Burning questions on the set-back of economy in Assam
Assam is rich of its visible and potential natural resources, but
adequate measures have not been taken for the utilization of such resources and
mobilization of the out turns. The growth of industry is quite negligible in Assam. The
other infrastructures, connected therewith, could not as well be accelerated
properly, as a consequence. The fiscal
out turn derived, are enjoyed by the people of the other States. The common
people of Assam
have practically to pass their days with hunger, beset with, acute darkness of
poverty. The shyness of financial condition is utterly responsible for the
same. The indifferent attitude of the
State political bosses as well the lack of dynamism of the administrative
machineries, are mainly responsible for such set backs vis-à-vis the fallen
economy of the State.
OIL SECTOR
(Original history)
Assam is blessed by nature with adequate numbers
of Oil fields in its soil, particularly in the Upper Assam
areas. There may be some more in other
areas of the State, but least efforts were made to unearth or unveil such
potential resources. There was only one Oil refinery at Digboi of the present
Tinsukia district of Assam since the British era. Consequent upon discovery of
a number of new Oil fields in the Upper Assam area, namely; in Sivsagar,
Dibrugarh and Tinsukia districts, a conspiracy was started at the instance of
the Government of India (Central Government) to pump out the crude oil by
extracting the same from such Oil fields, discovered in Assam to the Barauni
Refinery of Bihar. The Government of
Assam (State Government) maintained a cipher role in such conspiracy to deprive
the people of Assam
on the points of installation of new industry, avenue of employment and other
allied benefits. The mass people of Assam,
therefore, awoke up against such attitude of the Central Government and started
an agitation demanding installation of another Oil refinery in Assam for
utilization of the crude oil to be extracted from the newly discovered oil
fields. When it reached to the climax, the Central Government agreed to start a
refinery in Assam.
Second
refinery established in Assam
A second mini refinery was
established at Noonmati in the heart of the Gauhati City
and it was commissioned in 1960. The project was started to refine the crude
oil and to sale its finished petroleum products under the management of the
Indian Oil Corporation Ltd. (IOC), a
pioneer Oil Entrepreneur of the country to console the people of the
State.
A huge quantity of
such crude oil, however, was being pumped out to Barauni to feed the Barauni
Refinery, as originally planned.
Attempt to evade liabilities to pay tax
Crude Oil is a taxable
item of goods under the Assam
(Sales of Petroleum and Petroleum Products, including Motor Spirit and
Lubricants) Taxation Act, 1955 (Petroleum Act). The movement of such crude
oil on sales out side the State of Assam in the course of inter-State trade or
commerce, attracted liabilities to pay tax under the Central Sales Tax Act,
1956 (Central Act). The Oil Entrepreneurs, extracting such crude oil from
the soil of Assam
and making movement of the same on sales to Barauni in the course of
inter-State trade or commerce, originally did not pay any tax on the sales of
such goods. When required by the Superintendent of Taxes (taxing authority)
of the area, the Oil Extracting Entrepreneur filed the case of litigation
in the highest forum of law. Ultimately, a historic judgment was delivered by
the Supreme Court of India
(Apex Court),
affirming the liabilities of the Extracting Entrepreneur to pay tax under the
Central Act. The said Oil Entrepreneurs now involved in extracting operations
are (i) The Oil India Ltd. (OIL) and (ii) The Oil and Natural Gas Corporation
(ONGC)]. After the Apex Court’s
verdict, they started to pay tax.
Establishment of third refinery with its modus-operandi
In the meantime,
another Oil Refinery was set-up in Dhaligaon of Bongaigaon, namely; the
Bongaigaon Refinery and Petro Chemicals Ltd (BRPL). The sales of petroleum
and petro-chemical products used to make a considerable inflow of revenue to
the State Exchequer. There was, however, a mystery. The sales of the petroleum products of the
BRPL were restricted to the IOC only. It could not make sale of its products to
any other Oil organization as well as to the consumers direct. It is to be
routed through the IOC. That means, the BRPL was a manufacturing agency, while
marketing agency of the BRPL lied with the IOC, which could only make sales of
such products in the market.
Fourth refinery established in Assam
The movement started by the
All Assam Students Union (AASU), associated by the Gana Sangram Samitee in
1979 , inter-alia, for driving
out the influx of the illegal foreigners into Assam, making entry into the soil
of Assam from Pakisthan (now Bangladesh) came to an end, following a Memorandum
Of Understanding (MOU), signed by them with the Central and the State Government on the
15th August, 1985. Along with
the other terms, incorporated in the MOU, one of the terms was that a big sized
refinery is to be set up in the State. The Numaligarh Refinery is the
product of the said MUO. The out flow of crude oil to Barauni was discontinued
after the Numaligarh Refinery was commissioned.
Price mechanism of petroleum products
The Oil
Co-ordination Committee (OCC), constituted by the Central Government under
the Ministry of Petroleum, used to control the price mechanism of crude oil and
other petroleum products. Prior to 24.09.1982 the taxes on the petroleum
products were levied in Assam
on the volume of the petroleum products sold. The said system was discontinued
and the taxes were being levied on advelorem basis, that is, on the value of
such goods sold. There were two-folds of
price mechanism in respect of such goods sold; Ex-refinery price and the
Retention price. The ex-refinery price included; the cost of production, excise
duty, freight and tax, while the retention price was fixed after taking into
consideration the imported price of crude oil, cost of the indigenous crude
oil, refinery cost and refinery margins, crude throughput, product patterns
etc. The retention price was, therefore, much higher than the ex-refinery
price. The BRPL sold its products to the IOC at the ex-refinery price, while
the IOC sold such BRPL products along with its own manufacturing products at
the retention price. The tax on the sales of the petroleum products is payable
at the point of first sale made in Assam. No tax was, however, payable
at the point of second or subsequent sales made in Assam in respect of the same goods,
subject to discharge of onus that such tax was paid at the first stage of sale
by the BRPL. The BRPL paid tax on the sales made the ex-refinery price, while
the IOC charged tax on the sale value in respect of its own products and also
the products, purchased from the BRPL at the ex-refinery price. The IOC paid
tax on the sales of their own products only, while no tax was paid on the sales
of such goods made out of the purchases made from the BRPL, on the plea that
such sales were the second stage of sales made in Assam. The charge and collection of
tax was, therefore, irregular. The IOC maintained that this had to be done to
maintain the price equilibrium in the course of business of selling the goods,
but in the eye of law, this was an unauthorized and illegal collection of tax
made by the IOC without depositing the same into the State Coffer. There was no
provision in the Petroleum Act to make forfeiture of such amount and to
credit the amount into the Government account and also to initiate any penal
action for such illegal collection of tax on the second sales of the petroleum
products made in Assam.
Naturally, such amount of tax was added to the margin of profit in respect of
the business of the IOC. The State was deprived of such tax revenue, which were
collected from the common consumers.
System of maintenance of accounts
The BRPL, on the
other hand, used to receive the difference of the sale price between the
Retention price and the Ex-refinery price from the pool account of the OCC and
credited such receipt in their accounts, as ‘the sales of goods produced’, which
was duly projected in the Balance Sheet, maintained for the respective years.
An explanatory note in respect of such difference of amount, received from the
OCC, was recorded in the Balance Sheets of the relevant years as - ‘Sale
includes, inter-alia, excise duty, tax
and freight etc., wherever applicable and the OCC Pool account adjustment,
as allowed by the Government from time to time, as per petroleum pricing policy.”
Apparently, from the tone of the language, reflected in the Balance Sheet, it
appeared that the said amount , received from the OCC, was a part of the sale
price of the same goods, sold by the BRPL to the IOC, which was credited in the
account ‘Sales of the goods produced’.
Levy of tax and its consequential effect
The
Superintendent of Taxes, Bongaigaon (taxing authority), therefore, took
into consideration the entire amount of sales, projected in this behalf (viz the amount received on account of the
ex-refinery price and the amount received from the OCC) and levied tax to the BRPL from period ending
30.09.1982 and onwards.
No tax could,
however, be levied to the IOC on the tax charged and collected illegally on the
second stage of sales of such goods made in Assam. No action could as well be taken for
forfeiture of the excess tax collected and no penal measure as well could be
initiated for such unauthorized and illegal collection of taxes by IOC. In
fact, the provisions for forfeiture existed in the analogous tax laws on the
sales and purchases of goods, operating in Assam, but conspicuously, the same
was absent in the Petroleum Act, though this Act came into force long before in
1939, while the other sales tax laws came into force in 1947 and 1956.
The dispute in regard
to the levy of tax to the BRPL adding back the part of the sale price, as
aforesaid, was ultimately dragged to the Apex Court. The Apex court finally
provided relief to the BRPL saying that the said amount was nothing but a
subsidy. The action taken in this behalf thus took a final halt there. There are, however, some reservations as to
the measure of defence taken at the State level.
The State of Assam thus lost more than
100 crore of rupees, as a consequence from the period from 24.09.1982 to
30.06.1993 on this pertinent issue, initiated and ultimately closed down.
Leakage could be averted
The Petroleum Act was
repealed and its place, a new Act with the amalgamation, consolidation and
amendment of four taxation laws in respect of the sales and purchases of goods
in force in Assam, which was designed as the Assam General Sales Tax Act,
1993 (AGST Act) and came into force from the 1st July, 1993. In the said new
Act, provision was incorporated for forfeiture of the illegal,
unauthorized and excess tax collected. Steps could therefore be taken for
forfeiture of such amount of tax collected by the IOC from 01.07.1993 and onwards.
This, however, seems to have not been done.
Levy of tax, when sale price exceed forty percentum over the
purchase price
Another provision was
incorporated in the AGST Act effective from 01.07.1993, which laid down, as
below:
“Where a person sells a substantial part of the goods,
manufactured by him or imported by him to another person for sale under the
brand name of such other person or for sale as distribution or selling agent or
for sale for repacking or subjecting the goods to another process not amounting
to manufacture and the price charged on sale exceeds the sale price by more
than such percentage as may be prescribed in respect of such goods or classes
of such goods, the re-sale exceeds the sale price by more than such percentage,
as may be prescribed in respect of such goods or class of goods, the resale by
such other person shall subject to the rules, if any, framed in this behalf, be
deemed to be at the first point of sale within the State.”
It was provided in the
rules, framed under the AGST Act, that when such sales exceed forty percentum
of the purchase value, a tax on such sales proceeds is leviable.
The sales proceeds of
IOC at retention price in respect of the goods purchased from the IOC at
ex-refinery price exceeded forty percent over the purchase value. The taxing
authority, Guwahati Unit ‘A’ (taxing authority) took resort to the said
provisions of law and levied tax on such sales proceeds of goods derived out of
the purchases made on ex-factory basis from 01.07.1993 and realized the tax,
which to some extent safe-guarded the interest of the revenue of the State.
However, for the indifferent attitude and lack of proper action, taken by the
Government, a huge amount of such tax revenue from 24.09.1982 to 30.06.1993, as
discussed above had to be lost.
New price mechanism and its shortfalls
The price mechanism, adopted by the
OCC, as discussed above, continued upto 31stMarch, 1998. The
Central Government probably realized that such types of dual sale price on the
petroleum commodity might give rise to further complicacies and the said price
mechanism was dismantled from the 1st April, 1998. This would have safe-guarded well
the interest of the revenue of the State, but the State Government suddenly
took another new measure of levy of tax to petroleum entrepreneurs.
Crude oil, petrol,
diesel and other petroleum products are taxable at the point of first sale in
Assam and no tax is leviable on the second or subsequent sales made thereof.
The Legislatures of Assam made an amendment in the AGST Act effective from the
5th June,1998, whereby, it was
laid down that the inter-se-sales of such petrol and petroleum products
made by one Oil Company to another Oil Company in Assam are not be treated as
the first point sale in Assam for the purpose of levying of tax. That means, the sales made by the last Oil
Company in Assam to the
consumers are to be treated as the first point sale in Assam for the
purpose of levy of tax under the AGST Act. Such a thought was given in the year
1993 and 1994, when the episodes were first detected, but the same was not materialized, as there
was apprehension that it might drag to some more complicacy. In fact, after
dismantling of the price mechanism of the oil products from 1st April, 1998, which safe
guarded the interest of the State revenue, such an amendment given effect from
the 5th June, 1998, in true sense,
was unwarranted. There was, however, a time gap between this period from
01.04.1998 and 05.06.1998 for which perhaps this amendment was made. However,
this could have been withdrawn after the dismantling of price mechanism came to
the light. This pertained to the levy of tax on sales by the one Oil Company to
another company within the State, but when such purchasing Company makes sales
of goods to other Oil Company in the course of inter-State trade or commerce or
makes transfer of stock of goods to the principal, branch or agent from one
State to the other, the State was likely to make loss of the revenue. A safe
given in this regard pertained to the liabilities of the purchasing companies,
but it is not applicable in the manufacturing sphere.
In fact, though such
oil products are the goods, taxable at the point of first sale in Assam, the mode
of the taxation measures, adopted, is a departure from the norms and procedure.
Recurrence in the VAT Act
The AGST Act was
repealed from the 30th April, 2005 and in its place, the Assam Value
Added Tax Act, 2005 (VAT Act) came into operation with effect from the 1st May, 2005. The VAT Act
maintains that, it is a tax on the sale of any goods at every point in the
series of sales made by the registered dealer with the provisions of credit of
input tax paid at the points of previous purchases thereof. Contrary to this
spirit of law, the Petrol, Diesel and other petroleum products were designed as
the first point taxable goods in Assam. Again, keeping conformity
with the mode of levy of tax on such oil products with the repealed AGST Act,
the inter-se-sales between the Oil Companies were designed not as the
first point sales of Assam.
The inter-se- sales made by one Oil Company to the other Oil Company
were designed not as the first point sale in Assam, but the purchasing Oil
Company to the other and the consumers are to be treated as the first point
sale made in Assam. The entire process seems to be unique and lacks conformity
and failed to maintain proper conformity and consonance with the spirit and
intention of the VAT measure.
Discriminations in the rates of tax
The rate of tax on the sale
of petrol is 27.5 paise in the rupee, while rate of tax on diesel is 16.5 paise
in the rupee. In the case of sales of such goods to the registered dealers in
the course of inter-State trade or commerce, the rate of tax is two paise in
the rupee, while in the case of sales to other than the registered dealers, the
actual rate of tax applicable in the State.
The VAT Act laid down
that after the purchase of any petroleum or petroleum products for resale
within the State, if the purchasing Oil Company despatches any portion of the
goods to a place out side the State except as a direct result of sale or
purchase in the course of inter-State trade or commerce, then notwithstanding
anything contained in the VAT Act, for that portion of the goods, the purchasing
Oil Company shall be deemed to be the last purchaser within the State of Assam
and it shall be liable to pay tax on such portion of goods at the rate of four
paise in the rupee on the gross turnover of such purchase of goods.
In fact, the purchasing
Oil Company derived the benefit of tax @ 27.5 or 16.5 in the rupee, as the case
may be, at the time of purchase of such goods. If it despatches such goods not
by way of sale in the course of inter-State trade or commerce, but by way of
transfer of stock of goods out side the State of Assam, it ought to have
compensated the loss, by way of realization of tax actually due, but the VAT
Act provided relaxation and specified the rate of levy of tax at four paise in
the rupee instead of 27.5 or 16.5 paise in the rupee. This is obviously causing
loss to the State.
Diversion of trade- Loss of revenue
The rates of tax on the
sales of petrol in Assam
are 27.5 paise in the rupee, while the rate of tax of diesel is 16.5 paise in
the rupee. This is much higher, compared to the rates of taxes prevalent in
most other States of the North Eastern Region, where the rates of taxes are 20
paise and 12 paise in the rupee respectively. A consumer, therefore, prefers to
purchase such goods on payment of lesser amount of taxes across the nearby
boundary line; like Khanapara, Jorabat, Banrdowa and other areas to derive
fiscal benefit. The boundaries of the North-State districts are not far away.
So, apparently, there is a diversion of trade, causing loss of revenue to the
State of Assam.
Transfer of stock of oil
products to other States
The movements of goods to places out side the State in the course
of inter-State trade or commerce, may take place in two ways- (i) One by way of sales and the other by way of
stock transfer for sale or other manufacturing activities in other State. The
movements of goods on stock transfer are exempted from tax, but such claim of
stock transfer is subject to enquiry by the taxing authority, allowing
exemption of tax. Along with other documents and evidences to be produced under
the statute of the Central Act and the
rules, framed under, it has been made imperative to obtain a declaration in
Form ‘F’ by the transferor of the goods from the transferee, duly filled in
verified and signed. Such declaration should contain, inter-alia, the
particulars of despatch of the goods by railway, steamer or ferry, air port,
post office, road transport. The number and date of invoice, challan and
other documents under which in respect of the goods are to quoted in such
declarations with the physical evidence of such documents.
Despatch of oil products through pipe lines- propriety thereof
A section of the
Oil Refineries of Assam are despatching the oil products, like, petrol and
diesel to other States through the pipe lines, installed by them. Such
despatches of the products through the pipe line partly included in respect of
sales in the course of inter-State trade or commerce, while some related to the
stock transfer of such goods out side the State. The provisions of the Central
Act read with Form ‘F’ provided some restriction and limitation and the
despatch of goods through pipe line did not get berth. The Form ‘F’ prescribed
in the rules under the Central Act; did not specify that the movements of the
goods through the Pipe lines are permissible. The despatch of the
petroleum products through the pipe line is a unilateral process, adopted by
such oil companies in making movement by way of stock transfer. Moreover, in
such unilateral exercise, proper enquiry seems to be not possible. It is
understood that the taxing authorities are allowing such stock transfer of
petrol and petroleum products through pipe lines with out proper authority of
law.
This
pertinent aspect, therefore, requires a scrutiny and examination to safe guard
the revenue of the State.
RAW PETROLEUM COKE AND CALCINED PETROLEUM COKE
(Tax on declared goods)
Under the authority
of sub-clause (a) of clause (2) of Article 286 of the Constitution, Parliament
declared a series of goods to be of special importance in the course of
inter-State trade or commerce. “Coal, including coke in all its forms, but
excluding charcoal” has been declared to be of special importance in the
course of inter-State trade or commerce. ‘Raw Petroleum Coke’ (RPC) and
‘Calcined Petroleum Coke’ (CPC) are two different items of goods, which
have independent use and identity in the commercial market. The said two
goods have not been identified separately in the list of the declared goods.
The Apex Court
delivered a historical judgment affirming that the RPC and the CPC are
the one item for the purpose of levy of tax as the declared goods, covering the
broad term ‘ Coal including Coke in all its form.’ The identity and the commercial use of such
goods, therefore, did not gain the momentum.
The Central Act
laid down ‘ Where a tax has been levied in respect of sale or purchase
inside the State of any declared goods and such goods are sold in the course of
inter-State trade or Commerce and tax has been paid under this (Central) Act in
respect of sale of such goods in the course of inter-State trade or commerce,
the tax levied under such law shall be reimbursed to the person making such
sale in the course of inter-State trade or commerce in such manner and subject
to such conditions, as may be provided in any law in force in that State.”
In the tone of the
identification of ‘Coke in all its forms’, the tax paid on the purchase
of RPC is admissible for reimbursement, when CPC is sold in the course of inter-State
trade or commerce and taxes has been paid.
Parliament has
already identified separately, the manufactured or processed items of goods out
of iron and steel by making classification separately as rod, bars,
rounds, hoops, strips, skelps, plates, tools, alloys etc. for the purpose of
levy of tax separately on such iron and steel goods, but the same was not done
in case of coal and coke in all their form. As a result, heavy drainage of tax
revenue has been taking place from the State Coffer years after years for these
technical reasons, the amendment or modification of which may avert such
drainage of revenue.
This is entirely a
matter of the Central Government. The State Government took up the matter with
the Central Government, but without any fruitful result.
TEA SECTOR
Collection of tax on tea
Tea is precious Agricultural product of Assam. Tea
plants were discovered in the forests of Assam in the initial stage of the
British regime in 1926. It had a wide spread and gradually extended to the
whole of Assam. Though there are more than 50 thousands of
tea gardens (big and small) in Assam,
the tea industrial units are in between 700 and 800. The tax revenue in Assam in the
year 2012-13 was Rs. 28.11 crores under VAT Act and Rs. 14.48 crores under the Central Act,, the total being Rs. 42.59 crores.
The Head Offices of most of
the tea gardens in Assam,
located out side the State of Assam, use to make control over the business
activities of the tea gardens of Assam, like sales and purchases of
the goods including the avenue of employment. The garden managements do not
have any say on the same and they have to remain cipher and to act like rubber
stamps. A part from the sales of the manufactured tea, a huge quantity of such
goods uses to move to places out side the State of Assam by way stock transfer
to the Head Offices, Branch Offices or to the Agents out side the State of
Assam for the purpose of sale out side the State of Assam or as the case may
be. Such goods, moved to the places out side the State of Assam are exempted
from tax under the Central Act, subject to discharge of onus that there was no
element of sale in such movement of goods. The experience showed that in many
cases, there were manipulations of such deal in as much as the tea garden
entrepreneurs use to make sales of tea under the secret contract of sale, but
disclose that such goods moved by way of stock transfer by manipulation of
documents. The entire episodes are
carried on under the secret directions of the Head Offices, located out side
the State. Crores of rupees are being drained out from the State Exchequers
years after years. No proper investigations are made, proper inspections and
raids are applied to prevent; arrest or detect such drainage of revenue.
The State of Assam would have earned between 50% to 100% more
revenue, if the tax machineries are on the heels in this regard.
CONSIGNMENT TAX
To compensate loss for stock transfer of goods
There had been acute
murmuring from some producing States of the Union of India over the question of
legalizing the process of the transfer of goods by incorporating such a
provision in the Central Act from 01.04.1973. The affected States started hue
and cry. In order to safe guard the
interest of the revenue of the State, the Constitution was amended and
authority was provided to the Central Government to introduce law on
Consignment Tax by incorporation such entry 92B in List-I (Union List) in
the Seventh Schedule of the Constitution, which was effective from 02.02.1983.
No law was enacted by Parliament during
this long period of 31 years and the poor State like Assam has been suffering
for not getting tax on its products like; petrol diesel, tea, coal, raw jute,
superi, bamboo hides and skins etc.
This deserves an effective
consideration.
Tax on sale or purchases of green tea leaves
The sales and purchases of “Green
tea leaves” are exempted from tax under the VAT Act, which governs the levy
of such tax. The production of such “Green tea leaves” is, however,
taken into consideration as a measuring scale for the purpose of levy of tax
under the Assam Taxation (On Specified Lands) Act, 1990 [Specified Lands] Act
on the tea garden lands. Contrary to the provisions of the VAT Act, exempting
the levy of tax on the sales and purchases of such green tea leaves, the
Legislatures of the State introduced a measure of tax on the sales and
purchases of such green tea leaves in the name of safe guarding the collection
of tax under the said Specified Lands Act, tough the aim and object of the said
Act to levy tax on some the specified lands only, herein refers to the tea
garden lands of Assam. The necessity of levy of tax is there for the purpose of
augmentation of revenue, but this is not to be done in a perverted way.
This aspect of the
measure of tax adopted is required to be reviewed.
TAX ON AGRICULTURAL INCOME
Levy of tax on the income of tea
A measure of tax on tax on
the income derived out of agriculture was adopted in Assam with effect from 01.04.1939
during the British regime. The Assam Agricultural Income Tax Act, 1939
(Agricultural Act), governing such levy of tax is still in operation with the
time to time modification thereof. In case of other income out of agriculture,
the tax is levied on the 100 percent of such income derived. In the case of
levy of such on the income of tea, however, the quantum of income has to be
bifurcated. That is, 60 percent of such income is to be reckoned as the income
out of agriculture and 40 percent as out of trade. This process is
governed by the Indian Income Tax Act, 1961 (Income Act). Under the statute of the said Income Act, the
quantum of income is to be determined by the Income Tax Authorities of the
Central Government, which has to bifurcate it to make levy tax on trade on the
40 percent of such income leaving the balance 60 percent un-assessed for the
purpose of levy of tax by the Agricultural Income Tax authorities of the State
Government, as the agricultural income.
Though the Agricultural Act projected its wide and independent vision,
the provisions of the Income Act have been prevailing over it. Not only that,
the power of assessment of tax vis-à-vis determination of the quantum of total
income with bifurcation thereof; has been vested upon the Income Tax
Authorities. The State Agricultural Income Tax Authorities can not make any
excess and has to remain cipher in such exercise and carry on it function as
the assessing authority like a rubber stamp. The quasi-judicial approach
in the proceedings of the Agricultural
Act, thereby, suffers from acute set back.
In case of the other
income on agriculture, like; paddy, pulses, wheat, sugarcane, jute etc. such
restrictions are not there, but it is applied in the cases of tea only
restricting thereby the free flow of
revenue to the State Coffer.
The State o Assam is,
therefore, incurring heavy loss for bifurcation of such income derived from the
income of tea in two folds, namely; agriculture and trade.
A remedial measure
seems to be imperative for the greater interest of the State of Assam.
LEVY OF TAX ON PURCHASE OF GOODS
With a view to safe
guard the interest of revenue in Assam, a measure of tax was introduced for
levy of tax on the last point purchase of some local products of Assam from
03.07.1971 by way of enactment of the Assam Purchase Tax Act, 1967( Purchase
Act). Such items of goods were Raw
Jute, Bamboo, Hides and Skins of animal, Bones of animals, reptiles, Superi
etc. The said measure of tax continued upto 30th April, 2005 even after repeal of the said Purchase Act on the 30th June, 1993 by virtue of the
provisions of the Assam General Sales Tax Act, 1993 (AGST Act). The said
measure of tax was abolished after the VAT Act came into force from 1st May, 2005. A provision was,
however, incorporated in the VAT Act to the effect, which was, in fact, not
specific but circumstantial. The said measure of tax can not ensure proper levy
and collection of tax. There may difficulty to levy of tax in respect of the
goods moved other than by way of sales, but by way of transfer of stock, as
occurred in the VAT Act.
To ensure better
collection of revenue in respect of the items of local products, as stated
above, the Purchase Act could have played the pivotal role in the generation of
revenue of the State.
TAX ON BRICKS
“Brick” is an item
of goods, taxable at the point of first point of sale in Assam and the
rate of tax is five paise in the rupee.
The Government of Assam, however, allowed option to the producers of the
bricks to pay tax under the Composition Scheme, that is; in a lump sum basis
instead of paying tax at the Scheduled rate.
In the Budget of
2013-14, the said rate of Composition of tax were enhanced as below :
Category Capacity of kiln Previous annual rate Present annual rate
A 25
payas and above Rs. 57,
500.00
Rs. 1,00,000.00
B 21 payas to 24 payas Rs. 46,000.00 Rs. 80,000.00
C Upto
20 payas Rs.
34,500.00
Rs. 60,000.00
Generally, three categories of bricks are manufactured in a brick
field, the proportion of which are – 60%
-1st class : 20% -2nd class : 20% - 3rd glass (Jhama or broken). A
brick field with capacity of 3 (three) lakhs produces bricks in each round, the
following quantities of bricks:
1st class = 1,80,000 Nos.
2nd class = 60,000 “
3rd class 60,000
“
Total 3.00, 000 Nos.
Generally, three rounds of
bricks are manufactured in a brick field and in that case, the production will
be three times of the above.
On a close analysis and in
consideration of the prevalent price of such bricks, a brick field of having
three lakhs capacity of bricks is to pay tax at Rs. 2,88,000.0 for three rounds
of brick manufactured in a year. The same will be double, triple or even
quadruple, when the capacities of such brick fields are bigger.
The rate of tax under the
Composition Scheme, as stated above, is, therefore, much lower, compared to the
production of bricks and the price thereof..
Moreover, the Scheme
maintained silence as to what will be the fate of levy of tax on the subsequent
sales made by the dealers within the State or in the course of inter-State
trade or commerce.
As the question of huge leakage of revenue is
involved, this aspect of the measure of tax requires a review.
STATE IS DEPRIVED OF THE SHARE OF INCOME TAX
The Head offices of the Oil Companies, Coal Companies, Cement
Companies and most of the Tea Companies are located in the places out side the
State of Assam. They use to pay tax on the income derived in the State out side
the State of Assam. The shares of such taxes are received by the States in
which such income taxes are paid as envisaged in clause (2) f Article 270 of
the Constitution. Consequently, Assam
is deprived of such revenue derived out of income in the soil of Assam. There of the Central taxes would have
increased 50 percent, if not more, if such a episode would have not been there.
Unless the Head
Offices are shifted to Assam
this set back, leading to irreparable loss of revenue will continue.
Mrinal Kanti Chakrabartty
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