Tax is a contribution, extracted by the Government in the form of revenue to the State Coffer. No Government can exist without taxation. This money, in fact, is to be levied to the people and the grand art consists of levying so as not to oppress.
AIM AND OBJECT
The aim and object of the tax administration is to make generation as well to cause mobiliza¬tion of revenue resources for the purpose of augmentation to the State Coffer within the frame work of law, enacted by the Legislatures of the State in a systematical and methodical way.
TAXING AUTHORITIES
The Commissioner of Taxes (Commissioner) is the supreme authority in the field of administration for carrying out the purposes of the taxation laws of the State. He is to be assisted by a set of officers, namely; the Additional Commissioners of Taxes, Joint Commissioners of Taxes, Deputy Commis¬sioners of Taxes, Assistant Commissioners of Taxes, Superintendents of Taxes and the Inspectors of Taxes, appointed by the Government, specifying its territorial jurisdiction. The Agricultural Income Tax Officer is assigned to carry out the administration of the Assam Agricultural Income Tax Act, 1939. The post is manned by the cadre of the Superintendents.
COMMISSIONER OF TAXES
The Commissioner is an Ex-cadre post and the member of the lndian Administrative Service cadre ornaments this post He is entrusted to govern the tax administration with the help of the seasoned and veteran officers of the cadre posts. Primarily, he is not supposed to know the inner visions and techni¬calities and the taxing authorities, appointed to assist him, are to guide him in a right and proper way with unbiased briefs, clean and crystal projection of the facts. The notes are to be law, fact and docu¬ment based and are to be processed chronologically from the grass root level and onwards so as to adopt a constructive and judicious decision, implying thereby that, such a process is knowledge and experience oriented. Unless there is righteous advice and guidance, there may derailment or disrup¬tion in the walk on the main orbit smoothly and efficiently.
BIRTH OF THE TAXATION DEPARTMENT
Taxation department is a post child after the independence of India. In pre-independence period, the taxation laws, namely, the Assam Agricultural Income Tax Act, 1939, the Assam Sales of Motor Spirit and Lubricants Taxation Act, 1939 and the Assam Amusement and Betting Tax Act, 1939 (operative since 1.4.1939,1.4.1939and 1.8.193 9 respectively), enacted under the Government of India Act, 1935, were administered by the Excise Department of the Government of Assam. After the enactment of the Sales Tax Law (the Assam Sales Tax Act, 1947) from 24.12.1947 under the Government of India Act, the taxation department took its birth. All the above taxation Laws including the Assam Professions Trades, Callings and Employments Taxation Act, 1947 (operative from 1.4.1947), enacted also under the Government of India Act, 1935, received proper safe guards under saving provisions, as envisaged in Article 277 of the Constitution of India (Constitution) adopted and effected from 26.1.1950. There are as many as nine taxation laws operative in Assam.
Two taxation laws, namely; the Assam Taxation) on Goods carried by Roads and Waterways) Act, 1954 and the Assam Tax on Luxuries Act, 1997 were nullified by the Hon'ble Supreme Court of India. A portion of the taxation law, namely; the Assam Entry Tax Act, 2001 was also declared to be null and void by the Hon'ble Gauhati High Court, but the State Legislature repealed the earlier Act and made re-enactment of the same in 2008, which became effective from 1.6.2008. The new Act is to give safe guard of the erstwhile incomplete proceeding and tax recovery of the old Act and the tax already collected, but all proceedings under the 2008 Act are to be taken up denovo for the purpose of admin¬istration of the new Act. Two other Acts, namely; the Assam Passengers and Goods Taxation Act, 1962 and the Assam Urban and Immoveable Properties Act, 1963 administered by the taxation department, were transferred to the Transport and Municipal Department in 1989 and 1971 respectively.
POWERS AND FUCTIONS OF THE TAXING AUTHORITIES
The power and functions of the taxing authorities are of three folds : (i) Executive, (iii) Quasi-judicial and (iii) Administrative. The former two are in relation to the administration of the taxation laws and the last one is for general administration.
The bifurcation of executive and quasi-judicial powers in the process of administration of the taxa¬tion Laws was essential, keeping in view, the mandatory provision of Article 50 of the Constitution, that is, the doctrine of Separation of Powers. The encroachment of powers by the executive exercising the quasi-judicial power at the same time may be counted to be pre-judicious, as will be evident from the verdicts of the Hon' ble Courts of law. An investing officer or any team of officers is not to exercise the quasi-judicial powers for the same issue.
APPOINTMENT AND DELEGATION POWERS
The taxing authorities of the State are appointed by the State Government by notification in the Official Gazette with specification of the territorial jurisdiction. Only the Government can modify, extend or curtail such jurisdiction and none else. The Commissioner is to delegate his powers to the category-wise of officers subject to the conditions and restrictions imposed in the Act and the rules keeping in view the territorial jurisdiction, specified by the State Government. There should not be any overlapping or encroachments in the power delegation and power exercise scenario.
SHORTFALLS IN DELEGATION OF POWERS
The Assam Value Added Tax Act, 2003 (VAT Act) came into operation from 1.5.2005. In the power delegation scenario, some shortfalls became obvious and reconciliation seems to be incumbent for proper and smooth administration of the VAT Act. For instance, the scope of power delegation has been restricted in rule 6 of the rules, framed under the VAT Act. This seems to have not been rightly observed. In the said rule, there is no scope for delegation of powers to the Assistant Commissioners of Taxes, but the Commissioner by Notifications dated 28.4.2005 delegated his powers to the said set of officers without any base. Unless rule 6 is amended and the words Assistant Commissioner is accom¬modated, some complications might be there in near future. The, Commissioner has not delegated his powers to the appropriate category of the officers to exercise the powers of registration, provisional assessment, best- judgment, assessment to the unregistered dealers, escapement of assessment, power of forfeiture, calling of returns, levy of interest and in many other aspects. Moreover, delegation of powers to compound offences to all categories of officers seems to be in contravention of the provi¬sions of rule 6. The definition of Assistant Commissioner and Superintendent has special significance in the matter of administration of the VAT Law, as such authorities are one and same in respect of a dealer in a particular area and there can not be any overlapping of territorial jurisdiction.
The department will have no measure of defence, if the exercise of powers without delegation or the powers delegated beyond the scope of rule is challenged.
TAX MACHINERIES
The services of each category of official as well the taxing authorities are counted as indispensable for proper administration of the taxation laws of the State. None is inseparable from others and none is less important.
GRASS ROOT LEVEL
The grass root level officials are the members of the ministerial cadre. Unless the files are designed properly and systematically and moved with action, there may be dislocation in the system. In taxation department, the system of maintenance of records is very unique and very much methodical. The case records are to be maintained in double cover. The outer cover in side is meant for preservation of return at the first inside and preservation of the order of assessment in the last side. In between the first cover the correspondences and Miscellaneous or sheets are to be maintained period wise, year-wise, as the case may be. It is felt incumbent that a summery of the position of the files is maintained in side each case record. The Index Register and the Assessment, Demand and Collection Registers are like the mirror of a dealer and maintains the complete dossier. These records must have the parity with one another so that cross checking may yield a positive result.
The dealing assistants should make it a habit to make scrutiny of the case records from bottom to the top and to put up with action, wherever necessary. Where there is no action the portion is to be closed and tagged. Such scrutiny may ensure proper realization of tax,' if necessary by taking coercive measures. The records are to be maintained in such a way that no sort of entry is lost under any circumstances. }
The maintenance’ of case diary and put up diary are two basic requirements of the concerned deal¬ing assistants. The other records, like maintenance of Bakijai Registers, Register in relation to institu¬tion of court cases, composition of offences, imposition of penalty Register has a dire necessity. The summery at the end of each month is to be drawn up in the index Register, Assessment Demand and collection Register. The Assistant Commissioner or the Superintendents are to check the registers and records and ensure follow up action.
FIELD STAFF
The field staff mainly connotes the Inspectors of Taxes. There main duty is to make survey of the area at least three times in a year. The survey should be made in respect of all the business of the dealers/assesses of the area. None is to be left out. Even a Pan shop or a Saloon should not be omitted. The detailed particulars are to be recorded in the survey register. Such survey register will present the complete picture of business position in the area. The survey should not be confined to the urban areas only, but it should be extended to the rural or semi urban areas, where there is flow of business. Survey Register should be maintained for each Act separately, so that complete picture of the assessees re¬mains visible. Such survey is subject to inspection by the superior authority at least twice in a year.
Enquiry in respect of any assessee and inspection of the business premises, godowns, loaded/un¬loaded trucks form the other parts of duties of the field officers. Such exercise is to be made with a sober approach but with firm stand.
The collection of particulars from different sources with verification of such collected particulars is another vital part of duty of the field officer.
The work of inspection, if necessary under the authority of search warrant and the preparation of the seizure list requires due prudence and proper application of mind. Likewise, the seizure of goods should follow the same footstep. It is to be made imperative that all inspection be recorded in the Register with the outturn thereof.
QUASI-JUDICIAL PROCEEDINGS
The powers and function of the Assistant Commissioners and the Superintendents of Taxes are quasi-judicial,. Registration, requirement to furnish security, administration of assessment proceed¬ings and penal proceedings, all are quasi-judicial ones. The power of the Civil Court has been vested upon the said authorities, who can enforce attendance of any person, administer oath or affirmation in connection with any proceedings, require production of documents and evidences for such purpose, as may be warranted.
The orders in each case must be law, facts and materials based with a self-speaking exposure There should not be any biasness in the contents of the orders, but with a judicious approach and out look. While administering the quasi-judicial proceedings, all facts are to be recorded properly. Though the Act has provided that the orders, instructions and direction of the Commissioner is binding to the officers subordinate to him, but a reservation is maintained, whether such imposition will ensure fair and judicious delivery of judgment. There is possibility of being influenced by any order, direction or instruction in the lawful administration of any quasi-judicial proceedings under the Act.
APPELLATE PROCEEDINGS
The Appellate Authority is a quasi-judicial authority, but it maintains its independent entity. The Commissioner is neither to delegate his powers nor to issue any instruction in administering the quasi-judicial appellate functions under the Act. The Appellate Authority is to dispose of the appeal petition after providing opportunity to the person appealed and the authority against whose order appeal peti¬tion has been filed. The order of the Appellate Authority is not be interfered, by the Commissioner but the Board of Revenue, Assam can entertain an appeal, if filed by the aggrieved party or the Commis¬sioner. The scope for filing writ petition before the High Court on the question of law and justice, however, remains open.
REVISIONAL AUTHORITY
The power of revision of the orders of the Assessing Officer rests with the Commissioner or by the officers not below the rank of the Deputy Commissioner to whom such power is delegated by the Commissioner
SUO MOTO REVISION
The power of suo moto rests with the Commissioner or the persons appointed to assist the Commis¬sioner upto the level of the Deputy Commissioners. Three ingredients are necessary to invoke the powers of suo moto revision, (i) There must be an order (ii) the order must be erroneous and (iii) The order must be prejudicial to the interest of the revenue. Unless, these three ingredients exist, the invo¬cation of power of suo moto revisions is likely to be questioned. The order of suo-moto revision must reflect this vital requirement. When such ingredients are absent in the order, the order is likely to suffer from deficiency.
INVESTIGATING WING
There had been an investigating wing in the taxation department, which was withdrawn in 1983 December without being re-designed or revived so far. Though the Sales Tax Laws of the State em¬powered the State Government to constitute such a wing for investigation and detection of taxes, the same has not been materialized. This has a dire necessity to check, detect and prevent evasion of taxes. An Audit Team has been constituted, which does not have any legal base and such functioning of the Audit team may invite controversy in the long run. That can be regularized by creating an investing wing with assignment of powers, inter-alia, for investigation, audit etc. Audit is a part of investigation and its limitation need not be confined to the case records only.
POWER OF ASSESSMENT TO THE INVESTIGATING TEAM
A discussion has already made that following the doctrine of Separation of Powers, the quasi-judicial powers of assessment and other allied matters are not to be exercised by the investing wing and the said power rests with the assessing wing in the units. This aspect requires a fresh consideration with proper review.
OPERATION OF CHECK POSTS
The operational aspects of the check post suffer from various shortfalls and lacunae. First, there is no Weigh Bridge; second, there is no proper platform to unload the goods with adequate man- power; third, there is no godown to store the goods, when seized. The misuse of Delivery Notes has become a regular phenomenon. It is believed that the check posts maintains the complete dossier of each dealer with registration numbers, commodities dealt in and other allied requisite information. How they can make it possible to evade payment of tax by furnishing false information in respecct of the goods carried by misrepresentation of facts? The particulars transmitted through inter-net may help to adopt follow up action and to apprehend such unscrupulous traders. It is however imperative that for the purpose of administration of the quasi-judicial proceedings or to bring criminal liabilities, the Deliv¬ery Notes must be physically available to the concerned Assessing Officers. Actually, the Check Posts are the competent authorities to arrest such foul play at source and to do away with the odds by initiating coercive measures like detention of vehicle, seizing of goods and forfeiture or disposal thereof.
FIELD INSPECTION
There has been a good deal of deficiency in the matter of field inspectio, namely; at the business premises of the dealers, godowns, ware houses and carriers. The carriers place the pivotal role in indulging the evasion of taxes in collusion with the buyers and the sellers of the goods. Each officer is responsible for proper levy and collection of tax, checking, preventing and arresting evasion of taxes including collection of evaded and realization of outstanding dues in his area. In the past era, the good performances of the officer was a measuring scale to wards counting his efficiency and consideration for posting in suitable commercil areas. The inspection of cinema halls irrespective of any show was a regular phenomenon and it was made compulsory to maintain Register, to submit monthly statements in addition to submission of fornightly diaries.
OFFICE INSPECTION BY THE HIGHER AUTHORITIES
In sixties and earlier, office inspection by the Commissioner at least three times in a year was regular phenomenon. Such inspections were marathon and very tough, but constructive. The inspec¬tion reports were to be typed half margin and preliminary following action reports were to be submit ted within a specified time. With the increase of volumnous works and strengthening the man power, such task was carried out by his juniors in an identical manner. This improved the work culture and accelerated the work efficiency.
AUDIT
The aim and object of audit are to detect the irregularities and to regularise thereof. When there is major lapses, the officers were answeable to that. The existing provisions of law were rectified to cure the defects. Now, the said culture has been changed. The audit encroaches its jurisdiction and makes excess.
ADMINISTRATION OF THE ASSAM VALUE ADDED TAX ACT, 2003
Though the Assam Value Added Tax is a tax on the sales and purchase of the goods, but its aim and object is not identical to the previous ones. It is somewhat unique and technical and designed with a self-wheel-steering drive. The Act has, however, been designed identical to the previous sales tax law, whereby ample ambiguity and misconception prevail. For example, the spirit and intention of the Act was to levy tax on every stage of sales subject to credit of input tax. In the Act, contrary to the aim and object and the preamble, a tax measure for levy at the point of first point sales in respect of 23 items has been incorporated, though the Act has not specifically recorded anything about such departure from the main theme.
The VAT Law is for levy of tax on the sales or purchase of goods, but in the Act some measures of taxes were adopted to levy tax on exempted goods, production, total value of works contract, import of goods, which is beyond the spirit and intention of the Act. This type of payment of composition of tax obviously disrupted the levy of taxes at subsequent sales or inter-State sales making the whole process in the VAT system is anomalous and the process is likely to be foiled and frustrated.
The issue of Tax Invoice andivRetail Invoice are compulsory in the VAT regime to ensure proper accounting for and proper payment of tax thereof, but this has neither been complied with or not enforced for which trie leakage of revenue has become obvious.
The acceleration of activities in the field may discourage any such odds.
ENTRY TAX LAW AND THE LUXURY TAX LAW
The administration of these two Laws are to be carried on under the VAT Law of Assam, but the aim and object of levy of tax under these Act are not identical tq VAT Law. It will be in the fitness of things to make provisions in the Act for independent process of administration to avoid any complications.
TAX LAW ON SPECIFIED LANDS
With a view to ensure correct and accurate levy of tax, the following important aspects requires to be looked into:
(i) There should be a survey in all tea gardens irrespective of big and smalls.
(ii) The accuracy of production of green tea leaves is to be verified with the volume of production of black tea, keeping in view the ratio 4.5 :1.
(iii) There should be cross verification of green tea production statement, furnished in the sales tax department with the statement furnished in the Central Excise Department.
ELECTRICITY DUTY
The Central Sales Tax Act, 1956 has restricted the levy of tax in respect of the energy supplied outside the State, but contrary to this, the provisions for levy of tax on such supply, has been incorpo¬rated in the Assam Electricity Duty Act, 1963 in October, 1984.
AMUSEMENT AND BETTING TAX ACT
The Assam Amusement and Betting Tax Act, 1939 is to be renovated and re-designed to make way for assessment, specification of violation of the provisions of the Act including evasion of taxes and penal measures thereof.
TAX ON PRODESSIONS,TRADES. CALLINGS AND EMPLOYMENTS
Actually, the above measure of tax is hot a tax on income, but it is a tax on Professions, trades, callings and employments. The income derived out of the same is counted as a measuring scale for the purpose of levy of tax. But with the amendment of the Act, 1992, there was a crack in the system and this required to be restored.
Tuesday, June 1, 2010
WORKS CONTRACT AND LEASE:: WHETHER VAT COMMODITIES ?
VAT is a multiple system of tax leviable at every stage of sales of goods made by a dealer, subject to credit of input tax paid at the time of previous purchase of the goods. 'Input tax' and 'Output tax' are one and the same thing. The tax paid by the purchaser to the seller is input tax, while the tax realised by the seller from the purchaser and paid to the Govt. is output tax. A controversy is prevalent as to whether 'Works Contract and Lease' are VAT Commodities and the taxability on such item come under the purview of VAT tax-net.
Following a number of litigations and the Apex Court decisions against levy
of the tax on Works Contract and Lease, the Constitution of India was amended in 1982 and 'the transfer of property in goods involved in 'Works Contract' and 'the transfer of right to use any good without transfer of ownership' have been brought under the purview of the definition of 'Sales of goods'. The problem thus got a halt and tax on such transfer of property in goods and transfer of right of goods was well being levied under the Assam General Sales Tax Act, 1993. With the introduction of the Assam Value Added Tax Act, 2003, the basic principle of levy of tax, which has been discussed above, the levy of tax 'Works Contract' and 'Lease' has become irrelevant in as much as the 'Works Contract and Lease' maintain their independent entity and separate bearing. The multiple system of sales clockwise or stage wise in such deal become irrelevant. The VAT Act mainly dwelt in the basic principle of levy of tax on every goods at every stage of sale. It has not accommodated the principle of levy of tax on 'the transfer of property in goods' involved in 'Works Contract' and the 'transfer of right to use any goods involved in Lease. There ought to have a provision dispensing with the main theme of VAT so as to accommodate this extra-ingredients in the tax-net of Assam. The scope for levy of tax under the VAT Act has been specified in the Schedule attached to the Act along with the category of taxable goods not specified in other Schedules of the Act with the broad term 'Works Contract' and 'Lease'. The basic principle of levy of tax has not been accommodated. 'Works Contract' and 'Lease' are not the goods and the concept of levy of tax on 'Works Contract' and 'Lease' seem to be a deviation from the main spirit and intention of levy of tax on the sales of goods in the VAT ideology.
Assuming, but not admitting that the legislatures, while incorporating such measure of tax on 'Works Contract' and 'Lease', intending to levy tax on the transfer of property in goods involved in Works Contract and on the transfer of right to use such goods involved in lease, the rates of tax specified in Schedule at 12.5 paise in the rupee, is not at par with the rate of commodity-wise tax, specified in the other Schedules of the Act. For instance, the rate of tax on the sales of declared goods is always 4 paise in the rupee and it can not exceed the rate declared by the Govt. of India by enactment of the Central Sales Act, 1996 under the authority of the Constitution of India. Pipes of all varieties, pumps, tractors, ships vessels and many other allied articles, pertaining to 'Works Contracts' and 'Lease' do not have the rate of tax beyond 4 paise in the rupee. Naturally, there has been strong clash between the rate of the tax specified at 12.5 paise involved in 'Works Contract' and 'Lease' and the rate of tax of goods specified in the Schedules of the same VAT Act. There can not be double rate of tax on the same commodity for the purpose of 'Plain Sale' or 'Sale in the course of Works Contract' as well as the alleged sales on 'Lease'. Obviously, discrimination has been well maintained in tax-net scenario under the VAT Act of Assam.
The VAT law in Assam provided the measure of Composition of tax on works contract to be exercised by the works contractors at their own option in dispensing with the requirements of making payment of tax on the sales element under the VAT Act. The rate of tax payable as Composition of tax under such Scheme has been specified at 4 paise in the rupee on the gross value of 'Works Contract'. Apparently, this is abusive of the principle of levy of tax, as enumerated in the Constitution read with the definition of VAT Act.
A transfer of property in goods involved hi 'Works Contract' is liable to be taxed. A tax is leviable on the taxable commodities and not on the exempted ones. Moreover, labour charges, transport charges and other allied charges involved on the works contract can not be brought under the purview of taxability.
Transfer of right to use any goods in connection with lease is not a permanent sale of good. It is casual deal without maintaining any continuity. A lease deal on the same commodity may be frequent on the expiry of the specified period of time, but it may not be on chain system. This has provided scope for levy of tax on the same item leased without any scope for any credit of input tax. The legislatures have not specified the items to be taxed on lease and the levy of tax on lease has been made wide and open. It may naturally have an adverse effect to the lessesors and lessee when to be taxed on small deals of lease. No 'taxable quantum' has also been specified on lease deals. A confusion always prevail over the question of 'Hire' and 'Lease', as it has not been well analysed in the system. In absence of that creation of confusion to the dealer and exercise of powers by the taxing authority arbitrarily can not be ruled out in the matter.
Our above projection explaining the propriety of taxability in 'Works Contract' and 'Lease' ought not to have incorporated in the VAT Act of Assam, which maintain a separate aim and object with separate way of functioning. On the other hand, the levy of tax on transfer of property in goods involved Works Contract and transfer of right to use good on lease can not be given a good bye, as a substantial amount of tax revenue pours into the state coffer annually.
A separate enactment of law is considered to be imperative for the sake of better tax administration vis-a-vis proper augmentation of revenue of the State without any scope of disputes or controversy.
Following a number of litigations and the Apex Court decisions against levy
of the tax on Works Contract and Lease, the Constitution of India was amended in 1982 and 'the transfer of property in goods involved in 'Works Contract' and 'the transfer of right to use any good without transfer of ownership' have been brought under the purview of the definition of 'Sales of goods'. The problem thus got a halt and tax on such transfer of property in goods and transfer of right of goods was well being levied under the Assam General Sales Tax Act, 1993. With the introduction of the Assam Value Added Tax Act, 2003, the basic principle of levy of tax, which has been discussed above, the levy of tax 'Works Contract' and 'Lease' has become irrelevant in as much as the 'Works Contract and Lease' maintain their independent entity and separate bearing. The multiple system of sales clockwise or stage wise in such deal become irrelevant. The VAT Act mainly dwelt in the basic principle of levy of tax on every goods at every stage of sale. It has not accommodated the principle of levy of tax on 'the transfer of property in goods' involved in 'Works Contract' and the 'transfer of right to use any goods involved in Lease. There ought to have a provision dispensing with the main theme of VAT so as to accommodate this extra-ingredients in the tax-net of Assam. The scope for levy of tax under the VAT Act has been specified in the Schedule attached to the Act along with the category of taxable goods not specified in other Schedules of the Act with the broad term 'Works Contract' and 'Lease'. The basic principle of levy of tax has not been accommodated. 'Works Contract' and 'Lease' are not the goods and the concept of levy of tax on 'Works Contract' and 'Lease' seem to be a deviation from the main spirit and intention of levy of tax on the sales of goods in the VAT ideology.
Assuming, but not admitting that the legislatures, while incorporating such measure of tax on 'Works Contract' and 'Lease', intending to levy tax on the transfer of property in goods involved in Works Contract and on the transfer of right to use such goods involved in lease, the rates of tax specified in Schedule at 12.5 paise in the rupee, is not at par with the rate of commodity-wise tax, specified in the other Schedules of the Act. For instance, the rate of tax on the sales of declared goods is always 4 paise in the rupee and it can not exceed the rate declared by the Govt. of India by enactment of the Central Sales Act, 1996 under the authority of the Constitution of India. Pipes of all varieties, pumps, tractors, ships vessels and many other allied articles, pertaining to 'Works Contracts' and 'Lease' do not have the rate of tax beyond 4 paise in the rupee. Naturally, there has been strong clash between the rate of the tax specified at 12.5 paise involved in 'Works Contract' and 'Lease' and the rate of tax of goods specified in the Schedules of the same VAT Act. There can not be double rate of tax on the same commodity for the purpose of 'Plain Sale' or 'Sale in the course of Works Contract' as well as the alleged sales on 'Lease'. Obviously, discrimination has been well maintained in tax-net scenario under the VAT Act of Assam.
The VAT law in Assam provided the measure of Composition of tax on works contract to be exercised by the works contractors at their own option in dispensing with the requirements of making payment of tax on the sales element under the VAT Act. The rate of tax payable as Composition of tax under such Scheme has been specified at 4 paise in the rupee on the gross value of 'Works Contract'. Apparently, this is abusive of the principle of levy of tax, as enumerated in the Constitution read with the definition of VAT Act.
A transfer of property in goods involved hi 'Works Contract' is liable to be taxed. A tax is leviable on the taxable commodities and not on the exempted ones. Moreover, labour charges, transport charges and other allied charges involved on the works contract can not be brought under the purview of taxability.
Transfer of right to use any goods in connection with lease is not a permanent sale of good. It is casual deal without maintaining any continuity. A lease deal on the same commodity may be frequent on the expiry of the specified period of time, but it may not be on chain system. This has provided scope for levy of tax on the same item leased without any scope for any credit of input tax. The legislatures have not specified the items to be taxed on lease and the levy of tax on lease has been made wide and open. It may naturally have an adverse effect to the lessesors and lessee when to be taxed on small deals of lease. No 'taxable quantum' has also been specified on lease deals. A confusion always prevail over the question of 'Hire' and 'Lease', as it has not been well analysed in the system. In absence of that creation of confusion to the dealer and exercise of powers by the taxing authority arbitrarily can not be ruled out in the matter.
Our above projection explaining the propriety of taxability in 'Works Contract' and 'Lease' ought not to have incorporated in the VAT Act of Assam, which maintain a separate aim and object with separate way of functioning. On the other hand, the levy of tax on transfer of property in goods involved Works Contract and transfer of right to use good on lease can not be given a good bye, as a substantial amount of tax revenue pours into the state coffer annually.
A separate enactment of law is considered to be imperative for the sake of better tax administration vis-a-vis proper augmentation of revenue of the State without any scope of disputes or controversy.
TERRORISM BY MAOIST
The main theme of the Constitution of India is that it is a Sovereign, Socialistic, Secular, Democratic Republic. It provided each citizen of India the right to form association, to ensure freedom of speech and expression. So, every citizen can exercise such right. The Constitutional guarantee, however, did not encourage any citizen to be violation and to go ahead with terrorism. It will be an obvious act of abuse of fundamental right, if the path of violation or terrorism is adopted by any association or organization.
The birth of Maoist in the South Eastern part of India is not very old, but their activities in the path of terrorism are gaining the momentum since recent times. The Maoist moves are with the ideology of Mao-Tse- Tung, the revolutionary Communist leader of China, who by his ideology of Socialism brought a drastic change in the Republic of China during the period after his birth in 1889 to his end in 1976.
Though Indian Constitution ensured a Socialist pattern in the Country’s Democratic set-up, in actual practice, the trend of Capitalism is getting priority. In the areas, where the Maoists are fed up with the trend of capitalism, they have raised their heads against such odds. Actually, terrorism is not the proper way for any of such solution, but the meaningful and peaceful dialogue may make end of the burning or chronic problems.
Maoists, who are moving with the ideology of Mao Tse Tung, must not forget that they are out and out Indians and fully under the shadow of Indian Democracy vis-avis the Indian Constitution. They should not forget that China’s attitude is not very much friendly with India since last 48 years. The trend hostility is reflected in everyway of their activities.
So, they must keep in mind that they are Indians first and in following any ideology of others they should equally be up and doing in maintaining the unity and integrity of the Indian Sub-Continent.
The birth of Maoist in the South Eastern part of India is not very old, but their activities in the path of terrorism are gaining the momentum since recent times. The Maoist moves are with the ideology of Mao-Tse- Tung, the revolutionary Communist leader of China, who by his ideology of Socialism brought a drastic change in the Republic of China during the period after his birth in 1889 to his end in 1976.
Though Indian Constitution ensured a Socialist pattern in the Country’s Democratic set-up, in actual practice, the trend of Capitalism is getting priority. In the areas, where the Maoists are fed up with the trend of capitalism, they have raised their heads against such odds. Actually, terrorism is not the proper way for any of such solution, but the meaningful and peaceful dialogue may make end of the burning or chronic problems.
Maoists, who are moving with the ideology of Mao Tse Tung, must not forget that they are out and out Indians and fully under the shadow of Indian Democracy vis-avis the Indian Constitution. They should not forget that China’s attitude is not very much friendly with India since last 48 years. The trend hostility is reflected in everyway of their activities.
So, they must keep in mind that they are Indians first and in following any ideology of others they should equally be up and doing in maintaining the unity and integrity of the Indian Sub-Continent.
Wednesday, March 10, 2010
NEW DIMENSION IN TRADE ERA
The Asean Car Rally from Guwahati of Assam to Myanmar and onwards of the South East Asian countries in November, 2004 was the land mark maiden venture to initiate and to mobilize the ties of fraternity between India and the South Eastern Countries, namely; Myanmar, Thailand, Malaysia, Indonesia, Laos, Combodia, Vietnam, Philippines aiming at to go ahead in creating international understanding and prospective commitments. It was a prelude to establish a good and constructive gesture for acceleration of the potential trade activities between the two regions, on the fast symbolic globalization era. The abandoned road, was improved and made convenient for the car rally mission. The road, as is known as ‘Steelwell Road’, had its base structure in the Second World War period. The construction of the portion of the road from Mynamar and onwards is said to have already been completed. China of East Asia also constructed and expanded the portion of the road to link up with the Steelwell road with the aims and object to associate itself in extending its trade perimeter to India. A horn of dilemma, however, prevails in the Indian counterpart over the question of security of the eastern sector of the sub-continent, as road is penetrated through the dense and arduous Patkai Hill range, the extended base of Himalayas, making an easy access by the ultras. The Government of India, however, accorded budgetary sanction of Rs. 48 crore of rupees two years aback and it is learnt that the road is nearing completion.
Steelwell, the great hero
‘Steelwell Road’ has a historic significance, which was baptized after the name of Steelwell. A question naturally crop up ‘who was Steelwell?’ The history marks Steelwell as a prominent military officer in the Brigadier rank of the Second World War, whose untired efforts and immense costly sacrifices had the consequential effect of achieving the victory of England and its alliances in the war front against Japan and the alliance components. The rival nations got vanquished in the terrific battle.
‘Joseph Warren Steelwell’, popularly known as ‘Zo’ was born in 1883 A.D at Florida, but he passed his early days at New York. After acquiring the degree in the West Point Military Academy, the 5 feet 8 inches 1.7 meter tall, Steelwell got appointment in service at Philippine. 14 months later, he came back to West point, where he was engaged to learn different languages. After wedding Winfred Smith, he again backed to Philippines. At the late hours of the First World War, he was sent to China as the teacher to provide education in military languages and he simultaneously availed of the opportunity to learn the Chinese language as well. He became the father of five children, while he was in China. Steelwell was elevated to the rank of Brigadier and soon after that the Second World War broke out spreading over Europe, North Africa and South East Asia. Steelwell rushed by air to Chungking to meet Chiangkoi Shwek immediately after he assumed the war charge in South East Asia. He found that the only way of supplying food-stuff and war materials was by air from Ledo to Kunming, but that, too, was hardly possible in the 1000 kilometer long hazardous air flight. On 7th March, 1942 Rangoon, the capital of Burma, was captured by the Japan-alliance militants. Steelwell came by air from Chunking to Mandalaya, where the British Lieutenant General Sir Herald Alexander took shelter after the crack down of Rangoon. Incidentally, this Alexander jas withdrew the British army from Dandrik of Europe, when failed to face the sharp German aggression in 1940 and this has been a repetition to the earlier event. Both Steelwell and Alexander tried their best to save the middle part of Burma, but all efforts proved to be the futile exercise. Japanese army caused dislocation of rail and air communication in North Burma. Steelwell had no other way, but to retreat. After a strenuous and hazardous journey on foot and partly by boat, his troops reached Imphal without there being, however, any loss of life. Steelwell rushed to Delhi and furnished a detailed report on the catastrophe. The unbecoming circumstances forced Steelwell to remain away from Burma since June, 1942 to October, 1943. Japanese army captured the eastern coast of China and created havoc in its Southern border by frequent air raids. A profound necessity, therefore, cropped up for construction of a new road connecting Burma to get it hostile free. The Manipur- Pelel Road, was an alternative road, but it was not possible to be utilized for carrying the food-stuff and war equipments during the summer. Steelwell was restless and held marathon discussions in Delhi and Chunking to chalk out plan and programme. In 1942, the prospect of construction of an alternative road from Ledo-Pangchao pass-Hukang valley-via Misina to Burma was in sight. The practical aspects were examined, but it revealed that standing hills, dense forests, loose and muddy soil, deep-unsmooth ditches, heavy rainfall and unhygienic climate posed to be a hindrance to materialize such plan. This 768 kilometer road is to be constructed through three high ranges of hills, over three rivers beds with hundreds of bridges. Steelwell and Chiangkain shwek paid great importance for construction of the road at any cost, but the British Prime Minister Winstone Churchill was against such venture. The Americans were, however, adamant and gave high stress towards construction of the road linking Ledo – Burma at any cost in order to frustrate the territorial expansion of Japan to Burma. The American sent 330 skilled engineers and road construction materials and heavy machineries and equipments from 18,000 kilometer distance, by ocean, sea and road and this was routed through the western corridor of Assam. The military convoy congregated by Indian, African, American militants rushed enthusiastically to face the combat. The war mission, as we enjoyed in our early days, was really very much thrilling. The construction work was started in December, 1942 and 187 kilometer was completed on 27th December, 1943. The war footing construction made an end in the last part of 1944 connecting Ledo - Burma within a period of two years.
The posiion of the road is as below :
In Burma (Myanmar portion) In China
Pangchao Pass - 61 K.M. Mangyung – 740 K.M.
Tagap Ga - 127 “ Banting - 811 “
Sind Bowang - 165 “ Baochan -1043 “
Jambubam - 287 “ Yungpin - 1208 “
Barajup - 304 “ Chuyung - 1543 “
Michchhina - 403 “ Kunming - 1726 “
Bhamo - 595 “
Namkham - 707 “
Steelwell was the pioneer architect in the road construction project as well as the tactful management of the war front. The Japan and its alliances were kept busy otherwise and they could hardly imagine the far sighted diplomatic way of the road construction mission. The counter attacks on the showering attacks by the rival army continued. Japan had ultimately to surrender after Atom Bomb blast at Nagachaki and Hirosema. German also got vanquished. Thus the Second World War thus came to an end with the victory of England and alliances.
The untired, sincere and diplomatic services of Steelwell were profoundly recognized and the newly constructed road was named after him. It is unfortunate that the said road, constructed at high coast with deployment American, African, Chinese, Kacin, Oria, Nepali, Bengalee, Naga, Bodo and tea garden labourers, lost its importance and remained abandoned soon after the World War was over. This rather became a thoroughfare of a section of anti-socials and ultras. Steelwell became old; the incessant hard labour with deep sense of anxiety ruined his health. He was laid down by liver cancer. The Distiguished Service Medal, Legion Merit, Distinguished Service Cross was awarded to him. On the previous day of his sad demise on October, 12th, 1946, he was ornamented with the rare award ‘Combat Infantryman Badge’.
Trade scenario
The South East Asian countries are rich in precious resources like agricultural, forestry, fishery and mineral ores. The development of modern technology upgraded as well the industrial platform. India has immense potential resources including raw materials of different types, which are still to be mobilized. The aim and object of Asean Car Rally, as stated earlier was a token of good gesture towards reciprocation of trade venture. The road beyond the Indian portion has already been completed. China is also eager to expand its trade base to India. News
projected by the media reveals that India has to think twice in adhering to the proposed scheme of trade activities. China, in fact, is maintaining hostility with India since about last five decades. With provocative words, it is demanding Tawang of Arunachal Pradesh of India as a part of Chinese territory, though, in fact, it is a part State of India. Their modus operandi seems to be hostile and aggressive. Any accommodation of China in the field of trade activities through the eastern corridor, it is feared, may not be congenial to the security of the country.
It is recalled that for this blunder, the British Raj overthrew the Ahom Kings by expanding the trade base through the East India Company. The inner fall out was main factor. There is strong apprehension of repetition of such event, as Assam is confronted with many ghastly odds. Myanmar is also not playing a cordial role with India. It will be evident that it accommodated the United Liberation Front of Assam (ULFA) and other hostile ultras and afforded armed training at Kachin. Of late, the news media published that the Maoist of the north east India are importing Chinese arms from Myanmar and stored at Nagaland to spread terrorism and unrest in the sub-continent. The ulterior motive of such international folks can be easily guessed. Such ultras entered Assam through this road oft and on with destructive arms and ammunitions and applied for brutal killings of the brethren citizens of the soil . ‘Look before you leap’- this doctrine is now the main theme of consideration by the Government of India.
(Mrinal Kanti Chakrabartty)
“ Rudra Bhawan”,R.G.Barua Road, 10-Lakhimi path, Guwahati-781-024
Steelwell, the great hero
‘Steelwell Road’ has a historic significance, which was baptized after the name of Steelwell. A question naturally crop up ‘who was Steelwell?’ The history marks Steelwell as a prominent military officer in the Brigadier rank of the Second World War, whose untired efforts and immense costly sacrifices had the consequential effect of achieving the victory of England and its alliances in the war front against Japan and the alliance components. The rival nations got vanquished in the terrific battle.
‘Joseph Warren Steelwell’, popularly known as ‘Zo’ was born in 1883 A.D at Florida, but he passed his early days at New York. After acquiring the degree in the West Point Military Academy, the 5 feet 8 inches 1.7 meter tall, Steelwell got appointment in service at Philippine. 14 months later, he came back to West point, where he was engaged to learn different languages. After wedding Winfred Smith, he again backed to Philippines. At the late hours of the First World War, he was sent to China as the teacher to provide education in military languages and he simultaneously availed of the opportunity to learn the Chinese language as well. He became the father of five children, while he was in China. Steelwell was elevated to the rank of Brigadier and soon after that the Second World War broke out spreading over Europe, North Africa and South East Asia. Steelwell rushed by air to Chungking to meet Chiangkoi Shwek immediately after he assumed the war charge in South East Asia. He found that the only way of supplying food-stuff and war materials was by air from Ledo to Kunming, but that, too, was hardly possible in the 1000 kilometer long hazardous air flight. On 7th March, 1942 Rangoon, the capital of Burma, was captured by the Japan-alliance militants. Steelwell came by air from Chunking to Mandalaya, where the British Lieutenant General Sir Herald Alexander took shelter after the crack down of Rangoon. Incidentally, this Alexander jas withdrew the British army from Dandrik of Europe, when failed to face the sharp German aggression in 1940 and this has been a repetition to the earlier event. Both Steelwell and Alexander tried their best to save the middle part of Burma, but all efforts proved to be the futile exercise. Japanese army caused dislocation of rail and air communication in North Burma. Steelwell had no other way, but to retreat. After a strenuous and hazardous journey on foot and partly by boat, his troops reached Imphal without there being, however, any loss of life. Steelwell rushed to Delhi and furnished a detailed report on the catastrophe. The unbecoming circumstances forced Steelwell to remain away from Burma since June, 1942 to October, 1943. Japanese army captured the eastern coast of China and created havoc in its Southern border by frequent air raids. A profound necessity, therefore, cropped up for construction of a new road connecting Burma to get it hostile free. The Manipur- Pelel Road, was an alternative road, but it was not possible to be utilized for carrying the food-stuff and war equipments during the summer. Steelwell was restless and held marathon discussions in Delhi and Chunking to chalk out plan and programme. In 1942, the prospect of construction of an alternative road from Ledo-Pangchao pass-Hukang valley-via Misina to Burma was in sight. The practical aspects were examined, but it revealed that standing hills, dense forests, loose and muddy soil, deep-unsmooth ditches, heavy rainfall and unhygienic climate posed to be a hindrance to materialize such plan. This 768 kilometer road is to be constructed through three high ranges of hills, over three rivers beds with hundreds of bridges. Steelwell and Chiangkain shwek paid great importance for construction of the road at any cost, but the British Prime Minister Winstone Churchill was against such venture. The Americans were, however, adamant and gave high stress towards construction of the road linking Ledo – Burma at any cost in order to frustrate the territorial expansion of Japan to Burma. The American sent 330 skilled engineers and road construction materials and heavy machineries and equipments from 18,000 kilometer distance, by ocean, sea and road and this was routed through the western corridor of Assam. The military convoy congregated by Indian, African, American militants rushed enthusiastically to face the combat. The war mission, as we enjoyed in our early days, was really very much thrilling. The construction work was started in December, 1942 and 187 kilometer was completed on 27th December, 1943. The war footing construction made an end in the last part of 1944 connecting Ledo - Burma within a period of two years.
The posiion of the road is as below :
In Burma (Myanmar portion) In China
Pangchao Pass - 61 K.M. Mangyung – 740 K.M.
Tagap Ga - 127 “ Banting - 811 “
Sind Bowang - 165 “ Baochan -1043 “
Jambubam - 287 “ Yungpin - 1208 “
Barajup - 304 “ Chuyung - 1543 “
Michchhina - 403 “ Kunming - 1726 “
Bhamo - 595 “
Namkham - 707 “
Steelwell was the pioneer architect in the road construction project as well as the tactful management of the war front. The Japan and its alliances were kept busy otherwise and they could hardly imagine the far sighted diplomatic way of the road construction mission. The counter attacks on the showering attacks by the rival army continued. Japan had ultimately to surrender after Atom Bomb blast at Nagachaki and Hirosema. German also got vanquished. Thus the Second World War thus came to an end with the victory of England and alliances.
The untired, sincere and diplomatic services of Steelwell were profoundly recognized and the newly constructed road was named after him. It is unfortunate that the said road, constructed at high coast with deployment American, African, Chinese, Kacin, Oria, Nepali, Bengalee, Naga, Bodo and tea garden labourers, lost its importance and remained abandoned soon after the World War was over. This rather became a thoroughfare of a section of anti-socials and ultras. Steelwell became old; the incessant hard labour with deep sense of anxiety ruined his health. He was laid down by liver cancer. The Distiguished Service Medal, Legion Merit, Distinguished Service Cross was awarded to him. On the previous day of his sad demise on October, 12th, 1946, he was ornamented with the rare award ‘Combat Infantryman Badge’.
Trade scenario
The South East Asian countries are rich in precious resources like agricultural, forestry, fishery and mineral ores. The development of modern technology upgraded as well the industrial platform. India has immense potential resources including raw materials of different types, which are still to be mobilized. The aim and object of Asean Car Rally, as stated earlier was a token of good gesture towards reciprocation of trade venture. The road beyond the Indian portion has already been completed. China is also eager to expand its trade base to India. News
projected by the media reveals that India has to think twice in adhering to the proposed scheme of trade activities. China, in fact, is maintaining hostility with India since about last five decades. With provocative words, it is demanding Tawang of Arunachal Pradesh of India as a part of Chinese territory, though, in fact, it is a part State of India. Their modus operandi seems to be hostile and aggressive. Any accommodation of China in the field of trade activities through the eastern corridor, it is feared, may not be congenial to the security of the country.
It is recalled that for this blunder, the British Raj overthrew the Ahom Kings by expanding the trade base through the East India Company. The inner fall out was main factor. There is strong apprehension of repetition of such event, as Assam is confronted with many ghastly odds. Myanmar is also not playing a cordial role with India. It will be evident that it accommodated the United Liberation Front of Assam (ULFA) and other hostile ultras and afforded armed training at Kachin. Of late, the news media published that the Maoist of the north east India are importing Chinese arms from Myanmar and stored at Nagaland to spread terrorism and unrest in the sub-continent. The ulterior motive of such international folks can be easily guessed. Such ultras entered Assam through this road oft and on with destructive arms and ammunitions and applied for brutal killings of the brethren citizens of the soil . ‘Look before you leap’- this doctrine is now the main theme of consideration by the Government of India.
(Mrinal Kanti Chakrabartty)
“ Rudra Bhawan”,R.G.Barua Road, 10-Lakhimi path, Guwahati-781-024
CENTRE SEIZING STATES’ ECONOMICAL POWERS
The Constitution of India, a symbolic ideal of Sovereignty, Socialism, Secularism, Democracy and Republicanism in the global scenario, was enforced since the 26th day of January, 1950. It is like the holy Geeta in the Hindu Philosophy in socio-economic and political-administrative spheres of the country in as much as the national activities are carried on and are governed by its formulated principles and guide lines. While it laid down the divergent powers and functions of the Centre and the States, any clash or conflict in the field of power exercise is not generally visible.
Introduction of sales tax measures in Assam
Article 246 of the Constitution empowered Parliament and the States Legislatures to make laws on the subject, specified in the Seventh Schedule:
246(1)- The powers to make law in respect of the matters, enumerated in List-1 (Union List) of the Seventh Schedule of the Constitution has been vested upon Parliament.
246(3)- The powers to make law in respect of the matters, enumerated in List-II (State List) of th Seventh Schedule, of the Constitution, has been vested upon the States Legislatures.
246(2)- The powers to make law in respect of the matters, enumerated in List-III (Concurrent List) the Seventh Schedule of the Constitution, has been vested upon Parliament and subject to clause (1) of Article 246 of the Constitution to the State Legislatures.
The tax on the Sales and purchases of goods within the State, as enunciated in entry 54 of List II of the Seventh Schedule, is a State subject, while the tax on the sales and purchase of goods in the course of inter-State trade or commerce, as envisaged in entry 92A of List I of the Seventh Schedule
of the Constitution, is a Union subject.
The Assam Sales of Motor Spirit and Lubricants Taxation Act, 1939, a measure of tax on the sales of petroleum and lubricants was introduced from 1.4.1939 under the authority of Section 100(3) read with entry 48 of the
Government of India Act, 1935 This act was repealed and replaced by ‘ The Assam (Sales of Petroleum and Petroleum Product including Motor Spirit and Lubricants) Taxation Act, 1955 on 1.5.1956 under the authority
conferred in List II entry 54 of the Seventh Schedule of the Constitution. After the independence of India, but before
the adoption of the Constitution of India, a new measure tax on the sales or purchases of goods was introduced and ‘ the Assam Sales Tax Act, 1947’ came into effect from 24.12. 1947. Thereafter, a measure of tax on the sales or
purchases of some specified goods, imported from out side the Assam or such identical goods manufactured, made or processed in State was introduced with effect from 1.7.1956 by enactment of the Assam Finance (Sales Tax) Act, 1956. With the said authority a tax measure was as well adopted on the last point purchase of some specified goods by way of enactment of ‘the Assam Purchase Tax Act, 1967 from 3.7.1971. All these taxation Laws were amalgamated consolidated and amended to give birth to the unified ‘ Assam General Sales Tax Act, 1993 on
1.7.1993’.
Central Sales Tax measures
Parliament enacted ‘the Central Sales Act, 1956’ for the purpose of levy of tax on the sales made in the course of inter-States sales-purchases by virtue of the aforesaid powers and the same was effective from 5.1.1957. This tax
measure obviously provided a strong guard In respect of inter-State deals made between one State and another and it ensured proper levy and collection of taxes at the State level as well.
General Sales Tax
The traditional and chronological exercise of levy of tax on the sales or purchases of goods in the States since 1939 made way for acceleration of revenue trend and it played a pivotal role in the healthy growth of economy of
Assam. The Assam General Sales Tax Act, 1993 plugged some persistent lacunae and upgraded the power exercise scenario by the taxing Authorities for smooth and efficient administration.
Value Added Tax
The prolonged tax measures got a halt and a changed system of tax measure came into effect from 1.5.2005 by enforcing ‘the Assam Value Added Tax Act, 1993’ (VAT). VAT is a multifarious system of tax to be levied and
collected at every stage of sale subject to, however, the refund of the tax paid (in put) on the previous purchase of goods. In fact, following heavy pressures from the international fiscal agencies, like World Bank, Asian Bank,
International Monetary Fund etc., the Government of India made an imposition to the State Governments to introduce the VAT Regime in the States without allowing thm to judge and opine on the propriety of dispensing with the prolonged heritage. The heavy pressure from the Govt. of India alerting against the providing monetary support etc. compelled the States to agree. Assam was the first State to welcome the proposal. The neighbouring territories like Bangladesh, Nepal, Pakisthan and Sree Lanka already introduced this system of VAT. These small countries found no difficulty to proceed on.
There is no denial of fact that VAT is a unique and methodical system of tax. It is self-designed and moved by self-driven wheels. That means, the success of VAT regime is entirely dependable on the honesty, sincerity and good will of all sections of people, traders and the tax machinery. India is a Federal structure of country with the conglomeration of as many as 28 part-States and 7 Union Territories. The Constitution provided power to the States to frame the sales tax law for levy, collection and augmentation of revenue vis-à-vis ensuring the growth of economy. The centre’s imposition to make uniform rates of tax of different commodities could not be rigidly maintained by the States, as the safe guard of public interest was equally imperative.It is pertinent to say a large section of people of Assam are illiterate or half literate. They are not capable enough to abide by the requirements, conditions and restrictions of the VAT law. The issue of ‘Tax Invoice’ and ‘Retail Invoice’ are not properly and rigidly enforced, which resulted in improper and inaccurate maintenance of accounts. So, this amounted to be a farce. The
claims of Input tax credit lack proper discipline. There is acute collusion and collaboration between the traders, customers and the tax machinery in the tax dodging episode on which no proper and adequate preventing, arresting and detecting measures have been enforced.
The main theme of the VAT is to levy tax at every stage of sales, but to the utter deviation of the said principle, the Govt. of Assam adopted the measure of tax at the stage of first sales on some commodities, like crude oil, petrol, diesel, petroleum products, tea, liquor, bitumen etc. in the VAT Law Assam. The incorporation of tax free sales of oil products between Oil Companies seem be detrimental to the ideology, norms and procedure of either the VAT regime or first point tax scenario. The system of payment of composition of tax on the production of brick (not on sale) , import of marble (not on sale) and on the total value of works contract (instead of transfer of property of goods) seems to abusive of the constitutional footing, as envisaged in Article 366 (29A) of the Constitution. The composition of tax levied and collected at source obviously created a systematic fracture in the process of realization of tax on subsequent sales and inter-State sales. The VAT regime was thus on the way of crack down the clock-wise deals. It is believed that the system of VAT regime did not yield the expected revenue generation scheme. The States like Assam is maintaining the revenue equilibrium on the first point sales of taxable goods. Assam is an industrially backward State. The major industries like oil sectors, tea sectors have been isolated in the VAT net of Assam. Any short supply of crude oil has the consequential effect of deficiency in collection of sales tax.
Goods and services tax
It has been learnt from the news media that the Government of India has proposed to introduce ‘the Goods and Services tax’ in the country in replacement of the present VAT regime from 1.4.2010. It may not, however, be done immediately, as the States are not central exercise duty and for that purpose, the Constitution will be amended. That means, the States are likely to lose matter of traditional sales tax revenue administration.
We expressed our apprehension before the VAT regime was proposed to be introduced projecting some ill consequences in the measure. Such apprehension, we believe partly accomplished. We also endorse our similar anxiety and apprehension on the proposed measure of ‘Goods and Services tax.’
We hope, the Government of India will not unilaterally take such a decision by the seizing the power of the State and consider it to be incumbent to hold marathon discussions with the States’ economists, intellectuals in a phase manner on this grave and austere thought provoking issue.
(Mrinal Kanti Chakrabartty)
Introduction of sales tax measures in Assam
Article 246 of the Constitution empowered Parliament and the States Legislatures to make laws on the subject, specified in the Seventh Schedule:
246(1)- The powers to make law in respect of the matters, enumerated in List-1 (Union List) of the Seventh Schedule of the Constitution has been vested upon Parliament.
246(3)- The powers to make law in respect of the matters, enumerated in List-II (State List) of th Seventh Schedule, of the Constitution, has been vested upon the States Legislatures.
246(2)- The powers to make law in respect of the matters, enumerated in List-III (Concurrent List) the Seventh Schedule of the Constitution, has been vested upon Parliament and subject to clause (1) of Article 246 of the Constitution to the State Legislatures.
The tax on the Sales and purchases of goods within the State, as enunciated in entry 54 of List II of the Seventh Schedule, is a State subject, while the tax on the sales and purchase of goods in the course of inter-State trade or commerce, as envisaged in entry 92A of List I of the Seventh Schedule
of the Constitution, is a Union subject.
The Assam Sales of Motor Spirit and Lubricants Taxation Act, 1939, a measure of tax on the sales of petroleum and lubricants was introduced from 1.4.1939 under the authority of Section 100(3) read with entry 48 of the
Government of India Act, 1935 This act was repealed and replaced by ‘ The Assam (Sales of Petroleum and Petroleum Product including Motor Spirit and Lubricants) Taxation Act, 1955 on 1.5.1956 under the authority
conferred in List II entry 54 of the Seventh Schedule of the Constitution. After the independence of India, but before
the adoption of the Constitution of India, a new measure tax on the sales or purchases of goods was introduced and ‘ the Assam Sales Tax Act, 1947’ came into effect from 24.12. 1947. Thereafter, a measure of tax on the sales or
purchases of some specified goods, imported from out side the Assam or such identical goods manufactured, made or processed in State was introduced with effect from 1.7.1956 by enactment of the Assam Finance (Sales Tax) Act, 1956. With the said authority a tax measure was as well adopted on the last point purchase of some specified goods by way of enactment of ‘the Assam Purchase Tax Act, 1967 from 3.7.1971. All these taxation Laws were amalgamated consolidated and amended to give birth to the unified ‘ Assam General Sales Tax Act, 1993 on
1.7.1993’.
Central Sales Tax measures
Parliament enacted ‘the Central Sales Act, 1956’ for the purpose of levy of tax on the sales made in the course of inter-States sales-purchases by virtue of the aforesaid powers and the same was effective from 5.1.1957. This tax
measure obviously provided a strong guard In respect of inter-State deals made between one State and another and it ensured proper levy and collection of taxes at the State level as well.
General Sales Tax
The traditional and chronological exercise of levy of tax on the sales or purchases of goods in the States since 1939 made way for acceleration of revenue trend and it played a pivotal role in the healthy growth of economy of
Assam. The Assam General Sales Tax Act, 1993 plugged some persistent lacunae and upgraded the power exercise scenario by the taxing Authorities for smooth and efficient administration.
Value Added Tax
The prolonged tax measures got a halt and a changed system of tax measure came into effect from 1.5.2005 by enforcing ‘the Assam Value Added Tax Act, 1993’ (VAT). VAT is a multifarious system of tax to be levied and
collected at every stage of sale subject to, however, the refund of the tax paid (in put) on the previous purchase of goods. In fact, following heavy pressures from the international fiscal agencies, like World Bank, Asian Bank,
International Monetary Fund etc., the Government of India made an imposition to the State Governments to introduce the VAT Regime in the States without allowing thm to judge and opine on the propriety of dispensing with the prolonged heritage. The heavy pressure from the Govt. of India alerting against the providing monetary support etc. compelled the States to agree. Assam was the first State to welcome the proposal. The neighbouring territories like Bangladesh, Nepal, Pakisthan and Sree Lanka already introduced this system of VAT. These small countries found no difficulty to proceed on.
There is no denial of fact that VAT is a unique and methodical system of tax. It is self-designed and moved by self-driven wheels. That means, the success of VAT regime is entirely dependable on the honesty, sincerity and good will of all sections of people, traders and the tax machinery. India is a Federal structure of country with the conglomeration of as many as 28 part-States and 7 Union Territories. The Constitution provided power to the States to frame the sales tax law for levy, collection and augmentation of revenue vis-à-vis ensuring the growth of economy. The centre’s imposition to make uniform rates of tax of different commodities could not be rigidly maintained by the States, as the safe guard of public interest was equally imperative.It is pertinent to say a large section of people of Assam are illiterate or half literate. They are not capable enough to abide by the requirements, conditions and restrictions of the VAT law. The issue of ‘Tax Invoice’ and ‘Retail Invoice’ are not properly and rigidly enforced, which resulted in improper and inaccurate maintenance of accounts. So, this amounted to be a farce. The
claims of Input tax credit lack proper discipline. There is acute collusion and collaboration between the traders, customers and the tax machinery in the tax dodging episode on which no proper and adequate preventing, arresting and detecting measures have been enforced.
The main theme of the VAT is to levy tax at every stage of sales, but to the utter deviation of the said principle, the Govt. of Assam adopted the measure of tax at the stage of first sales on some commodities, like crude oil, petrol, diesel, petroleum products, tea, liquor, bitumen etc. in the VAT Law Assam. The incorporation of tax free sales of oil products between Oil Companies seem be detrimental to the ideology, norms and procedure of either the VAT regime or first point tax scenario. The system of payment of composition of tax on the production of brick (not on sale) , import of marble (not on sale) and on the total value of works contract (instead of transfer of property of goods) seems to abusive of the constitutional footing, as envisaged in Article 366 (29A) of the Constitution. The composition of tax levied and collected at source obviously created a systematic fracture in the process of realization of tax on subsequent sales and inter-State sales. The VAT regime was thus on the way of crack down the clock-wise deals. It is believed that the system of VAT regime did not yield the expected revenue generation scheme. The States like Assam is maintaining the revenue equilibrium on the first point sales of taxable goods. Assam is an industrially backward State. The major industries like oil sectors, tea sectors have been isolated in the VAT net of Assam. Any short supply of crude oil has the consequential effect of deficiency in collection of sales tax.
Goods and services tax
It has been learnt from the news media that the Government of India has proposed to introduce ‘the Goods and Services tax’ in the country in replacement of the present VAT regime from 1.4.2010. It may not, however, be done immediately, as the States are not central exercise duty and for that purpose, the Constitution will be amended. That means, the States are likely to lose matter of traditional sales tax revenue administration.
We expressed our apprehension before the VAT regime was proposed to be introduced projecting some ill consequences in the measure. Such apprehension, we believe partly accomplished. We also endorse our similar anxiety and apprehension on the proposed measure of ‘Goods and Services tax.’
We hope, the Government of India will not unilaterally take such a decision by the seizing the power of the State and consider it to be incumbent to hold marathon discussions with the States’ economists, intellectuals in a phase manner on this grave and austere thought provoking issue.
(Mrinal Kanti Chakrabartty)
Wednesday, January 27, 2010
HASTY DECISIONS MAY INVITE MORE COMPLICATION
The Indian sub-continent is on the point of a multifaceted volcano having possibility of eruption at any moment, which may result in unforeseen and unhealthy situation. The chronic burning problems of the country are already on the heels to create unrest and instability. An eruption may take place at any time, if the continued chronic problems are not handled with prudence and farsightedness. A trend of eventuality seems to be insight and the volcano in partial slumber, may awake up and erupt at any time. Immature but hasty decision may, no doubt, add fuels to the inner blazed flames of volcano to create catastrophe. The problems of the sub-continent at this stage are of manifolds. The unrest activities of the multifarious groups of ultras in different parts of the country are at present gaining the momentum. The trend of international threat of aggression by the nations, hostile to India, namely; Pakisthan and China already posed to be a cause of great agony and tension. The silent aggression by a section of illegal immigrants from the adjoining territory of Bangladesh and spread over the eastern sector of the Indian Territory more particularly in Assam with some obvious critical and vested aim in mind, has naturally posed to be a great threat to the indigenous people of the area. The said section of people are politically so alert and to whom the shower of blessings from the political level pour so heavily with the theme ‘safe guard the interest of the minority community’ that, it can be construed that it is intended to protect the ‘Vote Banks’. These immigrants use to roam in a separate world with some distinctive aims and objects. Though presently, Bangladesh maintains a good relationship with India under the dynamic stewardship of Shiekh Hasina with the ideology of her late lamented father Banga Bandhu Shiekh Mujibar Rahman, the mischief already caused can not be mended or repaired at this stage. The Bangladesh Government seems not keen to adopt the go back policy of such illegal immigrants from India; the counter part nation (India) also thinks twice to give a good bye and to evacuate the precious vote bank areas. These immigrants are eager to create an atmosphere detrimental to the existence and stability of the indigenous people of Northern States The regional indigenous people irrespective of any caste and creed are gradually forced to be made cipher on account of their deplorable pecuniary condition lack of diplomacy. None can say what their planned strategy is. Whether it is a prelude to expand the territorial base or to gain supremacy in the region. The problems, as cropped up, could have been averted, if the Government of India would have deported the unauthorized and illegal entrants, taking temporary shelter in the Indian soil to get rid of the violent Pakisthan militants, immediately after the liberation of Bangladesh. The people of the eastern sector of the sub-continent are now in doldrums for such imprudent act of the centre. A section of the indigenous people is after the power mongering exercises. The greed of power has the consequential aim to amass the black money. This is either for autonomy of the region or for separate statehood. The expenditure incurred is nominal, compared to the fund provision and the balance is normally pocketed. A section of the people is very much adamant over the question of independence and sovereignty. Presently, the ultra forces, like United Liberation Front of Assam ( ULFA) are adamant to acquire the independence of Assam with the banner of sovereignty. A section of Naga and Bodo militants are maintaining the same moto. There is dearth of knowledge on the concept of independence or sovereignty, as it is believed. The sentiment of cessation from the national net work may crop up, when the mass people of any region feel neglected by the apex Government, the prosperity of the same is legging behind or the political justice is not awarded to the people in representation and share of power in the apex Government. The people of Bangladesh experienced such odds and they initiated revolution within the soil, which ultimately succeeded. Of course India played a pivotal role in such exercise. Such an odd is not visible in Assam. Though initially, there was a sloth in the process of developmental activities, priority has been given after the Chinese aggression more particularly after six years of foreigners’ drive movement. The developmental works are being carried on in a phase manner on priority basis. This played a notable role to do away with the profound grievances of the people. The question of independence is not designed with any logical, legal and practical approaches and is, in fact, superfluous. The independence of Assam is not a matter of joke, as it is surrounded by other eight adjoining States and the buffer State Bhutan between India and China. Moreover, the ability and skillfulness of the independent seekers are to be reckoned. The screen of the Television and the circulated news media well ventilate what the role of 14 elected members in the Lok Sabha and 7 elected members in the Rajya Sabha. They are mostly the silent spectator within the four walls of the Houses of Parliament in the national and international debates. What sorts of qualitative outturn can be expected, if Assam is awarded independence? The ultras know how to kill innocent people, extract money by way of kidnapping and threatening. They lack proper diplomacy and ideology; otherwise they would not have taken shelter in Bangladesh against whom their primary modus-operandi was there. They have no idea or capability to run the administration. A chaos and conflict will naturally take place and the foreign power will take full advantage to over throw the Government and capture power. One must recall the eventuality at the end of weak administration in the Ahom regime of early 18th century, which helped the British traders to expand the trade base and to install power. The main leadership of ULFA have been apprehended and put behind the bar, but they are still vociferous over the question of independence of Assam. They are advocating for dialogue on the vital question of sovereignty or to arrange referendum to seek mass mandate over the question of liberation of Assam. Such referendum can not be expected to be free and fair. The mandate at gun point will get upper hand. The people of Assam irrespective of any class, creed and cadre are already the worst victims in the reign of terror for last 30 years. None has the moral support for the so called independence and sovereignty. The most tough question of this day is creation of more Statehood to provide political berth and economic soundness to a section of the aspirants. The Indian sub-continent already have twenty eight numbers of part States and seven numbers of Union territories. The part States have been provided with adequate power of autonomy in the State within the frame work of the Constitution of India. The Constitution vested some reserved -indispensible power to the Centre to ensure unity and integrity of the country. It has, of late, been noticed that there have been tremendous moves at different states for bifurcation of the existing States and creation of separate States. Telengana, Gokhaland, Bidarva,Harit Pradesh, Bunderkhand etc. are raising their demands for creation of new States. In Assam Bodo, Karbi, Dimacha, Garo are making agitation over the question of creation of new States. The Koch Rajbangshi people of undivided Goalpara district and five or six districts of West Bengal are demanding separate State under the banner of Kamatapur. As published in the news media, there is a base of such demand following an agreement of merger of Coochbehar territory with India, signed by the then King Jagadipendra Narayan Bhup Bahadur and the Government of India, which has been placed before the Hon’ble Supreme Court of India. It is not unlikely that the people of muslim majority areas may sometime come up with such demands in future. The last bifurcation vis-à-vis creation of new States took place on 15.11.2000. Ignoring all other instant claims, the Government of India recently decided to create a new State ‘Telengana’ in bifurcation of the State ‘Andhra Pradesh’. This apparently raised furor amongst the people of Andhra Pradesh and in protest against such a decision of the Government of India, numbers of cabinet ministers, elected representatives resigned by creating a political crisis. Not only that, voices of protests Bundhs episode etc. has already evoked from other parts by the aspirant for statehood. An unrest situation may as well crop over the question of haphazard decision. The creation of new State is a theoretical aspect. The practical aspect must be looked into. The resource potentiality, resource generation and resource mobility are the primary factor for creation of new Statehood. When a State is created, all sorts of requisite infrastructure must be available. In no case, such new State should be a burden to the centre, but a self dependent. In our view, when there were numbers of demands, Centre’s decision to create unilaterally the State of Telengana can not be termed as an act of maturity and prudence.
AN END TO BANDH CULTURE ?
A Division Bench of the Gauhati High Court, consisting of the Chief Justice Justy Chalemeswar and Justice A.C.Upadhaya recently delivered a historical judgment declaring the frequent bundh culture in the State of Assam as illegal. The judgment followed on the Public Interest Litigation petition fled by a retired police officer and Ex-Member of Parliament Ataur Rahman, a profound social worker Suchibrata Roychoudhury (now dead) and the renowned journalist Mrinal Hazarika seeking a verdict of the highest legal forum of the State covering the north east states of the country, in as much as such bandh calls are disrupting the normal way of life. The labour classes of people can not earn their daily wages, which continues some time for days together. Naturally, such unfortunatepeople have to remain in hunger for deficiency of money power for purchase of food. The school and college students can not attend their classes and there is untold loss in the educational spheres. The office goers from outskirt and distant areas, can not attend offices and the functioning of the offices remains paralyzed. Even, if some office goers take attempt to attend the offices; they have to come across various threats including for life. The bundh culture is spreading so heavily and rapidly that it has obviously become a curse in the civilized society. The bundh callers fail to realize and appreciate the consequential ill effect of the bundh in social life. They make misuse of the constitutional right, namely, right to speech and expression or right to association by extending it to bundh culture. The bundh culture is intended to reflect the act of protest, which is considered to be unwarranted and odd designed. In such exercise, there is dearth of knowledge towards evaluation on the concept of democracy as well as the republican thought. The bundh culture got priority at the time of foreigners’ movement in Assam in 1979 at the behest of the All Assam Students Union, associated by other ingredient parties and organizations under the banner of the ‘Ganasangram Samitee’. Even they took the self-designed administrative power to declare “Janata Curfew´ to enforce such bandh. They disassociated themselves from participating in the National programmes like Independence day, Republic day and forced the mass people to refrain from participation in such holy functions of the auspicious days. What this people used to do after coming to the power is indeed a shameful part of the history. This, in fact, has been made precedence and the agitators and the bandh callers of various groups or organizations are following the suit. The United Liberation front of Assam, a part acts of other brutal and unlawful activities, simultaneously uses to declare bundh and the innocent people have no other alternative, but to abide by such unlawful- designed calls. When the ‘ Assam Bundh’ and ‘Bharat Bandh’ calls are operative, the ’district bandh’ and ‘regional bandh’ are as well parallely gaining the momentum. There are various types of demands like providing autonomy, creating Statehood and even acquiring independence and sovereignty. That means, all are hankering after power to establish themselves in the power scenario. There is least thought for the welfare and upliftment of the common people, but to install in power- no matter whether the unity and integrity of the country get any set back. This bandh culture has spread so speciously that there no surety to reach the destination of perambulation within the time bound programme. The time factor is now irrelevant, but the bandh factor has to be reckoned in every step and given due cognizance. These unhealthy and unhygienic bandh culture; on the other hand, have been prominently cubing the mobilization of resources and the State economy has been put to a doldrums. The road-bandh being an inherent and integral part of the bandh culture, there is unhealthy and irritating blockade of transportation of goods and passengers. In fact, Assam is solely dependent of the essential commodities and other important commodities from places out side the State. The movement of goods to the other six sister States takes place through the corridor of Assam and naturally the economic activities of the said States get jeopardized. When the road blockade takes places, there is dearth of import with consequential shortfall of supplies. It is well known that price hike irrespective of any commodities have been spreading so widely like wild fire that there is unbearable murmuring of the incapable purchasers seeking solution. The benign Governments at the State and centre are keeping mum and practically remained cipher. We hail the verdict of the High Court, which provided relief to the mass people of the State. The verdict of the court will not , however, be enough, but there must be law to enforce the verdict incorporated with penal measures. The ball is now at the court of the Government. If the Government thinks seriously and sincerely for the welfare and prosperity of the people, the bandh episode will have to seek adieu soon and the people can confidently hope that the end will be knocking at the door.
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