Wednesday, January 27, 2010
TAX ON INCOME AND AGRICULTURAL INCOME
‘Tax’ means ‘the money that must be paid to the State; charged as a proportion of personal income and business profits or added to cost of some goods and services’ ‘ Income’ means ‘a money received during a certain period for work or from investment.’ “Agriculture’, on the other hand, means ‘a science or practice of farming.’ ‘Tax on income’ is thus money to be paid on the profits earned for works or investment, while; ‘Tax on agricultural income’ is ‘the money to be paid on profit earned on the practice of farming.’ ‘Tax on income’ is a subject, administered by the Government of India (Central Govt.) through the machineries at its disposal. Article 246(1) of the Constitution of India (Constitution) empowered Parliament to make enactment of laws on the subjects, specified in Seventh Schedule- List I (Union List). ‘Tax on income other than agricultural income’, as occurred in entry 82 of the said Schedule is thus the subject of levy of tax by the Central Govt. In fact, the measure of tax on income in India was introduced in British Parliament long back in 1860 to bear the economic burden on account of armed revolution of the First War of Independence against the British regime. The reasonableness of such measure of income tax adopted, were assigned as, it is a (i) canon of ability for paying such tax; (ii) canon of certainty; (iii) canon of convenience and (iv)canon of economy. There was, however, no such tax from 1865-67 on account of public murmuring. The Income Tax Act, 1886 was brought out to build- up licence tax. The Income Tax Act, 1922 continued to be operative in post independent period too. After the Constitution took birth on January, 26th, 1950, the said Act continued remained in force with the safe guard provided under the banner of Article 277 (Savings) of the Constitution. The Income Tax Act was remodeled and it was passed in the House of Parliament in September, 1961 and the Indian Income Tax Act, 1961 (Income Act) thus came into effect. It is, in fact, a tax only on income, profits or gains and not on the capital, whether original, substituted or increased. The salient features are, therefore, - (i) income tax is only a charge on income and not the capital; (ii) the method of charging tax on income and capital gains is different; (iii) in computing the taxable income of a business, profession or vocation, only the revenue expenditure and not the capital expenditure is deducted from the trading profits. ‘Tax on agricultural income, is a subject, administered by the State Governments through the tax machineries of the State. In 1925 the Indian Taxation Enquiry Commission opined the justification of creating a measure of tax on agricultural income, but the same was not readily materialized. The Government of India Act, 1935 as well incorporated entry 41 in the Seventh Schedule of Provincial Legislative List to facilitate introduction of tax measure on agricultural income. The measure of tax on agricultural income was thus introduced and the Assam Agricultural Income Tax Act, 1939 (Agricultural Act) was enacted by the then provincial Legislatures of Assam operative from 1.4.1939. After India achieved Republican character in 1950, entry 46 in the Seventh Schedule of the Constitution provided power to the Legislatures of the State to enact law on the ‘Taxes on agricultural income tax’. The 1939 Act, however, continued to be operative by virtue of savings provisions in Article 277 of the Constitution. It is worthy to mention that within this long spell of 70 years, a number of amendments of the Act took place following administrative needs and in consideration of public interest. ‘Tax on income’, as defined in clause (29) of Article 366 of the Constitution ‘includes a tax on the nature of an excess profits tax’, ‘ Agricultural income’ as defined in clause (i) of the said Article means ‘agricultural income, as defined for the purpose of the enactments relating to Indian income tax.’ The Constitution thus maintained silence to provide independent and categorical definition on the term ‘agricultural income’ and it is kept dependent on the Income Act. The definition in the Income Act incorporated that ‘the income that is derived from the land of agriculture’. The tax on income and the tax on agricultural income are levied taking into consideration the income derived in the previous year subject to deduction of the amount, admissible under the relevant Acts out of the total quantum of income derived. Though the main theme of the agricultural Act is that, it is a tax on agricultural income, but some deviation has been made in the matter of determination of the quantum of the agricultural income of tea. Income derived from tea is to be bifurcated as income on agricultural activities and on trade activities. The ratio maintained thereof is 60 : 40- that is, 60 percent on agricultural income and 40 percent on trade income. This principle is exclusively maintained in case of tea only and not on other production like paddy, pulses, wheat, sugar cane etc. where also simultaneously question of agriculture and trade are involved. There are good numbers of tea gardens, which produce green tea leaves and effect sales to the black tea manufacturing industries. It is not exactly known how they are roped in the tax net for purpose of levy of tax on income and agricultural income in accordance with the designed ratio. The tax on land, with the measuring scale of production of green tea leaves in smaller tea gardens, are not levied directly, but on the sales made to the manufacturing tea gardens, which purchase for production of black tea. The measures, adopted seem to be fallacious. The imposed restriction on the levy of 100% tax of tea obviously created an acute set-back in the revenue generation exercise of the State. In fact, tea industry is one of the few limited industries of Assam. This aspect of law requires a rethinking for rationalizing the fiscal disequilibrium at par with the income of the other agricultural commodities. The measure of tax, as introduced by the erstwhile provincial legislature of Assam and continued for long 70 years provided ample power to the Agricultural income tax authorities to administer the Act, that is, levy of tax and other allied matters. Over the head of such ardent vested quasi-judicial power, the exclusive power of determination of the quantum of total income and bifurcation thereof has been vested upon the income tax authority, causing a double standard in the power exercise scenario. It, no doubt, amounted to be a centralization of power the identical State law under the statute of law by way of encroachment and seems to be irrational and pre-judicious. The Agricultural Income Tax Rules laid down some discretionary power to agricultural authority for scrutiny and examination on such determination and bifurcation in such cases, when circumstances warranted so. The Supreme Court of India, of late, quashed the validity of the said State rule. This has the consequential effect that the State tax authorities are to remain cipher and to act like rubber stamps on the unitary decision of the central authorities. The quasi-judicial aspect in the agricultural Act thus practically intended to seek a good bye. The Head Offices of limited numbers of industries, installed in Assam, like tea industries, oil industries, coal industries etc. are mostly located at places out side the State of Assam. The taxes on income are generally deposited by such industrial entrepreneurs out side Assam. The concerned States in which such tax revenue deposits are made use to get share of income tax, as envisaged in Article 270(2) of the Constitution. Assam is thus deprived of such benefit even though the base of production, manufacturing and trade activities is totally within the parameter of Assam. The sensitive sons of the soil of Assam, urge upon the Government of Assam to consider this revenue generation issue and raise this vital pertinent question before the central Govt. so that an amendment of the Constitution is made to ensure augmentation of revenue to this economically backward State.
TEA GARDEN HEAD OFFICES SHIFTING TO ASSAM IS IMPERATIVE
The Assam Legislative Assembly adopted an unanimous resolution on 2nd April, 2002 demanding that the big tea companies, having tea gardens in Assam, are to shift their Head Quarters to Assam so that the local youths can get preference in appointment and other ancillary facilities. For that purpose, it decided to send a team of State Legislatures led by the Speaker of the Assembly to put pressure on the Government of India for mobilization of the process. It is not known what was the ultimate out-turn, but there is reason to believe that that it was simply a castle in the air.
There are about 800 tea gardens in Assam having there industrial base side by side. The big tea companies have their Head Offices at Kolkata, will be not less than 90% of such industrial based gardens, existent in Assam. The functioning of the gardens are carried on by remote control devices from Kolkata and the local management in Assam are kept in the dark about the modus-operandi in relation to the sales and purchases exercise effected from the gardens, employment avenue and other allied matters. They are to remain practically cipher in all respects. There can not question of ‘what’ any ‘why’. In true sense, the Head offices owe little allegiance to the State, bother a little for the development and welfare of the people of Assam, They use and utilize the soil of Assam, as the grazing grounds of the company for production and manufacture of tea keeping the aim in view to enrich and enlarge their assets and fiscal resources. Several moves were already made requiring the tea companies to shift their Head Quarters from Kolkata to Assam, but it reached to the deaf ears without any positive and fruitful reactions.
The tea lobby, as it appears, is very much powerful in Assam. They play the pivotal role in the elections scenario vis-a-vis installation of the party Governments to power and even dare to make imposition over the functioning of the Government. The Government in power, it seems from experience, can not over rule their imposed counsels or to be tough to them thereby to invite any displeasure. Neither the Government of Assam nor the Government of India is keen to force or make any imposition to the tea companies to shift the Head offices to Assam. This, they feel, may be abusive in as much as it would make way to curb the fundamental rights, guaranteed by the Constitution of India. The only way, as we believe, is that there should be effective dialogue, assertive pressures and keen pursuance by the mass people of Assam to yield any productive yields.
Avenue of employment :The Head offices of the tea companies formulate the recruitment policy of the respective gardens and make proper implementation of the same through the machineries installed in Assam. In such exercise, the youths of Assam are mostly deprived of any executive, technical or other important assignments in the tea gardens. There is no proper and proportionate representation of the youths of Assam in the Head offices of the tea companies, which are being run at the cost of earnings, derived from the soil of Assam. In that way, they project their indifference and callousness and obviously fail to discharge their obligations not only to the State but to the mass people of Assam. The acute unemployment problems could have been minimized to a great extent had the tea companies extended their healthy and sympathetic gesture to do away with the same.
Purchases of goods :The tea gardens of Assam are not empowered to purchase any goods in Assam. The Head offices make it a prevalent practice to purchase the motor vehicles, machinery, plants, equipment, production and packing materials and other requisites at Kolkata or some other places to the best of their best choice. It was pointed out in the Legislative Assembly at the relevant time that out of such 256 items purchased from places out side the State of Assam, the purchase value of tea bags alone came to Rs. 32 crore in a year. The way of such divergent trade activities adopted, is, no doubt, quite detrimental to the interest of the usual trade practice vis-à-vis healthy growth of economy in the form of revenue in Assam.
Entry tax :A measure of tax on the entry of goods was introduced in Assam by way of enactment of the Assam Entry Tax Act, 2001.The said Act was subsequently repealed consequent upon some legal controversies and a fresh law was enacted from 1st June, 2008. If such items embodied in the entry tax net of Assam, are imported on purchase for use or consumption by the tea gardens, the revenue generation is likely to be ensured and the heavy drainage of revenue in the name of purchase in other State is expected to be averted. It is felt that the tea companies will ultimately prefer to exercise a reverse course of action vis-a vis to purchase such goods, as are available in Assam to make wide flow of revenue to the State Coffer. Of course, the goods, which can not be had in Assam are to be purchased from places out side Assam and there is no other alternative to that.
The tea garden owners are extracting money from Assam soil and making investments of the heavy profit amount, earned thereof, in places out side the State. A dearth of interest is always in sight in their minds for the development and prosperity of Assam. In economic spheres too, the State fails to get the legitimate revenue on this pretext or that.
It is high time that the Government is to assert its stand and impress upon the tea gardens, augmenting the resources from the soil of Assam to be aware of their obligation and allegiance for the development of Assam, which is still maintaining acute backwardness, compared to others States in the Indian sub-continent. The voice of the people will equally be a basic way of action in compelling such tea companies to change such modus-operandi in the long run.
(Mrinal Kanti Chakrabartty)
“Rudrs Bhawan”R.G. Barua Road, Lakhimipath
Guwahati-24
There are about 800 tea gardens in Assam having there industrial base side by side. The big tea companies have their Head Offices at Kolkata, will be not less than 90% of such industrial based gardens, existent in Assam. The functioning of the gardens are carried on by remote control devices from Kolkata and the local management in Assam are kept in the dark about the modus-operandi in relation to the sales and purchases exercise effected from the gardens, employment avenue and other allied matters. They are to remain practically cipher in all respects. There can not question of ‘what’ any ‘why’. In true sense, the Head offices owe little allegiance to the State, bother a little for the development and welfare of the people of Assam, They use and utilize the soil of Assam, as the grazing grounds of the company for production and manufacture of tea keeping the aim in view to enrich and enlarge their assets and fiscal resources. Several moves were already made requiring the tea companies to shift their Head Quarters from Kolkata to Assam, but it reached to the deaf ears without any positive and fruitful reactions.
The tea lobby, as it appears, is very much powerful in Assam. They play the pivotal role in the elections scenario vis-a-vis installation of the party Governments to power and even dare to make imposition over the functioning of the Government. The Government in power, it seems from experience, can not over rule their imposed counsels or to be tough to them thereby to invite any displeasure. Neither the Government of Assam nor the Government of India is keen to force or make any imposition to the tea companies to shift the Head offices to Assam. This, they feel, may be abusive in as much as it would make way to curb the fundamental rights, guaranteed by the Constitution of India. The only way, as we believe, is that there should be effective dialogue, assertive pressures and keen pursuance by the mass people of Assam to yield any productive yields.
Avenue of employment :The Head offices of the tea companies formulate the recruitment policy of the respective gardens and make proper implementation of the same through the machineries installed in Assam. In such exercise, the youths of Assam are mostly deprived of any executive, technical or other important assignments in the tea gardens. There is no proper and proportionate representation of the youths of Assam in the Head offices of the tea companies, which are being run at the cost of earnings, derived from the soil of Assam. In that way, they project their indifference and callousness and obviously fail to discharge their obligations not only to the State but to the mass people of Assam. The acute unemployment problems could have been minimized to a great extent had the tea companies extended their healthy and sympathetic gesture to do away with the same.
Purchases of goods :The tea gardens of Assam are not empowered to purchase any goods in Assam. The Head offices make it a prevalent practice to purchase the motor vehicles, machinery, plants, equipment, production and packing materials and other requisites at Kolkata or some other places to the best of their best choice. It was pointed out in the Legislative Assembly at the relevant time that out of such 256 items purchased from places out side the State of Assam, the purchase value of tea bags alone came to Rs. 32 crore in a year. The way of such divergent trade activities adopted, is, no doubt, quite detrimental to the interest of the usual trade practice vis-à-vis healthy growth of economy in the form of revenue in Assam.
Entry tax :A measure of tax on the entry of goods was introduced in Assam by way of enactment of the Assam Entry Tax Act, 2001.The said Act was subsequently repealed consequent upon some legal controversies and a fresh law was enacted from 1st June, 2008. If such items embodied in the entry tax net of Assam, are imported on purchase for use or consumption by the tea gardens, the revenue generation is likely to be ensured and the heavy drainage of revenue in the name of purchase in other State is expected to be averted. It is felt that the tea companies will ultimately prefer to exercise a reverse course of action vis-a vis to purchase such goods, as are available in Assam to make wide flow of revenue to the State Coffer. Of course, the goods, which can not be had in Assam are to be purchased from places out side Assam and there is no other alternative to that.
The tea garden owners are extracting money from Assam soil and making investments of the heavy profit amount, earned thereof, in places out side the State. A dearth of interest is always in sight in their minds for the development and prosperity of Assam. In economic spheres too, the State fails to get the legitimate revenue on this pretext or that.
It is high time that the Government is to assert its stand and impress upon the tea gardens, augmenting the resources from the soil of Assam to be aware of their obligation and allegiance for the development of Assam, which is still maintaining acute backwardness, compared to others States in the Indian sub-continent. The voice of the people will equally be a basic way of action in compelling such tea companies to change such modus-operandi in the long run.
(Mrinal Kanti Chakrabartty)
“Rudrs Bhawan”R.G. Barua Road, Lakhimipath
Guwahati-24
AN IMPERATAVIE NEEDS
‘Green tea leaves’ are like the ‘raw gold’ and the ‘black tea’ are the ‘precious ornaments’. The tea cultivation in Assam was started from the early part of the eighteen century. The East India Company before taking over the helm of power in Assam discovered numbers of tea plants in the jungles of Assam. They could guess that proper cultivation of tea and utilization of the same by industrial exercise will, no doubt, be a lucrative business. The yield of a substantial financial resource would thus be knocking at the door. Actually tea is one of the factor, which tempted the British Raj to install power in the hazardous area.
Tax on tea : On sales- The first measure of tax on tea was introduced from 1.4.1939 on the income derived from agriculture. The measure of tax on the sales of tax is a subsequent exercise. In 1970, a further measure of tax was adopted on the sales of tea in the Guwahati Tea Auction Market through the brokers. Again, from 1.1.1990, a new measure of tax was adopted on the land and productivity of green tea leaves was reckoned as the measuring scale for the purpose of levy of tax on the tea garden lands.The present tax structure on the sales of tea, an indigenous product of Assam, is as below:-(i) When sold locally in Assam - @ 5 paise in the rupee at the point of first point sale of tea in Assam under the Assam Value Added Tax Act, 2003 (VAT Act). Though the basic structure under the VAT Act was to levy tax at every point of sales in Assam subject to refund of tax paid at the point of the previous purchases, a departure has been made in the case tea and some other allied items like crude oil, petrol, diesel, petroleum products, coke, biscuit, liquor etc., where the tax measure has been introduced at the point of first sale in Assam.(ii) When sold in the course of inter-State trade or commerce- 2 paise in a rupee to a registered dealer and 10 paise to other than a registered dealer.(iii) When sold in the Guwahati Tea Auction Market- 2 paise tax in a rupee payable by the brokers. (iv) When such tea, purchased through the brokers either in the auction market is re-sold to the registered dealers in the course of inter-State trade or commerce- the tax paid is reimbursed.Such measure of exemption of tax on tea sold in the Guwahati Tea Auction Market and subsequently sold by such purchasers in the course of inter-State trade or commerce was introduced long 40 years back with a view to encourage proper growth of the auction market. Of course, there seems to be profound deficiency in the proper functioning of the said tea auction market at Guwahati.
Stock transfer of tea, a tax free deal :The practice of transfer of stock of tea to the Head offices or to the agents from the tea gardens of Assam is very much in vogue in the tea business scenario of Assam. It proved to be a farce in many cases. It may be used a legal weapon to evade payment of tax on the sales of tea made under the coverage of stock transfer of goods some times by way of manipulation of the documents. In fact, the Head offices of many tea companies control the whole episode of sales and the stock transfer of tea. It was well established in many cases that such transfer of stock was actually the sales in the course of inter-State trade or commerce in letter and spirit, but a foul play is adopted to evade payment of taxes by a camouflage exercise. If the taxing authorities accept such modus operandi of the tea companies as a challenge and go ahead in operation to unearth such modus operandi, many odds is likely to be unveiled and the mischief caused to this poor State by arresting the tax dodging activities. A substantial amount of revenue would have consequently poured to State coffer making way for augmentation of the State revenue. The active vigilance and mobilization in the field of activities would have totally cracked down such mal-practices with resultant positive out turn of revenue generation. Such a constructive measure is, however, absent. The Head offices of many tea companies, as it is found from experience, are directly involved in such unhealthy episode at the cost of revenue of Assam. A complete up-rooting of such episode may be possible, when the Head offices are shifted to Assam.
Tax on tea garden lands :The Government of Assam enacted the Assam Tax (On Specified Lands) Act, 1990 for levy of tax on tea garden lands taking into account the production of green tea leaves as the measuring scale, as discussed above. The rate of tax was initially fixed at 0.50 paise per kilogram of green tea leaves tea produced. A section of aggrieved tea companies challenged the validity of the Act before the Gauhati High Court and the Supreme Court of India pleading such exercise as illegal and unconstitutional. While the cases of litigation were pending before the Courts of law, the Government of Assam suddenly signed a Memorandum of Understanding (MOU) with the representatives of such tea companies, which had the consequential effect of abrupt reduction of the rate of tax from 0.50 paise to 0.18 paise. It is pertinent to mention that the Government of West Bengal also faced similar challenge for introducing such an identical measure of tax. The patience would have yielded a positive result, as verdict of the Supreme Court was in favour of introduction of such tax measure. The impatience and hurried decision forced the Government of Assam to surrender before the tea lobby and to depart from its original stand, causing an irreparable loss of revenue at the primary stage. Of course, the State Government has now raised the rate of tax to 0. 20 and 0.32 paise at different stages. The tax relief provided to the tea gardens owning lands not exceeding 40 hectares has also been withdrawn. The present measure adopted for levy of tax on land below 40 hectares to the tea the industrial units on sale consideration seems to be a controversial exercise.
A disparity between the production of green tea leaves and manufacture of finished tea is sometimes noticed, as the figures disclosed to the State tax department and to the Central Excise department records a big sphere of gap. An investigation and application of proper check tactfully may unveil many odds.
Tax on Agricultural Income :Article 246(1) read with entry 46 of List-II-State List of the Constitution provided exclusive power to the State Legislature to introduce the measure of tax on agricultural income. Article 366(1) of the Constitution defined agricultural income, which means agricultural income as defined for the purpose of the enactment relating to Indian Income Tax. The ball was thus thrown to the law making body of the Union. The definition of agricultural income, inter-alia, laid down two fold of income in the case of tea –(i) out of cultivation (ii) out of processing and trade activities. The specified ratio of income was determined at 40% for the Centre in the form of income tax and 60% for the State in the form of income on agriculture. The State can thus levy tax on 60% percent of income and that, too, left un-assessed by the income tax authorities without raising any question of dispute or dissention. The Government of India thus shares a substantial amount of revenue out of such agricultural income on tea. We remember that Sri Prafulla Kumar Mahanta, the then Chief Minister of Assam strongly urged upon the Government of India for removal of such discrimination in case of tea alone and pleaded for raising it to 100%. The fate on the said move is immediately not known. It is hoped that such demand should be revived once again for the interest of this poor State.The maximum rate of tax on agricultural income came up to 83 paise in a rupee in early seventies. The collection of such tax topped at the relevant times. Gradually the rate of tax was reduced to 30 paise in the rupee and other benefits and relieves were also provided in this respect. The result is that the collection of tax started receding. In making such relaxation, the interest of the tea companies was given priority at the cost of loss to the State.
State of Assam is deprived of the share of income tax :The Head offices of many OF THE TEA COMPANIES USE TO PAY INCOME TAX ON THE INCOME EARNED ON TEA, PRODUCED AND MANUFACTURED IN THE SOIL OF ASSAM, AT KOLKATA. UNDER ARTICLE 270(2) OF THE CONSTITUTION OF INDIA, THE GOVERNMENT OF WEST BENGAL USE TO GET THE SHARE OF SUCH INCOME TAX. IN THAT WAY ALSO, ASSAM IS DEPRIVED OF A SUBSTANTIAL AMOUNT IN THE FORM OF SHARE OF INCOME TAX ANNUALLY.IT IS PERTINENT TO STATE IN THIS CONTEXT THAT THE HEAD OFFICES OF THE OIL COMPANIES AND MANY OTHER INDUSTRIAL WINGS, CARRYING ON BUSINESS IN ASSAM, ALSO LIKEWISE USE TO PAY SUCH TAX ON INCOME OUT SIDE ASSAM ON THE PRETEXT THAT THE HEAD OFFICES ARE OUT SIDE ASSAM. IT IS THUS CLEAR THAT THE TEA COMPANIES IN ASSAM ARE ENJOYING THE MAXIMUM BENEFITS, BUT THEIR CONTRIBUTION TO THE STATE IS NOT UPTO THE MARK. THE FISCAL DISEQUILIBRIUM HAS REACHED TO DOLDRUMS THE STATE ECONOMY IS PRACTICALLY PARALYZED. IT IS HIGH TIME THAT THE MASS PEOPLE OF ASSAM SHOULD RISE ON THE OCCASION AND COME UP HARMONIOUSLY TO PROVIDE SAFE GUARD OF THE GENUINE CAUSES.
(Mrinal Kanti Chakrabartty) “Rudrs Bhawan”R.G. Barua Road,
Guwahati-24
Tax on tea : On sales- The first measure of tax on tea was introduced from 1.4.1939 on the income derived from agriculture. The measure of tax on the sales of tax is a subsequent exercise. In 1970, a further measure of tax was adopted on the sales of tea in the Guwahati Tea Auction Market through the brokers. Again, from 1.1.1990, a new measure of tax was adopted on the land and productivity of green tea leaves was reckoned as the measuring scale for the purpose of levy of tax on the tea garden lands.The present tax structure on the sales of tea, an indigenous product of Assam, is as below:-(i) When sold locally in Assam - @ 5 paise in the rupee at the point of first point sale of tea in Assam under the Assam Value Added Tax Act, 2003 (VAT Act). Though the basic structure under the VAT Act was to levy tax at every point of sales in Assam subject to refund of tax paid at the point of the previous purchases, a departure has been made in the case tea and some other allied items like crude oil, petrol, diesel, petroleum products, coke, biscuit, liquor etc., where the tax measure has been introduced at the point of first sale in Assam.(ii) When sold in the course of inter-State trade or commerce- 2 paise in a rupee to a registered dealer and 10 paise to other than a registered dealer.(iii) When sold in the Guwahati Tea Auction Market- 2 paise tax in a rupee payable by the brokers. (iv) When such tea, purchased through the brokers either in the auction market is re-sold to the registered dealers in the course of inter-State trade or commerce- the tax paid is reimbursed.Such measure of exemption of tax on tea sold in the Guwahati Tea Auction Market and subsequently sold by such purchasers in the course of inter-State trade or commerce was introduced long 40 years back with a view to encourage proper growth of the auction market. Of course, there seems to be profound deficiency in the proper functioning of the said tea auction market at Guwahati.
Stock transfer of tea, a tax free deal :The practice of transfer of stock of tea to the Head offices or to the agents from the tea gardens of Assam is very much in vogue in the tea business scenario of Assam. It proved to be a farce in many cases. It may be used a legal weapon to evade payment of tax on the sales of tea made under the coverage of stock transfer of goods some times by way of manipulation of the documents. In fact, the Head offices of many tea companies control the whole episode of sales and the stock transfer of tea. It was well established in many cases that such transfer of stock was actually the sales in the course of inter-State trade or commerce in letter and spirit, but a foul play is adopted to evade payment of taxes by a camouflage exercise. If the taxing authorities accept such modus operandi of the tea companies as a challenge and go ahead in operation to unearth such modus operandi, many odds is likely to be unveiled and the mischief caused to this poor State by arresting the tax dodging activities. A substantial amount of revenue would have consequently poured to State coffer making way for augmentation of the State revenue. The active vigilance and mobilization in the field of activities would have totally cracked down such mal-practices with resultant positive out turn of revenue generation. Such a constructive measure is, however, absent. The Head offices of many tea companies, as it is found from experience, are directly involved in such unhealthy episode at the cost of revenue of Assam. A complete up-rooting of such episode may be possible, when the Head offices are shifted to Assam.
Tax on tea garden lands :The Government of Assam enacted the Assam Tax (On Specified Lands) Act, 1990 for levy of tax on tea garden lands taking into account the production of green tea leaves as the measuring scale, as discussed above. The rate of tax was initially fixed at 0.50 paise per kilogram of green tea leaves tea produced. A section of aggrieved tea companies challenged the validity of the Act before the Gauhati High Court and the Supreme Court of India pleading such exercise as illegal and unconstitutional. While the cases of litigation were pending before the Courts of law, the Government of Assam suddenly signed a Memorandum of Understanding (MOU) with the representatives of such tea companies, which had the consequential effect of abrupt reduction of the rate of tax from 0.50 paise to 0.18 paise. It is pertinent to mention that the Government of West Bengal also faced similar challenge for introducing such an identical measure of tax. The patience would have yielded a positive result, as verdict of the Supreme Court was in favour of introduction of such tax measure. The impatience and hurried decision forced the Government of Assam to surrender before the tea lobby and to depart from its original stand, causing an irreparable loss of revenue at the primary stage. Of course, the State Government has now raised the rate of tax to 0. 20 and 0.32 paise at different stages. The tax relief provided to the tea gardens owning lands not exceeding 40 hectares has also been withdrawn. The present measure adopted for levy of tax on land below 40 hectares to the tea the industrial units on sale consideration seems to be a controversial exercise.
A disparity between the production of green tea leaves and manufacture of finished tea is sometimes noticed, as the figures disclosed to the State tax department and to the Central Excise department records a big sphere of gap. An investigation and application of proper check tactfully may unveil many odds.
Tax on Agricultural Income :Article 246(1) read with entry 46 of List-II-State List of the Constitution provided exclusive power to the State Legislature to introduce the measure of tax on agricultural income. Article 366(1) of the Constitution defined agricultural income, which means agricultural income as defined for the purpose of the enactment relating to Indian Income Tax. The ball was thus thrown to the law making body of the Union. The definition of agricultural income, inter-alia, laid down two fold of income in the case of tea –(i) out of cultivation (ii) out of processing and trade activities. The specified ratio of income was determined at 40% for the Centre in the form of income tax and 60% for the State in the form of income on agriculture. The State can thus levy tax on 60% percent of income and that, too, left un-assessed by the income tax authorities without raising any question of dispute or dissention. The Government of India thus shares a substantial amount of revenue out of such agricultural income on tea. We remember that Sri Prafulla Kumar Mahanta, the then Chief Minister of Assam strongly urged upon the Government of India for removal of such discrimination in case of tea alone and pleaded for raising it to 100%. The fate on the said move is immediately not known. It is hoped that such demand should be revived once again for the interest of this poor State.The maximum rate of tax on agricultural income came up to 83 paise in a rupee in early seventies. The collection of such tax topped at the relevant times. Gradually the rate of tax was reduced to 30 paise in the rupee and other benefits and relieves were also provided in this respect. The result is that the collection of tax started receding. In making such relaxation, the interest of the tea companies was given priority at the cost of loss to the State.
State of Assam is deprived of the share of income tax :The Head offices of many OF THE TEA COMPANIES USE TO PAY INCOME TAX ON THE INCOME EARNED ON TEA, PRODUCED AND MANUFACTURED IN THE SOIL OF ASSAM, AT KOLKATA. UNDER ARTICLE 270(2) OF THE CONSTITUTION OF INDIA, THE GOVERNMENT OF WEST BENGAL USE TO GET THE SHARE OF SUCH INCOME TAX. IN THAT WAY ALSO, ASSAM IS DEPRIVED OF A SUBSTANTIAL AMOUNT IN THE FORM OF SHARE OF INCOME TAX ANNUALLY.IT IS PERTINENT TO STATE IN THIS CONTEXT THAT THE HEAD OFFICES OF THE OIL COMPANIES AND MANY OTHER INDUSTRIAL WINGS, CARRYING ON BUSINESS IN ASSAM, ALSO LIKEWISE USE TO PAY SUCH TAX ON INCOME OUT SIDE ASSAM ON THE PRETEXT THAT THE HEAD OFFICES ARE OUT SIDE ASSAM. IT IS THUS CLEAR THAT THE TEA COMPANIES IN ASSAM ARE ENJOYING THE MAXIMUM BENEFITS, BUT THEIR CONTRIBUTION TO THE STATE IS NOT UPTO THE MARK. THE FISCAL DISEQUILIBRIUM HAS REACHED TO DOLDRUMS THE STATE ECONOMY IS PRACTICALLY PARALYZED. IT IS HIGH TIME THAT THE MASS PEOPLE OF ASSAM SHOULD RISE ON THE OCCASION AND COME UP HARMONIOUSLY TO PROVIDE SAFE GUARD OF THE GENUINE CAUSES.
(Mrinal Kanti Chakrabartty) “Rudrs Bhawan”R.G. Barua Road,
Guwahati-24
MOUNTING PRICE HIKE CAUSING FISCAL INDISCIPLINE AND ECONOMIC INSTABILITY
‘Limited income’ but ‘unlimited expenditure’ has the consequential effect of unhealthy economic imbalance in the day to day way of life. Apparently, a vacuum has been created in the smooth life standard of the people. Assam, a part State of the Indian sub-continent has extensive agricultural lands, mighty rivers with their un-reckonable tributaries, huge numbers of beels, ponds and water pools, but, in fact, the austerity of life style can not be maintained out the agricultural products and fish population derived out of lands and water pools. The people have, therefore, to depend largely on the imported food staff and fishes from places out side the State. The raw materials like jute, superi, hides and skins can not be utilized in converting into finished products due to the dearth of industrial base. The raw materials have thus to be disposed of at a cheaper value paving way for ardent and unlimited fiscal gain by inter- State industrial - giants and the resourceful business magnets. The State of Assam is deprived of the legitimate pecuniary benefits. The reasons of poor agricultural outturn out of the lands are of many folds. The methods of cultivation applied in Assam, are very old and unscientific ones. Application of modern devices of cultivation by tractors, power tillers and of like is very rare. The manures used in the field by traditional burning of tree-leaves, paddy roots or application of cow dung are the cultivators’ normal habits. The chemical fertilizers are applied by a class of well to do people and the same are almost out of the reach of the common cultivators. The irrigation system is not upto the mark. Draughts play a vulnerable role in damaging the products. The century- backs ‘harrows and ploughs’ are the main agriculture implements in Assam. In other States, the application of modern implements ensures at least four types of cultivation in a year with yields of substantial products, while in Assam, more than two crops products in a year can not be expected. The products are also in most cases divisible amongst the land lords and the cultivators and such shared production becomes insufficient. The total area of Assam is 78,438 square kilometer. The cultivating land will be hardly 1/5th of the total area, as the hilly areas rivers and other water pools, townships cover a plenty part of the total area. The population of the State as per 2001 census is 2,66, 55,526 nos. The areas, covered for production of different types of crops with the quantities of production are, as below : *(a) Areas of production 2004-05 2005-06 +(b) Quantities of production (a) Rice (different types) 2383000 hectare 2420000 hectare (b) “ 3470000 Tonnes 3552000 Tonnes (a) Cereals “ 2474000 “ 2497000 “ (b) “ 3556000 ‘ 3624000 “ (a)Food crops “ 2582000 “ 2597000 “ (b) “ 3617000 “ 3680000 “ (a) Oil seeds 287000 “ 254000 “ (b) “ 147000 “ 110000 “ (a) Fibres 64000 “ 63000 “ (b) “ 436000 “ 605000 “ (a) Fruits & Vegetables 164000 “ 154000 “ (b) “ 1608000 “ 1314000 “ (a) Other misc. crops 131000 “ 129000 “ + Cocoa nuts, as included in oil seeds are in term of million nuts, cotton, mesta, as included in term fibres are 170/180 kg in each bale, arecanut as included in misc. crops is in term of cured nuts and sugar cane is in term of cane. The current figures being mot readily available there will not be much variation of the figures exhibited above. The goods so produced, can not normally meet the growing requirements of the ever increased population phenomena and hence the import of the commodities becomes imperative. Notwithstanding that the fishes of different types have the roaming beds in the rivers and tributaries, the number and area of fisheries in Assam in 2006-07 were, as follow:- Registered Beel - Numbers 430 Area 602215 Hectares Ponds and tanks “ 278755 “ 38767 “ Unregistered Beel “ 766 “ 40600 “ Swamp and waste land “ 9852 “ 39240 “ Registered river fisheries 177 “ - The production of Fish seed in 2006-07 is 2062.61 (million numbers) and that those of fishes were 1,81,479 tones. Obviously, therefore, such commodities can not cater to the growing needs of the people. The question of import has thus gained the momentum. In such import exercise, price element leaps no bound. The high cost at source, the cost of transportation, the whims of the administrative raj, the touts’ foul play are the main factors for increase of heavy price. Besides, the question of the margin of profit at the different levels makes way for such mounting price rise, which some times reach four times of the price at the source. The price of the essential commodities has gone to such a high degree that it is practically beyond the reach of the common people. The rich classes of people can effort easily, the poor classes of people survive some how.They have necessity, but no aspiration. But the acute victims are the middle classes of people, who can not accommodate in any way. The fish price is going to be higher and higher. Even the small sizes of fishes cost Rs. 400.00 per kg. Assam produces abundant vegetables, but the prices of the same have simultaneously gone high. There is margin of four times growth of price in urban areas, compared to the rural areas. The Government of Assam has not finally given effect to the revised pay scale to the employees. So, naturally, the employees can not stand before such heavy price rise. What is generally done is that they take resort to acquire black money to over come the challenge of grave economic crisis. So, the fiscal indiscipline and a financial instability has gained the momentum. It is high time that Government should awake up from deep slumber and take remedial measure to restore stability.
(Mrinal Kanti Chakrabartty)
“Rudrs Bhawan”R.G. Barua Road,
Guwahati-24
(Mrinal Kanti Chakrabartty)
“Rudrs Bhawan”R.G. Barua Road,
Guwahati-24
Sunday, December 6, 2009
CREATIVE POLITICAL PARTY IN POWER SCENARIO
Evolution is an important phenomenon in the global politics. It may be a product of revolution or an automatic exercise. The global nations are having immense constituents to carry on the power scenario. The fundamental ingredients are that- there must be a territorial base, population, a Government and sovereignty. India is recognized as a Sovereign, Socialist, Secular, Democratic- Republic in the global map. The federal structured territory of India has as many as twenty ninth part-States with six Union territories. Assam is one of the part States of the Indian sub-continent, having a popular Government to rule the State subject to the powers exercisable exclusively by the Government of India by enactments made under Article 246(1) read with List-I (Union List) of the Seventh Schedule of the Constitution of India (Constitution). An evolution in political scenario is a time bound factor to ensure a healthy democratic set- up of Government for curbing any trend of high-handedness or autocracy by any political party or parties in power either at the national or at the State level. The Indian democracy is having this broad concept. The Congress Party, Janata Party, Janata Dal, Bharatiya Janata Party singly or with the constituents of the alliance parties are ruling the Indian sub-continent. It is noteworthy that no Government was ever over-thrown by any coupe like other neighbouring countries.
Assam, a part of the federal India, has been mostly under the political Government excepting the President Rules on three or four
occasions on account of political instability. The congress party ruled the State continuously since 1947 till the early part of 1978 under the
dynamic stewardship of the following august personalities:
1. Lokopriya Gopinath Bordoloi- 1947 to 5th August, 1950
2. Bishnu Ram Medhi- 1950 to 1957
3. Bimala Prasad Chaliha 1957 to 1970
4. Mahendra Mohan Choudhury- 1970 to 1971
5. Sarat Chandra Singha- 1972 to 1978
The Congress party failed to come to the power in 1978 election and the Janata Party, headed by Golap Barbara became the head of the
Government. This government was short-lived. Thereafter, Jogen Hazarika, the Speaker of the Assam Legislative Assembly formed a party under
the banner of Asam Janta Party and became the Chief Minister. After a few days, the said Government fell and Presidents Rule was imposed.
Thereafter, Syeda Anowara Taimur, Keshab Chandra Gogoi of Congress became the Chief Minister of Assam for short periods. Again President
Rule was imposed, which lasted about one year. In order to avert the constitutional crisis, election has held forcibly without the proper mandate of
the people of Assam, Hiteswar Saikia took over the helm of power after such illegal election of1983. Unrest took place in the soil of Assam
following a mass movement led by the All Assam Students Union (AASU) in collaboration with the constituent organizations under the banner of
Gana Sangram Samitee on the sensitive foreigners’ issue. In fact, Assam became a den of the foreign nationals after the cold and silent aggression
of a section of the Bangladesh nationals since after partition of India. It reached to the climax after the liberation movement in East Pakisthan and
creation of Bangladesh, which is still continuing. Almost all the indigenous people of Assam rose to the occasion, but the Government of India did
not care to make immediate solution though there was heavy blood shed. Ultimately, at the behest of Rajib Gandhi, the then Prime Minister
of India a negotiation was made by a treaty titled as ‘Assam Accord’ in the early hours of August, 15th, 1985. The illegally constituted Assam
Assembly was dissolved and a fresh election was held.
The people of Assam voted to power the newly formed Assam Gana Parishad (AGP) led by the AASU with other constituent ingredients of
the Gana Sangram Samittee and the said party took over reign of Asssam on December, 24, 1985 with the AASU leader Prafulla Kumar Mahanta
as the Chief Minister. Their modus operandi, however, disappointed the people of Assam very soon. They could not drive out the foreigners, the
the first and foremost promise projected in the election manifesto. Rampant corruption gained the momentum. A section of the revolutionist with
arm activities started to create the reign of terror. The Government of India had to promulgate the President Rule to overcome the unruly situation.
In the next phase, the Congress Party came to the power under the leadership of Hiteswar Saikia in 1991. This Government was not at all in
favour of driving out the foreign nationals; rather they were keen provide security of the Vote bank, created by the foreigners. After 5 years , the
people overthrew the Congress regime. The AGP party again came to the power. This time, the performances proved to be the worst. People were
constrained to believe that they have been cheated by this regional party since beginning. The Congress party thus again came to the power in
2001election under theleadership of Tarun Gogoi. Congress party was voted to power for the second time in 2006 as well. People of Assam are
well aware of the mal-functioning of this Government, but they had to exercise their franchise in favour of the Congress party, as they found no
other party choice able party was there.The deteriorating law and order situation, high price rise, rampant corruption is gaining the momentum
in this regime. People of Assam are now the silent spectators to all odds. The Assembly election of Assam is knocking at the door. The question
now arises, who will be installed in the power scenario in 2011 election?
In Assam, Congress party is predominating since the beginning. The AGP came to the power scenario like a comet. There had been
disintegration of the party on a number of occasions on power mongering issues. Though, of late, reunited, the party members could not yet give good bye to the internal disputes and differences for the party stability. The confidence of the people has not been restored, which is evident from the numbers of bye-elections., The Lok Sabha poll of 2009 proved all the exercise futile. The Bharatiya Janata Party was, no doubt, an ideal party, but the inner quarrel and conflict has been detrimental to the unity and integrity of the party. The party is also not well organized in Assam and it is yet to strengthen its base yard. The Leftist Parties are also not very much relevant in Assam politics. It has been seen, of late, that the Autonomous Districts, like Karbi Anglong, North Cachar and Bodo Land have their district base and entity and they are capable to influence the political power scenario of Assam to a great extent. The United Democratic Front occupied a sizeable berth in the last State Assembly election. These parties are thus playing the pivotal role in formation of the Government. No forecast is possible at this stage as to the formation of Government in 2011 election by other parties unless they change their style of functioning and are up and doing to gain the confidence of the mass people.
A regional party has a dire necessity to ventilate the will and aspiration of the people and safe guard the regional interest. This is possible, when the peoples’ trust is bestowed upon the party incumbents. The AGP at this moment with the present incumbents seems to be not to the utter choice of the people. The inner party requires a reformation and renovation with fresh bloods, beset with dynamism and integrity. There must be a grass- root organization with constructive works to win the hearts of the people. A section of the veteran leaders are eager to mend the shortfalls and to come up with the new visions with constructive approaches, but it will be possible, when the grass root level is organized properly and systematically and they are keen to remove the economic disparity of the weaker section with constructive outlooks.
(Mrinal Kanti Chakrabartty)
“Rudra Bhawan”
R.G.Barua Road, 10- Lakhimipath
Guwahati -781-024
Assam, a part of the federal India, has been mostly under the political Government excepting the President Rules on three or four
occasions on account of political instability. The congress party ruled the State continuously since 1947 till the early part of 1978 under the
dynamic stewardship of the following august personalities:
1. Lokopriya Gopinath Bordoloi- 1947 to 5th August, 1950
2. Bishnu Ram Medhi- 1950 to 1957
3. Bimala Prasad Chaliha 1957 to 1970
4. Mahendra Mohan Choudhury- 1970 to 1971
5. Sarat Chandra Singha- 1972 to 1978
The Congress party failed to come to the power in 1978 election and the Janata Party, headed by Golap Barbara became the head of the
Government. This government was short-lived. Thereafter, Jogen Hazarika, the Speaker of the Assam Legislative Assembly formed a party under
the banner of Asam Janta Party and became the Chief Minister. After a few days, the said Government fell and Presidents Rule was imposed.
Thereafter, Syeda Anowara Taimur, Keshab Chandra Gogoi of Congress became the Chief Minister of Assam for short periods. Again President
Rule was imposed, which lasted about one year. In order to avert the constitutional crisis, election has held forcibly without the proper mandate of
the people of Assam, Hiteswar Saikia took over the helm of power after such illegal election of1983. Unrest took place in the soil of Assam
following a mass movement led by the All Assam Students Union (AASU) in collaboration with the constituent organizations under the banner of
Gana Sangram Samitee on the sensitive foreigners’ issue. In fact, Assam became a den of the foreign nationals after the cold and silent aggression
of a section of the Bangladesh nationals since after partition of India. It reached to the climax after the liberation movement in East Pakisthan and
creation of Bangladesh, which is still continuing. Almost all the indigenous people of Assam rose to the occasion, but the Government of India did
not care to make immediate solution though there was heavy blood shed. Ultimately, at the behest of Rajib Gandhi, the then Prime Minister
of India a negotiation was made by a treaty titled as ‘Assam Accord’ in the early hours of August, 15th, 1985. The illegally constituted Assam
Assembly was dissolved and a fresh election was held.
The people of Assam voted to power the newly formed Assam Gana Parishad (AGP) led by the AASU with other constituent ingredients of
the Gana Sangram Samittee and the said party took over reign of Asssam on December, 24, 1985 with the AASU leader Prafulla Kumar Mahanta
as the Chief Minister. Their modus operandi, however, disappointed the people of Assam very soon. They could not drive out the foreigners, the
the first and foremost promise projected in the election manifesto. Rampant corruption gained the momentum. A section of the revolutionist with
arm activities started to create the reign of terror. The Government of India had to promulgate the President Rule to overcome the unruly situation.
In the next phase, the Congress Party came to the power under the leadership of Hiteswar Saikia in 1991. This Government was not at all in
favour of driving out the foreign nationals; rather they were keen provide security of the Vote bank, created by the foreigners. After 5 years , the
people overthrew the Congress regime. The AGP party again came to the power. This time, the performances proved to be the worst. People were
constrained to believe that they have been cheated by this regional party since beginning. The Congress party thus again came to the power in
2001election under theleadership of Tarun Gogoi. Congress party was voted to power for the second time in 2006 as well. People of Assam are
well aware of the mal-functioning of this Government, but they had to exercise their franchise in favour of the Congress party, as they found no
other party choice able party was there.The deteriorating law and order situation, high price rise, rampant corruption is gaining the momentum
in this regime. People of Assam are now the silent spectators to all odds. The Assembly election of Assam is knocking at the door. The question
now arises, who will be installed in the power scenario in 2011 election?
In Assam, Congress party is predominating since the beginning. The AGP came to the power scenario like a comet. There had been
disintegration of the party on a number of occasions on power mongering issues. Though, of late, reunited, the party members could not yet give good bye to the internal disputes and differences for the party stability. The confidence of the people has not been restored, which is evident from the numbers of bye-elections., The Lok Sabha poll of 2009 proved all the exercise futile. The Bharatiya Janata Party was, no doubt, an ideal party, but the inner quarrel and conflict has been detrimental to the unity and integrity of the party. The party is also not well organized in Assam and it is yet to strengthen its base yard. The Leftist Parties are also not very much relevant in Assam politics. It has been seen, of late, that the Autonomous Districts, like Karbi Anglong, North Cachar and Bodo Land have their district base and entity and they are capable to influence the political power scenario of Assam to a great extent. The United Democratic Front occupied a sizeable berth in the last State Assembly election. These parties are thus playing the pivotal role in formation of the Government. No forecast is possible at this stage as to the formation of Government in 2011 election by other parties unless they change their style of functioning and are up and doing to gain the confidence of the mass people.
A regional party has a dire necessity to ventilate the will and aspiration of the people and safe guard the regional interest. This is possible, when the peoples’ trust is bestowed upon the party incumbents. The AGP at this moment with the present incumbents seems to be not to the utter choice of the people. The inner party requires a reformation and renovation with fresh bloods, beset with dynamism and integrity. There must be a grass- root organization with constructive works to win the hearts of the people. A section of the veteran leaders are eager to mend the shortfalls and to come up with the new visions with constructive approaches, but it will be possible, when the grass root level is organized properly and systematically and they are keen to remove the economic disparity of the weaker section with constructive outlooks.
(Mrinal Kanti Chakrabartty)
“Rudra Bhawan”
R.G.Barua Road, 10- Lakhimipath
Guwahati -781-024
Review on Mrinal Kanti Chakrabartty’s book “Jiwan Darshan”
Review on Mrinal Kanti Chakrabartty’s book “Jiwan Darshan” in “ Asomiya Journalist” Magazine (7th Edition December’2009)
Saturday, July 4, 2009
TAX DODGING EPISODE- A CRIMINAL ACTIVITY
Tax dodging is a unique phenomenon to crush the economic discipline and austerity. Moved in an anti-clockwise motion in the normal and systematic way in the broad economic platform, a tax dodging activity can be well termed as a gross crime in the socio- economic scenario of national life. No applause or appreciation is ever hailed for such unhealthy, polluted, anti-social and anti-economic odds. A harmonious voice of condemnation is always warranted for such undesired workmanship. ‘Necessity is the mother of invention’- this symbolic gospel truth is always existent in the pre- concept of mind of the tax dodgers in the process. When any mal-activity is foiled, frustrated or apprehended, the tax dodgers search out new gallery to adopt new art of tax evasion. Tax dodging activities were very much in vogue in the ancient mythological era, it continues now and shall continue till eternity, of course, with some new, diverted or modified methods worked out in the formulated net-works. The tax dodging episode, in fact, is not a unilateral exercise. Some sort concurrence, connivance or collusion must be there at different angles more particularly with the tax machinery. The famous diplomat and economist of the Mauryya era Kautilya or Chanakya rightly recorded – “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 towns and the countryside.” This rigid view was, no doubt, a product of his valued experience and it obviously forms a guide line of the day in the field of economic regime.
In the British era, the tax measures in the States were adopted under the Government of India Act, 1935. Two tax laws, namely; the Assam Agricultural Income Tax Act, the Assam Sales of Motor Spirit and Lubricants Taxation Act were enacted in 1939 in Assam as the maiden venture to make yield of revenue. The tax law on the sales or purchases of goods - ‘the Assam Sales Tax Act, 1947’ came into force from 24.12.1947 in the post- independent period, while the Assam Finance (Sales Tax) Act, 1956 was enacted by the State Legislatures with the vested power under clause 54 of the State List in the Seventh Schedule of the Constitution of India, The Central Sales Tax Act, 1956, a Government of India Act, came into operation from 5.1.1957 under clause 92A of the Union List in the Seventh Schedule of the Constitution. The Central Sales Tax Act, 1956 still remains in force, while the sales tax laws enacted at different times, were repealed and ultimately the birth to the Assam Value Added Tax Act, 2003 took place from 1.05.2005. In fact, the State’s tax resources are generated from nine tax measures with the current tax yield of Rs. 3592.88 against Rs. 2864.44 in 2007-08.
‘Evasion and avoidance of tax are brothers twine’. When there is measure of tax, there is always attempt to evade or avoid tax. The traders try to derive extra fiscal benefits by adopting fraudulent means and thereby indulging the tax dodging activities. Tax collected on the sales or purchases of goods is an indirect one, and the burden of such tax ultimately falls on the consumers. A portion of the sale or purchase is not exposed in the books of accounts and is suppressed with result that the tax due is evaded. With the expansion of trade velocity and trade dimensions, the magnitude of evasion of taxes is gaining the momentum. In the present hi-tech era, the unscrupulous traders use to adopt a unique technique to evade tax through computer devises on which no easy access can be had by the tax machinery. Even odd transactions are removed from the computer at frequent intervals and restored in the C.D. to avoid easy reach of others.
The race of evasion of tax starts at the entry point and ends at the point of sales made to the consumers. Amongst innumerable ways, the import of goods in fake names with fictitious addresses, misclassification of the goods and suppression of sales in fraudulent way are prominently prevalent. A dearth of adequate preventive measures to arrest or avert the multifarious ways of evasion of taxes, has the consequential adverse effect in the revenue generation exercise. The check posts have not been equipped with skilled man- power, requisite amenities, facilities and other allied infrastructure. No compact/ comprehensive platform has been erected for inspection of the goods vehicles, unloading and verification of the goods as well as preserving the seized goods safely in a befitting manner. The lack of the officers’ sincerity, devotion and integrity is another reckoning factor. Pressure or influences at different angles in normal functioning of the officials with some ulterior motive behind, uses to demoralize them. Adequate counter-check in the way side, at the delivery point or at the godown is rarely undertaken. The race thus ends uninterrupted with a negative approach towards the State revenue making the State Coffer an utter victim.
The Value Added Tax (VAT) regime, currently operative in Assam, is a self-designed system of levy of tax with its self -steering wheels. The success in this revenue venture can achieve, only when (i) the traders ensure the correct and accurate maintenance of accounts initially by preserving purchase vouchers, issuing sales invoices, (ii) the interim purchasing traders and the consumers are alert against any foul play in the deals and (iii) the tax machinery keeps proper vigilance on different ways and style adopted for evasion of taxes. Any sloth, lapse or dereliction in maintaining rigidity, harmony, austerity, integrity and transparency, no doubt, pose to be a serious threat to the State revenue generation exercise. The paramount necessity of the day is that the concept of VAT should be made aware to all. The Government of India, of late, is contemplating to replace VAT, by ‘Service and Goods Tax’ from 1st April, 2010. It well construe that there is a ‘but’ in the operative VAT system.
The policy adopted by the Government of India to abolish central sales tax in a phase manner (the 50% of which has already been materialized), is nothing but an act quite detrimental to the revenue interest of the States. The austerity in fiscal discipline has already been cracked and it is likely to be demolished fully, when the policy to do away with the same, is fully implemented. A chaotic condition will be knocking at the door in absence of any liaison or co-ordination maintained in the inter-States deals including stock transfer or export. The scope for levy of consignment tax, as incorporated in the Union List (92B) of the Constitution in 1982, is yet to be implemented by a separate central enactment to avert or prevent any fake stock transfer.
within the ambit and competence. The taxing authorities, as appointed by the Government to assist the Commissioner are well competent to decide the merit of any such pertinent question of law and any imposition made at any corner on the statutory power exercise scenario seems to be an overlapping of jurisdiction or intervening of the powers. The unfortunate part of thing is that even though the Commissioner is said to have directed the taxing authorities to imposed VAT on purchases of Flat with a retrospective effect from May, 2005, that is, from the date of coming into force of the VAT Law in Assam, he has not equipped the taxing authorities, namely; the Assistant Commissioners of Taxes and the Superintendents of Taxes to exercise the powers for registration of the dealers liable to pay tax under the VAT Law, to make assessments of tax to the dealers (except the power of self- assessment) and other allied important powers in the day to day administrative scenarios. The officers, on the other hand, are either without having being unaware of this vital requirements or without being conscious at all on the consequential effect on such unvested power exercise, keen to exercise such unvested powers in the course of their routine course of action presumably without any conviction of mind that the whole administrative system will be paralyzed. When it is well settled from the above concept of law that Flat is not a moveable property and out side the definition of goods, the scope for levy of tax on Flat purchase is not there.
The definition of goods, inter-alia’ laid down that all materials (whether as goods or in other forms) involved in execution of works contract are goods. If the construction of Flats are constructed through the contractors, naturally, the transfer of property in goods involved in such works contract is covered by the definition of sale, which has its obvious Constitutional footings with proper authority of law and the levy of tax on such goods is well attracted. The promoter of the Flats, however, generally come up with strong plea that they construct the Flats out of their own and the question of execution of works contract does not crop up. The actual state of affairs will come to the light on the nature of contract in course of scrutiny and examination of the contract deeds executed between the land ‘owner and the promoter’ and ‘the promoter and the flat purchasers’. It can not be fully agreed that the promoters alone play the pivotal role in the entire Flat construction exercise and there may be some agencies as well to act as contractors. That will be a product of investigation and vigilance. The taxing authorities, it is presumed have the access to some investigation and vigilance.
The materials used or utilized in connection with the construction of Flat are, no doubt, out of the purchases made locally or in the course of inter-State trade or commerce. The taxing authorities have the power to examine the documents and evidences to ascertain whether VAT has been charged against such purchases of goods by the sellers to proceed with as part of duty to ensure charging, payment and levy of tax properly, when such purchased of materials relates to within the State of Assam. If any such goods, covered by the Schedule of the Assam Entry Tax Act, 2008 are purchased from places out side the State of Assam for use or consumption, the taxing authorities have full power to undertake operation in the matter of deciding the liabilities under the said Act and to ensure proper levy and collection of tax. The taxation laws have provided ample powers to the taxing authorities, but such powers are to be exercised within the frame-work of law. Any powers exercised arbitrarily beyond the ambit and competence invites controversy and naturally a catastrophe in the revenue earning exercise becomes inevitable.
(Mrinal Kanti Chakrabartty)
“Rudra Bhawan”
R.G. Barua Road, 10-Lakhimipath,Guwahati-781024
(0361) 2457734
98642-01684
In the British era, the tax measures in the States were adopted under the Government of India Act, 1935. Two tax laws, namely; the Assam Agricultural Income Tax Act, the Assam Sales of Motor Spirit and Lubricants Taxation Act were enacted in 1939 in Assam as the maiden venture to make yield of revenue. The tax law on the sales or purchases of goods - ‘the Assam Sales Tax Act, 1947’ came into force from 24.12.1947 in the post- independent period, while the Assam Finance (Sales Tax) Act, 1956 was enacted by the State Legislatures with the vested power under clause 54 of the State List in the Seventh Schedule of the Constitution of India, The Central Sales Tax Act, 1956, a Government of India Act, came into operation from 5.1.1957 under clause 92A of the Union List in the Seventh Schedule of the Constitution. The Central Sales Tax Act, 1956 still remains in force, while the sales tax laws enacted at different times, were repealed and ultimately the birth to the Assam Value Added Tax Act, 2003 took place from 1.05.2005. In fact, the State’s tax resources are generated from nine tax measures with the current tax yield of Rs. 3592.88 against Rs. 2864.44 in 2007-08.
‘Evasion and avoidance of tax are brothers twine’. When there is measure of tax, there is always attempt to evade or avoid tax. The traders try to derive extra fiscal benefits by adopting fraudulent means and thereby indulging the tax dodging activities. Tax collected on the sales or purchases of goods is an indirect one, and the burden of such tax ultimately falls on the consumers. A portion of the sale or purchase is not exposed in the books of accounts and is suppressed with result that the tax due is evaded. With the expansion of trade velocity and trade dimensions, the magnitude of evasion of taxes is gaining the momentum. In the present hi-tech era, the unscrupulous traders use to adopt a unique technique to evade tax through computer devises on which no easy access can be had by the tax machinery. Even odd transactions are removed from the computer at frequent intervals and restored in the C.D. to avoid easy reach of others.
The race of evasion of tax starts at the entry point and ends at the point of sales made to the consumers. Amongst innumerable ways, the import of goods in fake names with fictitious addresses, misclassification of the goods and suppression of sales in fraudulent way are prominently prevalent. A dearth of adequate preventive measures to arrest or avert the multifarious ways of evasion of taxes, has the consequential adverse effect in the revenue generation exercise. The check posts have not been equipped with skilled man- power, requisite amenities, facilities and other allied infrastructure. No compact/ comprehensive platform has been erected for inspection of the goods vehicles, unloading and verification of the goods as well as preserving the seized goods safely in a befitting manner. The lack of the officers’ sincerity, devotion and integrity is another reckoning factor. Pressure or influences at different angles in normal functioning of the officials with some ulterior motive behind, uses to demoralize them. Adequate counter-check in the way side, at the delivery point or at the godown is rarely undertaken. The race thus ends uninterrupted with a negative approach towards the State revenue making the State Coffer an utter victim.
The Value Added Tax (VAT) regime, currently operative in Assam, is a self-designed system of levy of tax with its self -steering wheels. The success in this revenue venture can achieve, only when (i) the traders ensure the correct and accurate maintenance of accounts initially by preserving purchase vouchers, issuing sales invoices, (ii) the interim purchasing traders and the consumers are alert against any foul play in the deals and (iii) the tax machinery keeps proper vigilance on different ways and style adopted for evasion of taxes. Any sloth, lapse or dereliction in maintaining rigidity, harmony, austerity, integrity and transparency, no doubt, pose to be a serious threat to the State revenue generation exercise. The paramount necessity of the day is that the concept of VAT should be made aware to all. The Government of India, of late, is contemplating to replace VAT, by ‘Service and Goods Tax’ from 1st April, 2010. It well construe that there is a ‘but’ in the operative VAT system.
The policy adopted by the Government of India to abolish central sales tax in a phase manner (the 50% of which has already been materialized), is nothing but an act quite detrimental to the revenue interest of the States. The austerity in fiscal discipline has already been cracked and it is likely to be demolished fully, when the policy to do away with the same, is fully implemented. A chaotic condition will be knocking at the door in absence of any liaison or co-ordination maintained in the inter-States deals including stock transfer or export. The scope for levy of consignment tax, as incorporated in the Union List (92B) of the Constitution in 1982, is yet to be implemented by a separate central enactment to avert or prevent any fake stock transfer.
within the ambit and competence. The taxing authorities, as appointed by the Government to assist the Commissioner are well competent to decide the merit of any such pertinent question of law and any imposition made at any corner on the statutory power exercise scenario seems to be an overlapping of jurisdiction or intervening of the powers. The unfortunate part of thing is that even though the Commissioner is said to have directed the taxing authorities to imposed VAT on purchases of Flat with a retrospective effect from May, 2005, that is, from the date of coming into force of the VAT Law in Assam, he has not equipped the taxing authorities, namely; the Assistant Commissioners of Taxes and the Superintendents of Taxes to exercise the powers for registration of the dealers liable to pay tax under the VAT Law, to make assessments of tax to the dealers (except the power of self- assessment) and other allied important powers in the day to day administrative scenarios. The officers, on the other hand, are either without having being unaware of this vital requirements or without being conscious at all on the consequential effect on such unvested power exercise, keen to exercise such unvested powers in the course of their routine course of action presumably without any conviction of mind that the whole administrative system will be paralyzed. When it is well settled from the above concept of law that Flat is not a moveable property and out side the definition of goods, the scope for levy of tax on Flat purchase is not there.
The definition of goods, inter-alia’ laid down that all materials (whether as goods or in other forms) involved in execution of works contract are goods. If the construction of Flats are constructed through the contractors, naturally, the transfer of property in goods involved in such works contract is covered by the definition of sale, which has its obvious Constitutional footings with proper authority of law and the levy of tax on such goods is well attracted. The promoter of the Flats, however, generally come up with strong plea that they construct the Flats out of their own and the question of execution of works contract does not crop up. The actual state of affairs will come to the light on the nature of contract in course of scrutiny and examination of the contract deeds executed between the land ‘owner and the promoter’ and ‘the promoter and the flat purchasers’. It can not be fully agreed that the promoters alone play the pivotal role in the entire Flat construction exercise and there may be some agencies as well to act as contractors. That will be a product of investigation and vigilance. The taxing authorities, it is presumed have the access to some investigation and vigilance.
The materials used or utilized in connection with the construction of Flat are, no doubt, out of the purchases made locally or in the course of inter-State trade or commerce. The taxing authorities have the power to examine the documents and evidences to ascertain whether VAT has been charged against such purchases of goods by the sellers to proceed with as part of duty to ensure charging, payment and levy of tax properly, when such purchased of materials relates to within the State of Assam. If any such goods, covered by the Schedule of the Assam Entry Tax Act, 2008 are purchased from places out side the State of Assam for use or consumption, the taxing authorities have full power to undertake operation in the matter of deciding the liabilities under the said Act and to ensure proper levy and collection of tax. The taxation laws have provided ample powers to the taxing authorities, but such powers are to be exercised within the frame-work of law. Any powers exercised arbitrarily beyond the ambit and competence invites controversy and naturally a catastrophe in the revenue earning exercise becomes inevitable.
(Mrinal Kanti Chakrabartty)
“Rudra Bhawan”
R.G. Barua Road, 10-Lakhimipath,Guwahati-781024
(0361) 2457734
98642-01684
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