The numbers of the cases of detection of such evasion of taxes seem to be very meagre. The following projection will make the position very clear:
Year Numbers of cases detected Amount of tax, penalty realized
2013-14 2817 Nos. Rs. 15.10 Cr.
2014-15 2577 ,, Rs. 16.41 ,,
Numbers of assessees under different taxation laws
The numbers of assessees under the nine taxation laws operative in Assam are :
1. VAT 1,39.932 Nos.
2. Central tax 44, 401 ,,
3. Entry tax 5,772 ,,
4. Professions, trades, callings & Employment tax 67,022 ,,
5. Electricity Duty 629 ,,
6. Luxury tax (Hotels, inns, private nursing home) 557 ,,
7. Amusement tax 220 ,,
8. Agricultural Income tax 771 ,,
It can not be, however, agreed that all the tax payers are honest and perfect without being associating with or indulging in any tax -dodging activities. The amount of taxes, as shown realised above, are only 0 .19 and 0.20 percent of the total amount of tax collected. The above projected amount, however, included three times of penlty imposed on the evaded taxes. So, the element of tax is very small. Our firm conviction is that the episode of tax dodging activities are going on in full swing and there is dearth of of checking activities to apprehend and arrest the clandestine ways of evasion of taxes.
The cadre stregth of the tax machineries are, as below :
1. Commissioner of Taxes : 1 No. (from I.A.S.cadre)
2. Additional Commissioner of Taxes : 2 Nos (from departmental cadre)
3. Joint ,, ,, 5 ,, ,, ,,
4. Deputy ,, ,, 15 ,, ,, ,,
5. Assistant ,, ,, 25 ,, ,, ,,
6. Superintendents of Taxes 166 ,, ,, ,,
7. Inspectors of Taxes 343 ,, ,, ,,
(The Agricultural Income Tax Officers are deputed to administer the Agricultural Income Tax Act, 1939 from the cadre of the Superintendents of Taxes by rotation.)
The taxation department is thus equipped with adequate man power to carry on the revenue generating administration in the extensive area of functioning for profound activities.
Functioning of the tax officers
(i) The inspectors of Taxes are to– (a) make survey in respect of each of the assessees, (b) maintain a mirror-like survey register, (c) collect particullars from different sources, (d) inspect the business premises and godowns of the assessees on the basis of specific information, (e) undertake search operation and seizure of the suspected books of accounts and goods, under the authority of search warrant, obtained from the competent authority, when the circumstances are so warranted and (f) inspect transporters’ godowns, goods vehicles and take identical actions, where there is evasion of taxes.
The Inspectors of Taxes are, in fact, to play the pivotal role in the matter of revenue administration of the taxation department.Their mode of functioning are unlimited, but in such exercise, discipline ought to be maintained without projecting any high handedness or autocracy and thereby harassing the tax-payes to make them disgruntled.
(ii)The Superitendents of Taxes and the Assistant Commissioners of Taxes are to exercise the quasi-judicial functions in the matter of the administration of taxation laws. Their primary duty is to (a) make registration to a dealer, liable to pay tax, (b)realise security money, when they feel it necessary to do so with a view to safe -guard the interest of the revenue, (c) make scrutiny of the periodic returns, (d) make hearing of assessment proceedings, (e) make assessment, when there is compliance by the assesses, (f) make best judgment assessment, when there no compliance by the assessees.
In the process of assessment, hearing of the penal proceedings, which are quasi-judicial in nature, the consideratioin of the field reports (Survey & inspection) and other information, received or collected from different sources, are imperative.In all cases, there must be a judicious approach. Both the cadres of the above officers are to exercise the identical powers, but they are of separate ranks with separate status. Such officers have the power of the civil court under the Code of Civil Procedure in the field of administration.These two cadres of officers are as well empowered to undertake the field activities besides supervising the works of the Inspectors of Taxes and bear the burden of full responsibity of the revenue administration of the area.
Recovery of arrears
A section of the Superintendents of Taxes are entrusted to work as a Recovery Officer and to exersise the powers under the Assam Land and Revenue Regulations, 1886 and the Bengal Public Demands Recovery Act, 1913 for the purpose of recovery of the arrear dues. An active co-operation from the tax authorities of the concerned area ought to exit for successful recovery of the arrear taxes.
(iii) The Deputy Commissioners of Taxes are the zonal officers-(i) They are responsible for– (a) supervision of the works of the Inspectors of Taxes, Superintendents of Taxes and the Assistant of Commissioners of Taxes of the units and the zones; (b) inspection of unit offices and check post offices, (c) inspection of field works and check post works, (d) exercise powers of suo-moto revision on the erroneous orders, passed by the officers under him, while any such orders are found to be prejucial to the interest of revenue, (e) maintain liaison with the Commissioner and other superior officers in the field of administration.
(iv) The Deputy Commissioners of Taxes (Appeals), an officer authorized by the Government from the cadre of the Deputy Commissioner of Taxes.-They are to-(a) hear appeals, filed by the aggrieved dealers aassees any orders passed by the Superintendents of Taxes and the Assistant Commissioners of Taxes and deliver judgments by administering the quasi-judicial proceedings.
(v) Joint Commissioners of Taxes– They are responsuble to – (a) supervise the works of the zonal officers, (b) to hear revision petition filed by the aggrieved assessees (c) to assist the Commissioner of Taxes in different ways of administration, as allotted or assigned.
(vi) Additional Commissioners of Taxes- As the semi head of the department, they are to– (a) assist the Commissioner of Taxes in different ways, as allotted or assigned, (b) maintain co-ordination with unit, zonal officers and also with the Government, (c) hear revision petition, filed by the aggrieved assessees.
(vii)Commissioner of Taxes is a member of the I.A.S. cadre deputed to carry on the administration of the taxation department with the officers appointed to assist him. He is over all responsible for smooth performance of the revenue administration of the department. He delegates his powers to the officers, appointed to assist him right from the cadre of the Inspectors of Taxes to the Additional Commissioners of Taxes. The delegatation of power rests the prerogative of the Commissioner.
The outstanding dues, as stood on 01.04. 2015 are as below :
1. VAT/repealed AGST & CST- Rs. 2760.38 Cr.
2. Entry tax - Rs. 210.86 ,,
3. Professins, trades etc. tax - Rs. 2.33 ,,
4. Amusement tax - Rs. 0.20 ,,
5. Luxury tax - Rs. 3.62 ,,
6. Specified Lands tax - Rs. 1,088.22 ,,
7. Agricultural Income tax - Rs. 55.22 ,,
Total - Rs. 4,120.83,,
The quantum of arrears under the sales tax laws and the specified land laws is very heavy. The aggrieved assessees take resort to the legal forum, when they feel that levy of tax or imposition of penalty are arbitrary and prejudial to their interest. If the recovery proceedings are stayed and the disposal of the cases are delayed, the accumulation of arrears becomes automatic.
Enforcement or Vigilance wing
Almost in all States of India, apart from the general wing ( Survey, inspection, assessment etc. wing), an Enforcement or a Vigilance wing has been functioning, side by side, to apprehend, arrest and prevent evasion of taxes in their respective States. In Assam, an Enforcement or a Vigilance wing was functioning since the year 1964 to 1983 at the unit level, zonal level and the central level. Following some complaints of mal-activities and highhandedness, the Government of Assam withdrew the said wing in December, 1983 and it remains inoperative since last 33 years.
The officers might be bad, but the administrative machineries were certainly not bad. They could have controlled delinquent officers.If any faulty activities were substantiated, coersive measures could have been taken. The withdrawal of the wing was not at all desirable. It was a destructive measure. A rumour was prevailing that the wing was made inoperative with the nexus of a section of businessmen, politicians and administrative bosses. Such alleged mal-practices, high-handedness equally exist in other departments including some working wings of the police department. The officers were punished, but the wing was never demolished or dismantled. This instant exercise was, no doubt, detrimental to the interest of the revenue. The said wing, therefore, should be revived and allowed to be functioned under the direct supervison of the Commissioner of Taxes.The department is equipped with adequate man- power. The sincere, efficient, energetic and tactful revenue minded officers may be identified, selected and entrusted for the purpose. The tenure of service may be limited for one year the maximum.
Bureau of Investigation (Economic Offence)
During the ‘period of Internal Emergency in 1975, as a part of 20 Point programme of the then Prime Minister of India, a Bureau of Investigation (Economic Offence) was set-up in Assam to apprend the economic offenders under various departments like forest, excise, transport, taxation, weight and measure etc. The said wing is still functioning presently under the stewardship of an Additional Director General of Police, but the performances of the bureau are not upto the mark. In the case of taxation wing, there is acute dearth of man power. Even those tax officers deputed toin the bureau, they have not been equipped with requisite powers to check the goods vehicles, transporters’godowns, railway godowns or to apprehend the suspected goods vehicles on the road. The works of the bureau have thus to be performed in a half-hearted manner. When augmentation of revenue is the main aim and object of the Goverment, it is imperative that the drainage of revenue should be plugged and the modus-operandi of tax evaders are to be be averted with stern, but hygienic way of action.
Check posts set-up
The Government of Assam set-up numbers of check posts including ten established check posts at the inter-State border area. None of the bcheck posts except the Composite Check Post at Damra( Sreerampur) has proper checking yard for the purpose of unloading of the goods vehicles, carrying unacounted and suspected goods with adequate labour components for the purpose of checking. The check posts have not been equipped with any ‘Way Bridge’ for weighing the vehicles, suspected to have carried loads above the disclosed weight. The lack of proper infrastructure has caused immense set-back towards proper functioning as well to to achieve proper revenue yields in such revenue generating venture. The officers posted at the check posts on many a occasion have to work under political and administrative influence and pressure besides the threats of anti-socials and ultras. Unless the improved ways of functioning of the check posts are designed with requisite infrastructure,the odds will continue sine-die.
The collection of revenue in the ten check posts were Rs. 118.17 crore in 2013-14 and Rs. 59.70 crore in 2014-15. The shortfall, as learnt, has been due the restriction imposed on the movement of coal. Out of the non-coal moving check posts, the Boxirhat check post topped the list of collection with tax collection of Rs. 2.55 cr. and Rs. 2.42cr. in 2013-14 and 2014-15 cr. respectively. There is immense scope to increase revenue at the Khanapara check post at Jorabat, but for the presentgeographical location, absence of requisite man power and lack of proper infrastructures, acute set-back persists towards its proper functioning.
Ways of evasion of taxes
A section of the tax dodgers generally maintains the moto-‘ Necessity is the mother of invention’. They work out the new art of evasion of taxes, when one is foiled or frustrated. The ways of evasion of taxes are of manifolds- (a) import of unaccounted and mis-classified goods, (b) import of goods in fake names with false addresses, (c) suppression of goods in the challan manifests, (d) import of goods by declaring under weights, (e) import of goods declaring under valuation, (f) import of goods in the name the traders of other neighbouring States, but consuming in Assam by adopting the fraudulent means, (g) fake deals in the name of export and import of goods to and from Bhutan (h) misuse of the concept of sales made during the movement of the goods from one State to another by adopting the concept of pre-determined sales, (i) maintenance of parellel sets of accounts (duplicate sets), credit accounts, bunches of loose sheets, symbolic transactions (j) maintenance of hidden accounts in the computer, (k) hoarding of unaccounted goods in some undisclosed godown and business premises.(l) import of goods through on line transactions direct (m) inter- State sales designed as stock transfer by manipulation and suppression of actual documents, (refers mainly the garden tea and partly coal, jute, superi, bamboo,hides and skins), (n) stock transfer of petroleum, diesel etc. through pipe lines in a unilateral way without due adherance to the provisions of rule 4(4) of the Central Sales Tax (Assam) Rules and the Form ‘F’
A clear concept of law, dedication and enthusiasm to work with the clinical visions for generation, mobilization and augmentation of revenue obviously will provide substantial yields.
Tax on entry of goods
A measure of tax on the entry of goods was adopted in Assam , namely; the Assam Entry Tax Act, 2001 (Entry Act) from 01.10. 2001 for the purpose of levy of tax on the goods imported (a) from places out side the State of Assam to a local area of Assam or (b) from one local area of Assam to another local area of Assam for consumption, use or sale in Assam. No tax liability to pay entry tax accrues on the goods, imported from places out side the State of Assam, if such goods are (a) sold in Assam and makes payment of VAT to the satisafaction of the taxing authority, (b) sold in the course of inter-State trades or commerce ,(c) moved to places out side the State of Assam on stock transfer , (d) sold in the course of export out of the territory of India.
Following the restriction imposed in Article 286(1)(b) of the Constitution of India that no tax is to be levied by the States on the sales or purchases of goods taking place in the course of import of any goods from out side the territory of India, the tax on such import under Entry Act was exempted. Suddenly, on 18-12-2014, the Legislature of the State of Assam introduced a measure of tax under the said Act in respect of entry of crude oil, imported from the places out side the territory of India to the State of Assam. It could learnt that such a measure of taxes was adopted, on the pretext that, the entry tax measure is related to the entry of the goods and not on the sales or purchases of the goods, so imported. This seems to be controversial. The measure of entry tax in such case ought have been taken earlier and the goods other than crude oil ought to have been brought under purview of the entry tax-net.
The revenue derived out of the entry tax, are as below;
2011-12 Rs. 512.75 crore
2012-13 Rs. 364.14 ,,
2013-14 Rs. 404.69 ,,
2014-15 Rs. 382.44 ,,
The collection of tax seems to have a downward trend. A good number of industrial and construction projects have been undertaken in Assam and many of them are in the process for which the import of machinery, materials etc. are being made regularly for use or consumption. The quantum of entry tax, therefore, ought to have been in a higher side. It requires examination whether a portion of such goods are being shown imported in the name of the neighbouring States, but delivered and consumed in Assam by diverting the course of trade by way of manipulation of papers and documents.
Tax on Specified Lands
A mesure of tax on the tea gardens lands and coal mining lands by enactment of the Assam Tax (on Specified Lands)Act was introduced on 01.01.1990. The taxes on coal mining lands was, however, withdrawn from 01.02.1994. Again, a measure of tax on coal mining lands, lime stone mining lands, crude oil mining lands and natural gas bearing lands were introduced 29.12.2004 with a retrospective effect from 01.01.2004. The collection of tax was, as below :
2003-04 Rs. 56.94 crore
2004-05 Rs. 45.29 ,,
2006-07 Rs. 53.18 ,,
2009-10 Rs. 78.87 ,,
2012-13 Rs. 99.72 ,,
2013-14 Rs. 103.43 ,,
2014-15 Rs. 101.66,,
The Economic and Statistic Department of the Government of Assam recently published a booklet on the Economic Survey of Assam,2014-15, based on the survey made in various fields of activities for the year 2013.
An analysis on the Survey Report
It was disclosed in economic survey report that –
A. (i) the total numbers of tea garden in Assam were 69,220 Nos (big and small). [It also could be learnt from other sources that there are about 750 nos industry-based tea gardens in Assam, which were included above.]
(ii)Total area of tea garden lands is– 3, 22, 000 Hector
(iii)Total production of tea is– 62, 90, 50,000 Kilogram (Kg )
The yields of tea (black tea) was from the industrial processing activities of the green tea leaves produced. The ratio of production of black tea leaves from green tea leaves is 4.5 Kg : 1 Kg. The production of green tea leaves in the tea garden lands can, therefore, be calculated out of blkack tea as- 62,90,50,000 Kg X 4.5 Kg = 283,07,25,000 Kg.. The tax on the tea garden lands is calculated on the annual production of the green tea leaves produced. The rate of tax on green tea leaves producedced varies from 0 .25 paise to 0.32 paise per Kg. Even if the minimum rate of tax is calculated @ 0.27 paise per Kg, the amount of tax comes upto Rs. 76,42,95,750.00.
B. The booklet further projected the production and use of the lands of following categories :
(a) coal mining lands : Coal extracted - 6,65,000 Metric tons
(b) lime stone mining lands: Lime stoneextracted- 2,08,000 ,, ,,
(c) crude oil mining lands: Crude oil extracted- 47,18,000 ,, ,,
(d) Natural gas bearing lands: Gas used- 26, 55 ,00 ,000 Cubic meter
The figures, published by the Economic and Statistics department, Government of Assam on the basis of economic survey must have some rigid base and these are clear and authentic.
The rate of tax on coal mine lands is Rs. 50.00 on the extraction of per metric ton of coal, on lime stone lands is Rs. 10.00 on the extraction of per metric ton of lime stone, on crude oil lands is Rs. 200.00 on the basis of extraction of per metric ton of crude oil, while on natural gas bearing lands is Rs. 100.00 on the use of per thousand cubic meter.
C. The tax liabilities, therefore, come up, as below :-
(6,65,000 X Rs. 50.00 = Rs. 3, 32,50,000.00
(ii) Lime Stone
(2,08,000X Rs. 10.00 = Rs. 20,80,000.00
(iii) Crude Oil
(47,18,000 X Rs. 200.OO = Rs. 94,36,00,000.00
(iv) Natural Gas
(26,55,00,000 X Rs. 100.00) = Rs. 2, 65,50,000.00
The tax element, as already worked out in respect tea leaves oif thergarden lands was
Rs. 76,42, 95, 750.00. If the above amount of tax Rs. 100,54,80,000.00 is
added to the same, the total amount of tax comes to Rs. 176,97,75,750.00 (say; Rs. 176. 98). The collection of tax on the specified lands, as per tax department record for the year 2014-15 was shown at Rs. 101.66. So, in consideration of both the Government records, a conclusion can be drawn up that there was an under payment of tax Rs. 176.98- Rs. 101.66 = Rs. 75.32 crore only.
The Specified Lands Act suffers from various lacunae. First, there is no provision of survey, inspection of accounts in the field. Second, no provisions for search of the premises, yards and godowns, seizure of the books of accounts and goods is existent. Third, the assessees (specified land owners) were given the liberty to pay tax uniliterally out of their own without any inspection or checking. Fourth, in the production of green tea leaves and use thereof in the industry along and the out turn derived can not be verified in a methodical way. Fifth, sometimes disparity or discrepancy, may exist between the figures of production of green tea leaves and that of manufactured black tea, but the same can not be verified and ascertained . Sixth the returns submitted before the State taxing authority are never verfied with the statements/returns submitted to the central excise authority to make counter check and to ascertain the accuracy.
Forthese shortfalls, therefore, under payment of tax.
Conflicts over taxability on sales of green tea leaves
Green tea is an exempted goods under the sales tax laws of Assam since 1947. No tax was leviable at any time on the sale or purchase of such goods. Even entry 41 of the First Schedule of the VAT Act makes it clear. Strangely enough, a provision has been inserted in the Specified Lands Act from 12-02-2009, which reads, as below :
“ Section 6A-Deduction of tax at source- Every person engaged in manufacture of tea and responsible for making any payment or discharging any liability on account of any amount purported to be the full or part payment of sale price or consideration of purchase of green tea shall at the time of credit to the account of or payment to the seller of such amount in cash, by cheque, by adjustment or in any manner, what soever deduct tax caculated at the rate of 25 paise per kilogram and deposit the same in the State exchequer in such manner, as may be precribed.”
A strong clash ,therefore, exists between the provisions of sales tax law (VAT) and the specified land law, which are being administered under the same roof of the tax administration in Assam. The said measure, as we believe, was inserted in the Specified Lands Act probably with a view to ensure proper payment of tax by the small tea gardens owners, but it can not ignore or supersede the restrictions imposed in the principal Act, governing the sales and purchases of the goods to the effect that no tax is leviable on the sales or purchases of the green tea leaves. The power to deduct and deposit such tax has been vested to some non- Government organizations [private tea industries] for which the accuracy of the production, sales made by the small tea gardens and deduction of tax at source remain controversial.
Tax on luxury
A measure of tax was introduced on the luxury provided in the hotels and lodging houses, carrying on the business on commercial basis, by way of enactment of the Assam Taxation (on Luxuries Hotels & Lodging Houses) Act, 1989 since 01.04.1989. The luxury included accommodation, amenities,facilities and the services provided therein. The owners of the hotels and lodging houses are to be made liable to pay tax under the said Luxury Tax Act on the turnover receipts of a hotelier.
The private hospitals, which provide accommodation , amenities, facilities and services on commercial basis were also brought under the puview this tax –net with effect from 29.08. 2009 and has been liable to pay tax on the the turnover in respect of such luxuries received.
The taxes collected under this law are :
2007-08 Rs. 3.11 Crore
2008-09 Rs. 5.75 ,,
2009-10 Rs. 5.17 ,,
2010-11 Rs. 5.42 ,,
2011-12 Rs. 7.48 ,,
2013-14 Rs. 8.67 ,,
2014-15 Rs. 10.55 ,,
In superseesion of the earlier rates of tax, the following rates of taxes were introduced in respect of the hoteliers with effect from 29.08.2009 :
(i) Where the charge of luxury in a hotel
is less than Rs. 300.00per day per room
(ii) More than Rs. 300.00 and not more than
Rs.1000.00 …5% of the turnover
(iii) More than Rs. 1000.00 and not more than
Rs. 2000.00 .. 8% ,,
(iv) More than Rs. 2000.00 ..12% ,,
With the introduction of tax on private hospitals in the luxury tax scenario with effect from 29.08.2009, the rates of tax were designed, as below:
(i) Where the charges of luxury provided
In a hospital is less than Rs.1000.00
In a hospital is less than Rs.1000.00
per day per room Nil
(ii) More than Rs.1000.00, but less than
Rs. 2500.00 .. 5% of the turnover
(iii) More than Rs. 2500.00 .. 8% ,,
The collection of tax, though is in a higher side, seems to be not very much encouraging particularly after the private hospitals were brought under the purview of this tax net. One reason of such shortfall might be that, the rate of tax on the hoteliers, as earlier prevailed, were reduced from 10%, 15% and 20% to 5%, 8% and 12% respectively, which might have caused lower yield of such tax revenue. The new measure of tax on private hospitals could not adequately compensate the loss.
The rate of luxury tax in respect of the hoteliers were further modified with effect from 12.05.2015 by reducing the margin of tax exemption quantum from Rs. 1000.00 to Rs. 2000.00 with the rates of tax from above Rs. 2000.00 to Rs.5000.00 a@ 10% and above Rs. 5000.00 @ 14%. We are to see the future impact of revenue on account of such modification.
A part from Guahati city, where there are numbers of star hotels, standard luxurious hotels with unique and adequate facilities of modern era, in other district, subdivisional and commercial towns also, many standard and sophisticated hotels, lodging houses, resorts and inn are operating. In National Parks and Game sancuaries, numbers of such hotels, lodging houses are there. The marriage celebrating houses were also brought under the purview of this Act.The accommodation, amenities, facilities and services charges in the modern and sophisticated hotels and private hospitals are very high.
From some data available, is found that the numbers of tourist Indian and Foreign) in the five National Parks with revenue collections were, as below :
Year NationalPark Indian tourists Foreign tourist Revenue
2012-1300 Kaziranga 93, 747 7418 Rs. 205.76
2013-14 ,, 119, 289 6922 Rs. 268.66
2012-13 Manas 15,890 218 Rs. 25.48
2013-14 ,, 20,527 211 Rs. 30.93
2012-13 Rajib Gandhi Orang 1,847 70 Rs. 2.76
2013-14 ,, 2,329 16 Rs. 2.43
2012-13 Dibru-Saikhowa 2,656 19 Rs. 1.08
2013-14 ,, 4,230 54 Rs. 2.09
2012-13 Nameri 4,370 528 Rs. 4.54
2013-14 ,, 5,866 806 Rs.11.56
This is a simple instance. It can be well imagined what will be numbers of borders and quantum of collection in the hotels, lodging houses, inns, resorts and private hospitals etc.
The luxury Act provided that inspection, search and siezure of the place business of such assessee are to be carried on by virtue of the provisions of the VAT Act. The Luxury Act and rules have not incorporated any independent provision thereon. It is not known, if such exercise of bpowers in respect of the assessees are being carried on. What we believe is that, a preventive way of action will make rise to the collection of tax revenue under this law.
Augmention of revenue to a higher quantum is possible, if there is proper mobilization of resources, utilization of man power and plugging of the legal lacunae. At present, man power in the taxation department is quite adequate., but it is not known how their services are being utilized. In the past, each of the taxing officers were on the heels to ensure proper and ascending revenue collection in their respective areas. They were answerable for any shortfall or lapses, whatsoever. The maintenance of survey register, inspection of places of business of the assessee including transport establishments, places of entertainmentsis the primary duty of the tax officers and it was imperative to maintain such records and registers, submit the periodic diaries, statements of performances including inspection, detection of evasion of taxes, tax involvement with realisation thereof, disposal of assessment cases, collection of revenue with arrear taxes, which were being reviewed by the superior authorities at frequent intervals by way of inspection to assess their performances individually. The maintenace Index Register, Assessment, Demand and collection (including arrear collection)Register, Detection and Prosecution Registers, Field Survey, Field inspection Register is a must The periodic marathan inspection offices from the rank of the Deputy Commissioner of Taxes (previously the Assistant Commissioners of Taxes) to the top was a regular feature. It is not known, if such traditions and culture are still being maintained.
(Mrinal Kanti Chakrabartty)
R.G. Barua Road, Lakhimipath,
Guwahati -781024 (Assam)