KARMA JIWANAR PARISHAR ANTAHEEN

KARMA JIWANAR PARISHAR ANTAHEEN is an article in Assamese, written by me (Mrinal Kanti Chakrabortty) to make an analysis on the philosophy of human life, keeping in view some
verses of Sree Sree Madbhagawat Geeta. Action in human life comes to an end, when one
breaths his last.
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VAT BYABASTHA...

“VAT BYABASTHA- KSHAMATA PRADAN-KSHAMATA PRAYOG ARU KSHAMATAR ATISHAYYA”- This article is written by me (Mrinal Kanti Chakrabortty) pointing out some draw-backs in the Assam VAT Law, deficiencies in power delegation scenario and excessive exercise of powers by the tax officials.
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VAT ON FLAT PURCHASE

Recently a news item was published in the Assam Tribune under the caption “H.C. rejects VAT on Flat purchase”. Quoting a release issued by Assam Real Estate & Infrastrure Development Association, the release said that a Division Bench of the Gauhati High Court ordered the Commissioner of Taxes, Assam not to impose VAT on the purchase of Flats. The release added that recently the tax department started raids demanding that all Flat purchasers are liable to pay VAT with retrospective effect from May, 2005.The fundamental concept of VAT, as envisaged in the preamble of the VAT Law, is that it related to the imposition and collection of tax on the sales or purchases of goods in the State of Assam. Sales and purchases are, in fact, co-related. When there is purchase there is sale and vice versa. No dispute is existent on this concept of law. The basic question is, however, what is goods? ‘Goods’, as defined in the VAT Law means- all materials, commodities and articles and all other kinds of moveable property, whether tangible or intangible and includes, inter-alia, all materials (whether as goods or in some other form) involved in the execution of works contracts. ‘Flat’, as occurred in Oxford Dictionary, means- a set of rooms forming an individual home within a larger building. ‘Building’, on the other hand, is a structure with roof and walls with all requisite amenities and facilities. It is, therefore, a fixed asset and not a moveable property and naturally, it does not come under the purview of the definition of goods. A Flat is conclusively nothing but an immoveable property and as such the definition of goods is not attracted. The order, issued by the Commissioner of Taxes, if any, is thus not 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
Mobile: 098642-01684

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AVERT DIVERSION OF OIL TRADE-TAX REVENUE SAFEGUARD IS IMPERATIVE

Tax on oils, namely; crude oil, petrol, diesel and other petroleum products; plays a pivotal role in the revenue generation scenario of Assam. Taxes on sales and other allied matters are governed by the Finance Taxation Administration of Assam by way of enforcement of the enacts introduced in this behalf. The collection of tax revenue during the last three years were, as below:-2006-07 – Rs.3046 crore2007-08 - Rs.2864 ”2008-09 - Rs. 3526 ” The shortfall of collection in 2007-08 was, inter-alia, due to inadequate supply of crude oil vis-à-vis the consequential production outturn and sales threto. However, this has been recouped and took an accelerative turn in 2008-09. If things goes on rightly, the tax revenue collection may undoubtedly achieve Rs. 5000 crore within a couple of years. The trend of extracted crude oil sometimes poses to be discouraging and equally, therefore, import of such crude oil from othe States becomes essential. Contrary to the spirit and intention of the Value Added Tax (VAT) ideology, which maintains the steadfast theme of levy of tax on the every stage of sales of taxable goods, subject to the credit of input tax paid at the point of previous purchase of such goods, the State Legislatures accommodated levy of first point tax in the VAT Law of Assam with exemption of such tax at the subsequent stage on discharge of the onus of payment of tax at source without, however, any relaxation or modification, whatsoever on the basic theme, incorporated in the Law.. Simultaneously, therefore, a two-tier system of levy of tax, that is, one at the multi-point sales of goods and other at the first point, has been operating side by side without any fundamental change of ideology and structure in the VAT Law. Obviously, a clash and conflict between the two in the VAT Law has been apparently visible. In the system of levy of tax on the first point sales of oil products, some relaxation has as well been provided in the case of inter-se-sale deals between one oil company and other, implying thereby that, such inter-se-sales between one oil company and other shall not be held as the first point sales in Assam, but the subsequent sales made to the others or to the consumers shall be treated as the first point sales in Assam for the purpose of levy of tax under the VAT Law of Assam. When a particular Law has been framed for a particular purpose for levy of tax, such a deviation without relaxing of the basic theme or vision of the Law seems to be a unique and an unprecedented exercise of power. Clumsiness, complication and controversy on the system are, therefore, well existent. The ideology formulated and maintained in relation to the non- levy on the first sales in the course of inter-se sales between the oil companies obviously defeated the purpose of levy of tax at the point of first sales in Assam and it is doubtful if such a provision did necessarily warrant. The terms set-forth in the VAT Law to provide the tax relief by the first point seller oil company are : (a) that, the purchaser oil company will pay tax on the sales within the State or in the course of inter states sales under the VAT or the Central Sales Law, as the case may be (b) that, in case the purchaser desptaches such purchased oil products to other States not by way of sales, liability to pay tax on the purchase value of such goods, as provided in the VAT Law shall be cropped up. Despatch of goods to other States not by way of sale is apparently a transfer of stock of goods to other State for sale. Article 286(1)(a) of the Constitution of India restricted any levy of tax for sale out side the State. Section 6A of the Central Sales Tax Law, on the other hand, provided the granting of exemption of tax on such stock transfer of goods subject to discharge of onus in this respect. The propriety of levy of tax on the same goods meant for stock transfer on the purchase value is thus a controversial matter. The rate of tax on the purchase value of oil products meant for stock transfer has been specified at 4 paise in the rupee against the normal rates of tax (@ Petrol Rs. 25.75 paise in the rupee and Diesel Rs. 15.50 paise in the rupee) while in the case of other commodies despatched for identical purpose has been specified as per the prevelant rate of tax, specified in the Schedules of the Act.. So, a disparity and discrimination has obviouly been maintained leaving scope for dispute. There has been mysteriously large scale transfer of stock of oil products by the producing oil companies to other States. The entertainment of such claim of stock transfer is subject to enquiry and achieving satisfaction by the Assessing Officers. The Central Sales Tax Rules formulated some guidelines for the same as well. Whether such transfer of stock is consquent upon any pre-contract of sale is a vital point to be examined and ascertaied as any despatch on the basis of such a contract the character and quality of stock transfer is likely to be defeated. The VAT Law also provided benefit of tax at the concessional rate to the inter-se-purchaser oil companies to make stock transfer and thus to indulge the tax dodging activities by adopting frauduleny way of stock transfer. It stands a routine way of life for a section of traders/cosumers to purchase oil products at lower rates of tax at Khanapara Meghalaya), Bandardowa Arunachal Pradesh) and Dimapur (Nagaland) etc. taking advatange of the geographical location and an acute diversion of trade activities is in sight.It is high time that all these aspects may be considered by the State tax administration and to ensure that no drainage of Assam State revenue is there, but proper safe guard is guaranteed at any cost of augmentation of revenue of the State.
(Mrinal Kanti Chakrabarty)10, Lakhimi Path, R.G. Barua RaodGuwahati – 781024, India98642-01694 (M)