Taxation means the system of imposition and collection of tax. Tax, on the other hand, means, the money demanded by the Government from the income of the citizen or on the value of the goods, bought or sold, or by other ways and means, adopted to collect revenue to the Government coffer within the frame-work of the Constitution or under the statute of the law, operative in this behalf.
Taxation in pre-imperial rule
Taxation is not a new phenomanon in the history of India. It had the age- long tradition since Ramayan and Mahabhat era. The measure of tax in the past, in fact, used to continue as a matter of convention, the mode and manner of extraction being harsh, beset with untold ingredients of torture and cruelty.The Land Revenue was the primary source of royal earnings with other ancillaries, adopted, from time to time. Such measures were, however, not systematic, rather haphazard, clumsy and cumbersome. In the Mauryya era, the great deplomate and economist Kautilya or Chanakya played a pivotal role towards the acceleration of administration commensurated with the ways and means towards upgradation of economy. In his famous precious book “Kautilya’s Artha Sastra”, this great man of giant personality formulated the unique technic of administration with various guide-lines, wherein the spheres of fiscal discipline in the field of administration gained the momentum.To speak the truth, Kanishka or Chanakya was the father of modern administration and economy, who designed a broad platform centuries aback.
Imperial Rule in India
At the out-set, say, from 2000 - 3000 B.C.till the early part of the 12th century, India was ruled by the Hindu Kings with utmost glory and grandeur; but since 1206 A.D., the Muslim dynestic rule was set-up by Kututubuddin Aibek of Das Dynesty following the invasion of the country by his master Mohammed Ghori of Ghazni dynasty of Turky. The traditional marathan Muslim regime continued till 1712 A.D.,that is, upto the demise of the Emperor Bhadur Shah, the last Mughal dynestical ruler, which kingdom being set up by Emperor Babar in 1526 A.D., The East India Company of England, a business organization, which came to India for trade and commerce purposes instantaneously changed their modus-operandi on being tempted by the unparallel visible and potential wealth and property resources widely spread in the nooks and corns of the country ( east and west and north and south). They took up the helm of administration of India in a piece meal way by applying might and by hook or crook taking advantage of utter weakness and unbecoming and uncompromising feuds and fall -outs amongst the rulers besides other internal chaos and conflicts, those parallely being cropped up. Ultimately, the entire Indian territorial administration came to their grip one after one under a single banner. The Ahom Kingdom of Assam, which had the unbreaking period of administrative regime for long 598 years (from 1228 to 1826 A.D.) in greater Assam ,also came under the grip of the East India Company following the Yandabu Treaty, signed by the said company and the earlier invaders of Assam, the Mans of erstwhile Burma, (now Myanma). During the tenure of great Queen Victoria of England the British Government took over the administration from the East India Company on the 1st November, 1858 A.D. and started to rule the country through her representative, the Viceroy of India. Since then, Assam became a part of great Britain as a province of intregated and consolidated India. The province of Assam was primarily divided into ten districts on 6th February, 1874. The British Rule in India continued upto 1947 and on the 15th August , 1947, India got its independance following marathan struggles and movements both violent and non-violent. But the most tragic part of the happenings was that India was bifurcated and Pakisthan took birth as a muslim dominated country in the global map. India is now a Sovereign, Secular, Socialistic, Democratic Republic since 26th January, 1950. Assam being the part of India (a province since 1874) and now it is a State of the territory of India.
During the Muslim regime, the measures of taxation were there, but in many occasions, it posed to be detrimental to the interest of the Hindu inhabitants. Even, the Emporer Aurangeb used to levy Jijia tax on the Hindus obviously playing a distinctive communal game to oppress and suppress the non-Muslim community. This was not the single instance, but there were many. In a nut shell, the measures of taxes were there, but the levy and colletion lacked proper discipline and the requisite sense of justice and equity were lacking.
Tax administration in Assam under the British Rules
Our instant topic of discussion, in fact, is taxation in Assam though we designed it in a broad title ultimately to cover the State of Assam, one of the North Eastern States. During the hours of British reign since 1826 A.D., various measures of taxation were adopted. The prominent amongst them were Land Revenue, Excise Duty, Stamp Duty etc. There was Zamindari system in the erstwhile undivided Goalpara district. The Zaminders or Kings became loyal to the British Goverment in lieu of payment money and other precious gifts. The said Zaminders were the agents of the Government in power in the matter of collection of such revenue resources and other gifts. In other areas of Assam, the Mouzadars played the pivotal role in this matter. The mode and manner of collection and extraction of such revenue were not healthy, but was full of cruelty and brutality to the poor class of people.
State taxation laws
Tax under the Govt. of India Act,1935
Pre-independance period
The British Government enacted the Government of India Act in 1935, whereby, the people of India were, inter-alia, provided with a part of autonomy on certain matters to execute such power through their elected representatives, but, those too, were under the royal authority. Taxation was one of the subject of matter of such power of the allegedly designed autonomy. The system of levy and collection of Municipal tax in urban areas and house tax in rural areas also did prevail. A number of States adopted the measures of sales tax in 1936-37, but the Goverment of Assam introduced the following tax measures after enactment of law in 1939 only.
The measures of tax were the following :-
1. The Assam Sales of Motor Spirit and Lubricants Taxation Act, 1939- from 1st May, 1939 . A tax on sales or purchase of Petroleum and Lubricants This was, however, replaced by The Assam (sales of Petroleum, Petroleum Products including Motor Spirit and Lubricants Taxation Act, 1955 from 1.5.1956 with gradual additions of numbers of refinery products and petro-chemicals products besides crude oil. This law was merged with the Assam General Sales Tax Act, an amalgamated, consolidated and amendment of four operating Acts, namely; the Assam Sales Tax Act, 1947, the Assam Finance (Sales Tax) Act, 1956, the Assam Sales of Petroleum, Petroleum Products including Motor Spirit and Lubricants Taxation Act, 1955 and the Assam Purchase Tax Act, 1967 from 1.7.1993. The Constitutional Safe-guard, in fact, was existent there in the new Act (The Assam General Sales Tax Act, 1993) by entry 54 List II (State List) in the Seventh Schedule of the Constitution. With the introduction of Assam Value Added Taxation Act, 2003 from 1.5.2005, the items of goods, as were there, were incorporated in the said Act. Contrary to the spirit and intention of the Assam Value Added Tax Act, crude oil, petroleum products and petro-chemical products, the items of first point tax in the State, continued to be administered by this Act without any separate base or footing, exceptions, whatsoever. The items crude oil, petroleum,petroleum producuts with other ancillaries as well do not have any impact under the Goods and Services Act, 2017 and it has its independant way of administration probably being carried on by the Assam Value Added Tax Act, 2003.
2. The Assam Agricultural Income Tax, 1939-from 1.4.1939. This is a tax levied on the agricultural income of the agriculturists. This is seperated from the Indian Income Tax Act, 1961, which is a Central Act with measure of tax on income other than agricultural income. But 40% of the income derived out of tea, an agricultural product, is bifurcated and counted for levy of tax under the Indian Income Tax Act, as being the alleged income derived out of trade. The State can levy tax on the remaining 60% of the income derived out of such production of tea, that too, subject to determination by the Income Tax authorities, a Central Government revenue wing. However, a disparity and discrimination besides over-riding the power of the State taxing authorities are being obviously continuing there. Not only that, the Income Tax Act made it mandatory that the income determined by the income tax authorities has to remain binding on the aggricultural income tax authorities without any power to call in question obviously thereby superseding the manadatory powers laid down in the Assam Agricultural Income Tax Act,1939. A funny aspect is, no doubt, transparent in the administration of this Act.
This Act has now the base of entry 41 of List II (State List) in the Seventh Schedule of the Indian Constitution.
3.The Assam Amusement and Betting Tax,1939- from 1.8.1939. A tax on Amusement , betting and on use of Cable Television (being added subsequently). It continued to be operative even after the Constitution of India was adopted. The Constitutional safe-guard was obvious, as envisaged in entry 62 List II (State List) of the Seventh Schedule of the Constitution of India,.
This measure of tax has been brought under the purview of the Goods and Services Tax Act, 2017 with effect from 1.7.2017.
Post independence period
After the independence of India, but before the the Constitution of India came into force from 26.1.1950, the Government of Assam enacted the following taxation laws, as mentioned below :-
1. The Assam Professions, Trades, Callings and Employments Taxation Act, 1947- from 1st May, 1947. This tax measure was introduced on professions, trades, callings and employments. The measure of income tax, adopted by the Government of India is a tax on the net income derived out of income, while the taxes under this Act are levied on the professions, trades, callings and employments. The gross income has been designed as the measuring scale on such items for levy of tax. Apparently, this is not a double tax on income. This Act is being administered independently by the State taxing authorities and it is well guarded by Article 276 read with entry 60 of List II (State List) in Seventh Schedule of the Constitution of India.
2. The Assam Sales Tax Act, 1947 – from 24.12.1947. The measure of tax on the sales and purchases of goods, was introduced in Assam with exemption of tax on certain commodities. The tax on transfer of property in goods effected in course of execution of works contract and the goods handed over on lease for temporary use by the lessee without any change of ownership, were also brought under the purview of this Act. This Act was well safe-guarded by entry 54 List II (State List)of the Seventh Schedule of the Constitution.
This Act was amalgamted with the Assam General Sales Tax Act,1993 with effect from 1.7.1993. There after, it was incorporated with Assam General Sales Tax Act, 1993 from 1.5. 1993 and then again with the Assam Value Added Tax Act, 2003 from 1.5.2005. Now with introduction of the Goods and Services Tax Act, 2017 with effect from 1.7.2017 this is being governed by the said Act.
Post- Constitutional period
After the Constitution of India, which came into force from 26.1.1950, the following taxation laws were enacted.
1.The Assam Taxation on goods carried by Roads and Inland Waterways Act, 1954-- from 24.4.1954. This taxation law was introduced on the carriage of tea and jute (on weight basis) by road or waterways. This Act was declared ultra-vires by the Supreme Court of India, as the requisite assent was not obtained from the President of India under Article 304(b) or 255 of the Constitution of India before or after the enactment of the said law. The said Act was reintroduced to safe-guard the earlier collection of tax, but the Act finally ceased to be operative after 31.3.1962. This Act was enacted under the authority of entry 56, List II (State List) –Seventh Schedule of the Constitution of India.
The loss incurred for inoperation of this Act, was compesated by enactment of the Assam Passengers and Goods Taxation Act, 1962, which came into force from 16.8.1962 (as is being discussed latter), based on the said consttutional footings.
2.The Assam Finance (Sales Tax) Act, 1956- from 1.7.1956. This enactment of law was introduced for the purpose of levy of tax on the sales of some specific goods, which were (i) imported from out side the State of Assam or (ii) manufactured or processed in Assam for the purpose of sales. This was done under the authority of Article 304(a) read with entry 54 of List II (State List) in the Seventh Schedule of the Constitution of India to avoid discrimination between imported and manufactured or processed goods. This reached to the same fate as in the case of the Assam Sales Tax Act, 1947, as discussed above.
3.The Assam Passengers and Goods Taxation Act, 1962- from 16.8.1962- The requirement for enactment of this taxation Act was partly discussed against the item 1 above (Viz the Assam Taxation of Goods carried by Road and Inland Waterways Act, 1954). This has the same Constitutional base as was in the said Act. This tax was leviable on the fare and freight of the passengers and goods, carried by roads and waterways on hire.
The power of administration of this Act was transferred to the transport administration of the State in the year 1989.
4. The Assam Urban and Immovable Property Tax Act, 1963- from 1.4.1963. Entry 49 List II (State List) of the Seventh Schedule of the Constitution of India empowered the State Legisture vide item ‘Tax on Lands and Buildings’ to enact such a law. The administration of this Act was solely extended for the Urban areas, which were under the Municipal or the Town Committees and it is leviable to the the owners of the lands and buildings on the rental value of such lands and buildings, determined by the Municipality or the Town Committee authorities.
The power of administration of this Act was transferred to the Municipal and Town Committee authorities in the year1971-72, as it was more relevant to the said authorities.
5.The Assam Electricity Duty Act, 1964- from 1.4.1965- Entry 53 Lst II (State List) of the Seventh Schedule of the Constitution of India empowered the State Legislature to levy tax on consumption or sale of electricity.With such power conferred, the Legislature of Assam enacted the Assam Electricity Duty Act, 1964 to levy tax on the generation, consumption and distribution of electrict energy. This tax is leviable in units.
The Act is till now operative within the State of Assam.The users, consumers, in fact, are to bear the burden of this measure of tax.
A section of persons in the electricity board is enjoying the benefit of free payment of rent for consumption of electricity. Likewise, in some temporary supply of electricity for different purposes, the rents are being paid on lump sum basis. A pertinent question arises whether duty, as due for consumption, use or supply are being paid to the State Coffer properly or not ?
6. The Assam Purchase Tax Act, 1967- from 3.7.1971- The Constitutional back ground of this Act is the same, as is in the case of the Assam Sales Tax Act and other two laws on sales and purchases of goods within the State of Assam. This measure of tax was on the last point purchase of jute, raw hides and skins and paddy. The Act was originally given effect from 29.5.1968, but following the cases of litigation in the Court of law and disposal thereof against the State further amendment of the Act was necessary .It was thus given effect from 3.7.1971 causing loss of revenue for three years.
This Act as well reached the same fate as in the case of other three Acts, namely; the Assam Sales Tax Act, the Assam Finance (Sales Tax)Act and the Assam (Sales of Petroleum, Petroleum Products including Motor Spirit and Lubricants )Taxation Act, 1955.
7. The Assam Tax on Luxuries (Hotels, Lodging Houses And Hospitals Act, 1989- from 1.4.189 original Act and from 29.8.2009, the Hospital Act. The tax on luxuries has the same base like that of the amusement and betting tax, as envisaged in entry 62 List II (State List) in the Seventh Schedule of the Constitution of India. Taxes are leviable under this Act on the accommodations, services and amenities provided in the Hotels, Lodging Houses and Hospitals (other than the Government Hospitals).
This Act was merged with Goods and Services Tax Act,2017 with effect from 1.7.2017.
8.The Assam Taxation (On Specified Lands) Act,- from 1.1.1990. This Act was introduced by virtue of power conferred to the State Legislature vide entry 49- List II State List) in the Seventh Schedule of the Constitution of India. Originally, this measure of tax was introduced on the lands taking into consideration the quantum of production of green tea leaves and extraction of coal.The weight pertaining to the production or extraction was a measuring Scale for determining the tax on land. The item coal was withdrawn from the tax scenario for a short time, but it was reintroduced. Other items, added in this respect ,were crude oil, natural gas, lime stones etc.
The Act was challenged before the Hon’ble High Court and the Supreme court of India on the plea that it is not a tax on production of tea or extraction of coal, but it is a tax on the land. However, after a Memorandum of Understanding signed by the appellants and the State Government of Assam, the cases were withdrawn and the rates of tax were reduced from 50 paise to 18 paise per kilogram of tea produced. That, it was a levy of tax on land and not on the green tea leaves was confirmed by Hon’ble Calcutta High Court, in some identical case in West Bengal, but the Government. Had nothing to do following the Memorandum of Understanding signed hurriedly.This Act is operating till now yielding a substantial amount of revenue to the State coffer, though there has been a shortfall, as no power of inspection and seizure of goods were incorporated in this Act.
9. The Assam General Sales Tax Act, 1993- from 1.7.1993. This has the same constitutional base, as has been discussed in the cases of the four taxation laws in relation to the sales and purchases of goods in Assam. Following the dire necessity felt to mininimize the work load of administration, which involved time factor as well, these four taxation laws in relation to the sales and purchases of goods operative in Assam, were amalgamated, consolidated and amended in Assam and the Assam General Tax Act, 1993 to give birth to this new Act for operation in the State of Assam. This has the same constitutional base as in othe sales and purchase tax Act.
This Act was an ideal one and continued to be operative till the Assam Value Added Tax Act,2003 on 1.5.2005, which was subsquently replaced by the Goods and Services Tax Act, 2017 from 1.7.2017.
10. The Assam Taxation (On Luxuries) Act, 1997 –from 1.8.1997- The constitutional base of this taxation Act is identical to the Tax on Luxuries (Hotels, Lodging Houses and Hospitals) Act,1989, but the subject matter, mode and manner of the measure of tax is different. The tax was leviable on the stock value of luxuries, namely, of Cherrots, Cigerettes, Cigar, Scented Tobacco including Zarda, Smoking Mixture for Pipes and Cigerettes, Mill made Textiles and Fabrics. The operation of this Act got yield of a substial amount of revenue to the State.
The Hon’ble Supreme Court of India by a judgment and order passed on 21.1.2005 declared the incorporation of the items tobacco and Gudka as ultra-vires and the Act thereafter ceased to be effective.
11.The Assam Entry Tax Act, 2001- from 1.10.2001. The Assam Entry Tax Act, 2001 was introduced under the authority of Entry 52-List II (State List) in the Seventh Schedule of the Constitution of India. Originally, the aim and object of this Act was was to levy of tax on some specified goods entered into any local areas of Assam from the places outside the State of Assam for use or sale. The intention of this Act was to prevent a section of traders or consumers to purchase goods in places outside the State of Assam and to bring such goods into Assam for onward sale or use depriving the State of its revenue. After 18 days of coming into force of the said Act, the Act was, however, amended abruptly and apart from entry of goods into Assam, the entry of goods from one local area in Assam to any other local area in Assam were made liable to be taxed. Thus apart from the character of tax on entry of goods, it was simultaneously designed with the character of Octroi tax.
A portion of this Act was declared ultra-vires by the Hon’ble Gauhati High Court on 17.11.2006 for the constutional lapses, which decision was upheld on appeal by the larger Bench of the said Court. The Act was thus repealed and a fresh law on Assam Entry Tax was enacted and given effect from 13.4.2008 with the power of the State to realise the earlier taxes.
With the introduction of the Goods and Services Tax Act, 2017 from 1.7.2017, this Act ceased to be operative.
12. The Assam Value Added Tax Act, 2003- from 1.5.2005- This is a new measure of levy of tax on the sales and purchases of goods. It is a tax leviable at every stage of sale made by a registered dealer to another registered dealer with the provision of credit of input tax paid at the points of purchase of such goods made, It is leviable at different stages like (i) sale of raw materials (ii) manufactured or finished products and (iii) the goods imported from the places outside the State of Assam and sales thereof. The issue of Tax Invoices in case of whole sale and Retail Invoices were made imperative in relation to the transaction. With the addition of value added tax, the prices of the commodities naturally went up. The dealers were benefitted, the State Government used to get the legitimate amount of tax, but the consumers had to suffer multiplicity of tax following the merger of tax in each stage of sales (i.e value added tax). Though the aim and object of this Act was to provide transparency, but in the field of activities it was not as good,as it was assured to be. Though the items pertaining to Petroleum and petroleum Products were excluded from the purview of this Act, the administration in relation to the said measure of tax were being carried on under the said Assam Value Added Tax Act with the identical system of administration. This was indeed contrary to the main ideology of the operative law .The Act was repealed following the introduction of the Goods and Services Tax Act, 2017, while petroleum, diesel etc. maintained their own base.
The Central taxation laws
1. The Central Sales Tax Act, 1956- Prior to 5.1.1957, there was no measure of tax on the sales and purchases of the goods made in the course of inter-State trade or commerce. Article 269 (3)(g) read with entry 92A of List I (Union List) in the Seventh Schedule of the Constituion of India empowered Parliament to make laws for levy of tax on thes sales or purchases of goods made in the course of inter-State trade or commerce. Parliament enacted the Central Sales Tax Act, 1956, which came into force from 5.1.1957. The items of goods, which were taxable under State taxation Laws were as well to be levied tax under the this Act, when sold in the course of inter-State trade or commerce. Two categories of the rates were persistant, namely; for sales to the registered dealers under the Act and sales to other than the registered dealers. The transfer of stock of goods were not be taxed under this Act subject to the conditions and restrictions , as imposed. The State Governments were empowered to grant exemption of tax on certain commodities or to certain areas under the provisions of this Act.
This taxation law ceased to be existent following introduction of the Goods and Sevices Tax Act, 2017 from 1.7.2017.
2. The Goods and Services Tax Act, 1917- from 1.7.2017- The Government of India gave a new thought to make restructure of a series of the Central and State taxation Acts not only in respect of sales or purchases the goods and other ancillaries,connected therewith, into one Act under a single tax net as a measure of simplification of administration as well as growth of economy for the entire the country as a whole. The central taxes intended to be merged were the Central Excise Duty; Additional Excise Duty; Exice Duty levied under the Medicinal and Toiletories Preparation; Service Tax; Additional Customs Duty commonly known as Countervailing Duty; Special AdditionalDuties of Customs ; Surchage and Cess; Central Sales tax, while of the States, the Sales tax, Entertainment tax, Luxury tax, Lottery, Betting and Gambling tax , Cess and Surcharges, Entry tax.
A series of items of services was incorporated in this new Act for the purpose of levy of tax.
There had been wide dispute and dissention over the question of introduction of this consolidated tax measure, but after wide deliberation, ultimately, a consensus was arrived at and it was introduced unanimously.
The Constitution of India was amended with the requisite Articles and the entries of the Schedules thereof before the enactment of the Goods and Services Act.
The Goods and services Act has been designed into three aspects, as below
(1)State Goods and Services Act (SGST)- enacted to be administered by the State authorities in the line of the Central Goods and Services Act;
(2) Central Goods and Services Act (CGST)- enacted to be administered by the Central authorities;
(3) Inter State Goods and Services Tax Act (IGST)- enacted to be administered by the Central authorities in the matter of inter-State deals.
Though two years have been over after implementation of the Goods and Services Tax Act, it is yet to attain maturity and the common people are yet to be made aware of the pros and cons of this measures of tax. This tax measures did not yield a very positive result and according to media report, the collection of revenue is now in a lower side.
The State taxation laws, as exhibited above, which were not incorporated in the Goods and Services Tax are continuing their operation and administration independently, as before.
Conclusion
The ‘Goods and Services Tax’ is a self-designed omnibus with multifarious Central and State apparatus and components, propelled by designed engine with self-moving arrangements, having its full control over the methodical journey, which is rarely be astrayed or cracked in reaching the destination. Such designed omnibus may not, however, always ensure safe and proper journey and to yeild a positive result due to unhealthy apparatus and irregular ingredients and components. The outside vicious atmosphere may also influence adversely in the loading components. Our suspicious vision is that there may be foul play in the process. ‘Good will and bad will’; ‘honesty and dishonesty’ may in either way influence the race. ‘Evasion and avoidance are ‘brothers twine’. Our intention is to say that full sphere of honesty and trustworthy must prevail upon the operating traders in the course of their journey of trades and services activities.
The law making authorities have given due stresses on the on the honesty, integrity and trustworthyness of the traders and discouraged the functions of the ‘Inspector Raj’, the field officers on the plea of the alleged high handedness and corruption. Even if any raid is to be undertaken, that is also to be done only with the prior orders or approval of the Joint Commissioner of Taxes, normally remaining far away from the spot in such process, there will be a time gap and the whole exercise may be foiled and frustrated . The law, on the other hand, maintained utter silence on the question of erection and operation of the check posts, which played a pivotal role in preventing, detecting and arresting evasion of taxes in the erstwhile law regimes. Accordingly, all check posts have been made effective making way for free movement of the goods.’The earth would have been a heavenly abode had there been no evasion or avoidance of taxes’. But whether it can be rightly presumed or assumed?
Some raw materials, like jute, superi, tea leaves as well as timbers, bamboo, cane and furniture thereof besides coal, dhania, jeera, haldhi, ginger, hides and skins and bone of animals, raptiles etc. which are the non-excisable commodities use make clandestine movements from one place to another and from one State to another on sales or sock transfer, whatsoever, we believe, hardly pay tax righteously and legitimately. One can- not assure that the finished products derived thereof are being accounted for properly to be incorporated in the tax net. The reports of unaccounted movement of coal and detention thereof are frequently published in the news media. Functioning of unauthorised syndicates and collection of unathorized and illegal tax are also gaining the momentum. ‘Necessity is the other of invention’. So, tax evader or avoider will try to make new ways and means to evade payment of taxes. This vital point requires a proper review by the law making and law enforcing authorities.
At the conclusion, we add two famous sayings-
Frederick the Great of Russia- “No Government can exist without taxation. This money must necessarily be levied on the people, and grand art consists of levying so as not to oppress.”
Kautilya or Chanakya- “ Thus the king shall first reform the administration, by punishing appropriately those officers, who deal in wealth, they duly corrected shall use the right punishments to ensure the good conduct of the people of the town and countries.”
Mrinal Kanti Chakrabartty
R.G. Barua Road, 10- Lakhimipath’
Guwahati-781-024 (Assam)
Taxation in pre-imperial rule
Taxation is not a new phenomanon in the history of India. It had the age- long tradition since Ramayan and Mahabhat era. The measure of tax in the past, in fact, used to continue as a matter of convention, the mode and manner of extraction being harsh, beset with untold ingredients of torture and cruelty.The Land Revenue was the primary source of royal earnings with other ancillaries, adopted, from time to time. Such measures were, however, not systematic, rather haphazard, clumsy and cumbersome. In the Mauryya era, the great deplomate and economist Kautilya or Chanakya played a pivotal role towards the acceleration of administration commensurated with the ways and means towards upgradation of economy. In his famous precious book “Kautilya’s Artha Sastra”, this great man of giant personality formulated the unique technic of administration with various guide-lines, wherein the spheres of fiscal discipline in the field of administration gained the momentum.To speak the truth, Kanishka or Chanakya was the father of modern administration and economy, who designed a broad platform centuries aback.
Imperial Rule in India
At the out-set, say, from 2000 - 3000 B.C.till the early part of the 12th century, India was ruled by the Hindu Kings with utmost glory and grandeur; but since 1206 A.D., the Muslim dynestic rule was set-up by Kututubuddin Aibek of Das Dynesty following the invasion of the country by his master Mohammed Ghori of Ghazni dynasty of Turky. The traditional marathan Muslim regime continued till 1712 A.D.,that is, upto the demise of the Emperor Bhadur Shah, the last Mughal dynestical ruler, which kingdom being set up by Emperor Babar in 1526 A.D., The East India Company of England, a business organization, which came to India for trade and commerce purposes instantaneously changed their modus-operandi on being tempted by the unparallel visible and potential wealth and property resources widely spread in the nooks and corns of the country ( east and west and north and south). They took up the helm of administration of India in a piece meal way by applying might and by hook or crook taking advantage of utter weakness and unbecoming and uncompromising feuds and fall -outs amongst the rulers besides other internal chaos and conflicts, those parallely being cropped up. Ultimately, the entire Indian territorial administration came to their grip one after one under a single banner. The Ahom Kingdom of Assam, which had the unbreaking period of administrative regime for long 598 years (from 1228 to 1826 A.D.) in greater Assam ,also came under the grip of the East India Company following the Yandabu Treaty, signed by the said company and the earlier invaders of Assam, the Mans of erstwhile Burma, (now Myanma). During the tenure of great Queen Victoria of England the British Government took over the administration from the East India Company on the 1st November, 1858 A.D. and started to rule the country through her representative, the Viceroy of India. Since then, Assam became a part of great Britain as a province of intregated and consolidated India. The province of Assam was primarily divided into ten districts on 6th February, 1874. The British Rule in India continued upto 1947 and on the 15th August , 1947, India got its independance following marathan struggles and movements both violent and non-violent. But the most tragic part of the happenings was that India was bifurcated and Pakisthan took birth as a muslim dominated country in the global map. India is now a Sovereign, Secular, Socialistic, Democratic Republic since 26th January, 1950. Assam being the part of India (a province since 1874) and now it is a State of the territory of India.
During the Muslim regime, the measures of taxation were there, but in many occasions, it posed to be detrimental to the interest of the Hindu inhabitants. Even, the Emporer Aurangeb used to levy Jijia tax on the Hindus obviously playing a distinctive communal game to oppress and suppress the non-Muslim community. This was not the single instance, but there were many. In a nut shell, the measures of taxes were there, but the levy and colletion lacked proper discipline and the requisite sense of justice and equity were lacking.
Tax administration in Assam under the British Rules
Our instant topic of discussion, in fact, is taxation in Assam though we designed it in a broad title ultimately to cover the State of Assam, one of the North Eastern States. During the hours of British reign since 1826 A.D., various measures of taxation were adopted. The prominent amongst them were Land Revenue, Excise Duty, Stamp Duty etc. There was Zamindari system in the erstwhile undivided Goalpara district. The Zaminders or Kings became loyal to the British Goverment in lieu of payment money and other precious gifts. The said Zaminders were the agents of the Government in power in the matter of collection of such revenue resources and other gifts. In other areas of Assam, the Mouzadars played the pivotal role in this matter. The mode and manner of collection and extraction of such revenue were not healthy, but was full of cruelty and brutality to the poor class of people.
State taxation laws
Tax under the Govt. of India Act,1935
Pre-independance period
The British Government enacted the Government of India Act in 1935, whereby, the people of India were, inter-alia, provided with a part of autonomy on certain matters to execute such power through their elected representatives, but, those too, were under the royal authority. Taxation was one of the subject of matter of such power of the allegedly designed autonomy. The system of levy and collection of Municipal tax in urban areas and house tax in rural areas also did prevail. A number of States adopted the measures of sales tax in 1936-37, but the Goverment of Assam introduced the following tax measures after enactment of law in 1939 only.
The measures of tax were the following :-
1. The Assam Sales of Motor Spirit and Lubricants Taxation Act, 1939- from 1st May, 1939 . A tax on sales or purchase of Petroleum and Lubricants This was, however, replaced by The Assam (sales of Petroleum, Petroleum Products including Motor Spirit and Lubricants Taxation Act, 1955 from 1.5.1956 with gradual additions of numbers of refinery products and petro-chemicals products besides crude oil. This law was merged with the Assam General Sales Tax Act, an amalgamated, consolidated and amendment of four operating Acts, namely; the Assam Sales Tax Act, 1947, the Assam Finance (Sales Tax) Act, 1956, the Assam Sales of Petroleum, Petroleum Products including Motor Spirit and Lubricants Taxation Act, 1955 and the Assam Purchase Tax Act, 1967 from 1.7.1993. The Constitutional Safe-guard, in fact, was existent there in the new Act (The Assam General Sales Tax Act, 1993) by entry 54 List II (State List) in the Seventh Schedule of the Constitution. With the introduction of Assam Value Added Taxation Act, 2003 from 1.5.2005, the items of goods, as were there, were incorporated in the said Act. Contrary to the spirit and intention of the Assam Value Added Tax Act, crude oil, petroleum products and petro-chemical products, the items of first point tax in the State, continued to be administered by this Act without any separate base or footing, exceptions, whatsoever. The items crude oil, petroleum,petroleum producuts with other ancillaries as well do not have any impact under the Goods and Services Act, 2017 and it has its independant way of administration probably being carried on by the Assam Value Added Tax Act, 2003.
2. The Assam Agricultural Income Tax, 1939-from 1.4.1939. This is a tax levied on the agricultural income of the agriculturists. This is seperated from the Indian Income Tax Act, 1961, which is a Central Act with measure of tax on income other than agricultural income. But 40% of the income derived out of tea, an agricultural product, is bifurcated and counted for levy of tax under the Indian Income Tax Act, as being the alleged income derived out of trade. The State can levy tax on the remaining 60% of the income derived out of such production of tea, that too, subject to determination by the Income Tax authorities, a Central Government revenue wing. However, a disparity and discrimination besides over-riding the power of the State taxing authorities are being obviously continuing there. Not only that, the Income Tax Act made it mandatory that the income determined by the income tax authorities has to remain binding on the aggricultural income tax authorities without any power to call in question obviously thereby superseding the manadatory powers laid down in the Assam Agricultural Income Tax Act,1939. A funny aspect is, no doubt, transparent in the administration of this Act.
This Act has now the base of entry 41 of List II (State List) in the Seventh Schedule of the Indian Constitution.
3.The Assam Amusement and Betting Tax,1939- from 1.8.1939. A tax on Amusement , betting and on use of Cable Television (being added subsequently). It continued to be operative even after the Constitution of India was adopted. The Constitutional safe-guard was obvious, as envisaged in entry 62 List II (State List) of the Seventh Schedule of the Constitution of India,.
This measure of tax has been brought under the purview of the Goods and Services Tax Act, 2017 with effect from 1.7.2017.
Post independence period
After the independence of India, but before the the Constitution of India came into force from 26.1.1950, the Government of Assam enacted the following taxation laws, as mentioned below :-
1. The Assam Professions, Trades, Callings and Employments Taxation Act, 1947- from 1st May, 1947. This tax measure was introduced on professions, trades, callings and employments. The measure of income tax, adopted by the Government of India is a tax on the net income derived out of income, while the taxes under this Act are levied on the professions, trades, callings and employments. The gross income has been designed as the measuring scale on such items for levy of tax. Apparently, this is not a double tax on income. This Act is being administered independently by the State taxing authorities and it is well guarded by Article 276 read with entry 60 of List II (State List) in Seventh Schedule of the Constitution of India.
2. The Assam Sales Tax Act, 1947 – from 24.12.1947. The measure of tax on the sales and purchases of goods, was introduced in Assam with exemption of tax on certain commodities. The tax on transfer of property in goods effected in course of execution of works contract and the goods handed over on lease for temporary use by the lessee without any change of ownership, were also brought under the purview of this Act. This Act was well safe-guarded by entry 54 List II (State List)of the Seventh Schedule of the Constitution.
This Act was amalgamted with the Assam General Sales Tax Act,1993 with effect from 1.7.1993. There after, it was incorporated with Assam General Sales Tax Act, 1993 from 1.5. 1993 and then again with the Assam Value Added Tax Act, 2003 from 1.5.2005. Now with introduction of the Goods and Services Tax Act, 2017 with effect from 1.7.2017 this is being governed by the said Act.
Post- Constitutional period
After the Constitution of India, which came into force from 26.1.1950, the following taxation laws were enacted.
1.The Assam Taxation on goods carried by Roads and Inland Waterways Act, 1954-- from 24.4.1954. This taxation law was introduced on the carriage of tea and jute (on weight basis) by road or waterways. This Act was declared ultra-vires by the Supreme Court of India, as the requisite assent was not obtained from the President of India under Article 304(b) or 255 of the Constitution of India before or after the enactment of the said law. The said Act was reintroduced to safe-guard the earlier collection of tax, but the Act finally ceased to be operative after 31.3.1962. This Act was enacted under the authority of entry 56, List II (State List) –Seventh Schedule of the Constitution of India.
The loss incurred for inoperation of this Act, was compesated by enactment of the Assam Passengers and Goods Taxation Act, 1962, which came into force from 16.8.1962 (as is being discussed latter), based on the said consttutional footings.
2.The Assam Finance (Sales Tax) Act, 1956- from 1.7.1956. This enactment of law was introduced for the purpose of levy of tax on the sales of some specific goods, which were (i) imported from out side the State of Assam or (ii) manufactured or processed in Assam for the purpose of sales. This was done under the authority of Article 304(a) read with entry 54 of List II (State List) in the Seventh Schedule of the Constitution of India to avoid discrimination between imported and manufactured or processed goods. This reached to the same fate as in the case of the Assam Sales Tax Act, 1947, as discussed above.
3.The Assam Passengers and Goods Taxation Act, 1962- from 16.8.1962- The requirement for enactment of this taxation Act was partly discussed against the item 1 above (Viz the Assam Taxation of Goods carried by Road and Inland Waterways Act, 1954). This has the same Constitutional base as was in the said Act. This tax was leviable on the fare and freight of the passengers and goods, carried by roads and waterways on hire.
The power of administration of this Act was transferred to the transport administration of the State in the year 1989.
4. The Assam Urban and Immovable Property Tax Act, 1963- from 1.4.1963. Entry 49 List II (State List) of the Seventh Schedule of the Constitution of India empowered the State Legisture vide item ‘Tax on Lands and Buildings’ to enact such a law. The administration of this Act was solely extended for the Urban areas, which were under the Municipal or the Town Committees and it is leviable to the the owners of the lands and buildings on the rental value of such lands and buildings, determined by the Municipality or the Town Committee authorities.
The power of administration of this Act was transferred to the Municipal and Town Committee authorities in the year1971-72, as it was more relevant to the said authorities.
5.The Assam Electricity Duty Act, 1964- from 1.4.1965- Entry 53 Lst II (State List) of the Seventh Schedule of the Constitution of India empowered the State Legislature to levy tax on consumption or sale of electricity.With such power conferred, the Legislature of Assam enacted the Assam Electricity Duty Act, 1964 to levy tax on the generation, consumption and distribution of electrict energy. This tax is leviable in units.
The Act is till now operative within the State of Assam.The users, consumers, in fact, are to bear the burden of this measure of tax.
A section of persons in the electricity board is enjoying the benefit of free payment of rent for consumption of electricity. Likewise, in some temporary supply of electricity for different purposes, the rents are being paid on lump sum basis. A pertinent question arises whether duty, as due for consumption, use or supply are being paid to the State Coffer properly or not ?
6. The Assam Purchase Tax Act, 1967- from 3.7.1971- The Constitutional back ground of this Act is the same, as is in the case of the Assam Sales Tax Act and other two laws on sales and purchases of goods within the State of Assam. This measure of tax was on the last point purchase of jute, raw hides and skins and paddy. The Act was originally given effect from 29.5.1968, but following the cases of litigation in the Court of law and disposal thereof against the State further amendment of the Act was necessary .It was thus given effect from 3.7.1971 causing loss of revenue for three years.
This Act as well reached the same fate as in the case of other three Acts, namely; the Assam Sales Tax Act, the Assam Finance (Sales Tax)Act and the Assam (Sales of Petroleum, Petroleum Products including Motor Spirit and Lubricants )Taxation Act, 1955.
7. The Assam Tax on Luxuries (Hotels, Lodging Houses And Hospitals Act, 1989- from 1.4.189 original Act and from 29.8.2009, the Hospital Act. The tax on luxuries has the same base like that of the amusement and betting tax, as envisaged in entry 62 List II (State List) in the Seventh Schedule of the Constitution of India. Taxes are leviable under this Act on the accommodations, services and amenities provided in the Hotels, Lodging Houses and Hospitals (other than the Government Hospitals).
This Act was merged with Goods and Services Tax Act,2017 with effect from 1.7.2017.
8.The Assam Taxation (On Specified Lands) Act,- from 1.1.1990. This Act was introduced by virtue of power conferred to the State Legislature vide entry 49- List II State List) in the Seventh Schedule of the Constitution of India. Originally, this measure of tax was introduced on the lands taking into consideration the quantum of production of green tea leaves and extraction of coal.The weight pertaining to the production or extraction was a measuring Scale for determining the tax on land. The item coal was withdrawn from the tax scenario for a short time, but it was reintroduced. Other items, added in this respect ,were crude oil, natural gas, lime stones etc.
The Act was challenged before the Hon’ble High Court and the Supreme court of India on the plea that it is not a tax on production of tea or extraction of coal, but it is a tax on the land. However, after a Memorandum of Understanding signed by the appellants and the State Government of Assam, the cases were withdrawn and the rates of tax were reduced from 50 paise to 18 paise per kilogram of tea produced. That, it was a levy of tax on land and not on the green tea leaves was confirmed by Hon’ble Calcutta High Court, in some identical case in West Bengal, but the Government. Had nothing to do following the Memorandum of Understanding signed hurriedly.This Act is operating till now yielding a substantial amount of revenue to the State coffer, though there has been a shortfall, as no power of inspection and seizure of goods were incorporated in this Act.
9. The Assam General Sales Tax Act, 1993- from 1.7.1993. This has the same constitutional base, as has been discussed in the cases of the four taxation laws in relation to the sales and purchases of goods in Assam. Following the dire necessity felt to mininimize the work load of administration, which involved time factor as well, these four taxation laws in relation to the sales and purchases of goods operative in Assam, were amalgamated, consolidated and amended in Assam and the Assam General Tax Act, 1993 to give birth to this new Act for operation in the State of Assam. This has the same constitutional base as in othe sales and purchase tax Act.
This Act was an ideal one and continued to be operative till the Assam Value Added Tax Act,2003 on 1.5.2005, which was subsquently replaced by the Goods and Services Tax Act, 2017 from 1.7.2017.
10. The Assam Taxation (On Luxuries) Act, 1997 –from 1.8.1997- The constitutional base of this taxation Act is identical to the Tax on Luxuries (Hotels, Lodging Houses and Hospitals) Act,1989, but the subject matter, mode and manner of the measure of tax is different. The tax was leviable on the stock value of luxuries, namely, of Cherrots, Cigerettes, Cigar, Scented Tobacco including Zarda, Smoking Mixture for Pipes and Cigerettes, Mill made Textiles and Fabrics. The operation of this Act got yield of a substial amount of revenue to the State.
The Hon’ble Supreme Court of India by a judgment and order passed on 21.1.2005 declared the incorporation of the items tobacco and Gudka as ultra-vires and the Act thereafter ceased to be effective.
11.The Assam Entry Tax Act, 2001- from 1.10.2001. The Assam Entry Tax Act, 2001 was introduced under the authority of Entry 52-List II (State List) in the Seventh Schedule of the Constitution of India. Originally, the aim and object of this Act was was to levy of tax on some specified goods entered into any local areas of Assam from the places outside the State of Assam for use or sale. The intention of this Act was to prevent a section of traders or consumers to purchase goods in places outside the State of Assam and to bring such goods into Assam for onward sale or use depriving the State of its revenue. After 18 days of coming into force of the said Act, the Act was, however, amended abruptly and apart from entry of goods into Assam, the entry of goods from one local area in Assam to any other local area in Assam were made liable to be taxed. Thus apart from the character of tax on entry of goods, it was simultaneously designed with the character of Octroi tax.
A portion of this Act was declared ultra-vires by the Hon’ble Gauhati High Court on 17.11.2006 for the constutional lapses, which decision was upheld on appeal by the larger Bench of the said Court. The Act was thus repealed and a fresh law on Assam Entry Tax was enacted and given effect from 13.4.2008 with the power of the State to realise the earlier taxes.
With the introduction of the Goods and Services Tax Act, 2017 from 1.7.2017, this Act ceased to be operative.
12. The Assam Value Added Tax Act, 2003- from 1.5.2005- This is a new measure of levy of tax on the sales and purchases of goods. It is a tax leviable at every stage of sale made by a registered dealer to another registered dealer with the provision of credit of input tax paid at the points of purchase of such goods made, It is leviable at different stages like (i) sale of raw materials (ii) manufactured or finished products and (iii) the goods imported from the places outside the State of Assam and sales thereof. The issue of Tax Invoices in case of whole sale and Retail Invoices were made imperative in relation to the transaction. With the addition of value added tax, the prices of the commodities naturally went up. The dealers were benefitted, the State Government used to get the legitimate amount of tax, but the consumers had to suffer multiplicity of tax following the merger of tax in each stage of sales (i.e value added tax). Though the aim and object of this Act was to provide transparency, but in the field of activities it was not as good,as it was assured to be. Though the items pertaining to Petroleum and petroleum Products were excluded from the purview of this Act, the administration in relation to the said measure of tax were being carried on under the said Assam Value Added Tax Act with the identical system of administration. This was indeed contrary to the main ideology of the operative law .The Act was repealed following the introduction of the Goods and Services Tax Act, 2017, while petroleum, diesel etc. maintained their own base.
The Central taxation laws
1. The Central Sales Tax Act, 1956- Prior to 5.1.1957, there was no measure of tax on the sales and purchases of the goods made in the course of inter-State trade or commerce. Article 269 (3)(g) read with entry 92A of List I (Union List) in the Seventh Schedule of the Constituion of India empowered Parliament to make laws for levy of tax on thes sales or purchases of goods made in the course of inter-State trade or commerce. Parliament enacted the Central Sales Tax Act, 1956, which came into force from 5.1.1957. The items of goods, which were taxable under State taxation Laws were as well to be levied tax under the this Act, when sold in the course of inter-State trade or commerce. Two categories of the rates were persistant, namely; for sales to the registered dealers under the Act and sales to other than the registered dealers. The transfer of stock of goods were not be taxed under this Act subject to the conditions and restrictions , as imposed. The State Governments were empowered to grant exemption of tax on certain commodities or to certain areas under the provisions of this Act.
This taxation law ceased to be existent following introduction of the Goods and Sevices Tax Act, 2017 from 1.7.2017.
2. The Goods and Services Tax Act, 1917- from 1.7.2017- The Government of India gave a new thought to make restructure of a series of the Central and State taxation Acts not only in respect of sales or purchases the goods and other ancillaries,connected therewith, into one Act under a single tax net as a measure of simplification of administration as well as growth of economy for the entire the country as a whole. The central taxes intended to be merged were the Central Excise Duty; Additional Excise Duty; Exice Duty levied under the Medicinal and Toiletories Preparation; Service Tax; Additional Customs Duty commonly known as Countervailing Duty; Special AdditionalDuties of Customs ; Surchage and Cess; Central Sales tax, while of the States, the Sales tax, Entertainment tax, Luxury tax, Lottery, Betting and Gambling tax , Cess and Surcharges, Entry tax.
A series of items of services was incorporated in this new Act for the purpose of levy of tax.
There had been wide dispute and dissention over the question of introduction of this consolidated tax measure, but after wide deliberation, ultimately, a consensus was arrived at and it was introduced unanimously.
The Constitution of India was amended with the requisite Articles and the entries of the Schedules thereof before the enactment of the Goods and Services Act.
The Goods and services Act has been designed into three aspects, as below
(1)State Goods and Services Act (SGST)- enacted to be administered by the State authorities in the line of the Central Goods and Services Act;
(2) Central Goods and Services Act (CGST)- enacted to be administered by the Central authorities;
(3) Inter State Goods and Services Tax Act (IGST)- enacted to be administered by the Central authorities in the matter of inter-State deals.
Though two years have been over after implementation of the Goods and Services Tax Act, it is yet to attain maturity and the common people are yet to be made aware of the pros and cons of this measures of tax. This tax measures did not yield a very positive result and according to media report, the collection of revenue is now in a lower side.
The State taxation laws, as exhibited above, which were not incorporated in the Goods and Services Tax are continuing their operation and administration independently, as before.
Conclusion
The ‘Goods and Services Tax’ is a self-designed omnibus with multifarious Central and State apparatus and components, propelled by designed engine with self-moving arrangements, having its full control over the methodical journey, which is rarely be astrayed or cracked in reaching the destination. Such designed omnibus may not, however, always ensure safe and proper journey and to yeild a positive result due to unhealthy apparatus and irregular ingredients and components. The outside vicious atmosphere may also influence adversely in the loading components. Our suspicious vision is that there may be foul play in the process. ‘Good will and bad will’; ‘honesty and dishonesty’ may in either way influence the race. ‘Evasion and avoidance are ‘brothers twine’. Our intention is to say that full sphere of honesty and trustworthy must prevail upon the operating traders in the course of their journey of trades and services activities.
The law making authorities have given due stresses on the on the honesty, integrity and trustworthyness of the traders and discouraged the functions of the ‘Inspector Raj’, the field officers on the plea of the alleged high handedness and corruption. Even if any raid is to be undertaken, that is also to be done only with the prior orders or approval of the Joint Commissioner of Taxes, normally remaining far away from the spot in such process, there will be a time gap and the whole exercise may be foiled and frustrated . The law, on the other hand, maintained utter silence on the question of erection and operation of the check posts, which played a pivotal role in preventing, detecting and arresting evasion of taxes in the erstwhile law regimes. Accordingly, all check posts have been made effective making way for free movement of the goods.’The earth would have been a heavenly abode had there been no evasion or avoidance of taxes’. But whether it can be rightly presumed or assumed?
Some raw materials, like jute, superi, tea leaves as well as timbers, bamboo, cane and furniture thereof besides coal, dhania, jeera, haldhi, ginger, hides and skins and bone of animals, raptiles etc. which are the non-excisable commodities use make clandestine movements from one place to another and from one State to another on sales or sock transfer, whatsoever, we believe, hardly pay tax righteously and legitimately. One can- not assure that the finished products derived thereof are being accounted for properly to be incorporated in the tax net. The reports of unaccounted movement of coal and detention thereof are frequently published in the news media. Functioning of unauthorised syndicates and collection of unathorized and illegal tax are also gaining the momentum. ‘Necessity is the other of invention’. So, tax evader or avoider will try to make new ways and means to evade payment of taxes. This vital point requires a proper review by the law making and law enforcing authorities.
At the conclusion, we add two famous sayings-
Frederick the Great of Russia- “No Government can exist without taxation. This money must necessarily be levied on the people, and grand art consists of levying so as not to oppress.”
Kautilya or Chanakya- “ Thus the king shall first reform the administration, by punishing appropriately those officers, who deal in wealth, they duly corrected shall use the right punishments to ensure the good conduct of the people of the town and countries.”
Mrinal Kanti Chakrabartty
R.G. Barua Road, 10- Lakhimipath’
Guwahati-781-024 (Assam)
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