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By R. P. Shah B.S.C.
(Hon.), LL.B.,
CENTRAL
SALES TAX AMENDMENTS 1.
Finance Act, 2002
Under Finance Act, 2002 as assented to by the President on
11.5.2002 amongst other laws Central Sales Tax Act, 1956 is amended.
Provisions relevant to the amendment of the Central Sales Tax
Act, 1956 are contained in sections 150 to 155 of the Finance Act, 2002.
The Finance Act, 2002, is published in the gazette on 13.5.2002.
As such these amendments to the Central Sales Tax Act can be said
to have come into force from 13th May, 2002. 2.
Outlines of the amendments
(A) The section
150 of the Finance Act, 2002 substitutes clause (g) of section 2 of the
Central Sales Tax Act, 1956 relating to the definition of
"sale", to widen the scope of the term "sale" to
include therein the six categories of "deemed sales" as per
clause (29A) of Article 366 of the Constitution.
(B) Section 151
of the Finance Act, 2002 amends section
6A of the Central Sales Tax Act, 1956. In case of transfer of goods from
one state to another state, claimed otherwise than by way of sale,
furnishing of F Form was directory and not mandatory as judicially held.
The amendment now makes furnishing of F Form by the recipient of
the goods to be compulsory. If the recipient of the goods fails to
furnish F Form the movement of such goods is to be deemed, for all
purposes of the Act, to have been occasioned as a result of inter state
sale. Thus, the effect of
the amendment is that if the recipient of the goods fails to furnish
Form F the transaction will tantamount to be an inter state sale and
consequently it will attract liability to pay Central Sales Tax.
(C) Section 152
of the Finance Act, 2002 amends section 8 of the Central Sales Tax Act,
1956, in six respects as per (a) to (f), as under:-
(a) Section
8(1) is amended to provide that the Central Sales Tax does not become
greater than local Sales-tax in case of sale of goods to the Government
and Registered dealers. This means that the inter state sales of goods taxable at the
rate lower than 4% under the State Sales-tax law when made to a
Registered dealer or Government will be liable to Central Sales Tax at
the local rate of tax only and only if such inter state sales are
supported by Form C or Form D. If such inter state sales are not
supported by Form C or Form D, they would attract the provisions of
section 8(2) of the Central Sales Tax Act, 1956 for the purpose of the
rate of Central Sales Tax. In
other words for getting benefit of the concessional rate of Central
Sales Tax either at 4% or at the rate of State tax lower than 4%,
furnishing of Form C or Form D by the Registered dealer or by the
Government is made compulsory except in respect of exempted goods,
(b) Section
8(2) of the Central Sales Tax Act is amended to provide for exemption
from Central Sales Tax in cases where goods are generally exempt from
local sales tax. Provisions in this regard existing in section 8(2A) are
incorporated herein since existing section 8(2A) is deleted.
(c) The
existing sub section (2A) of section 8 providing for rate of Central
Sales Tax on goods generally exempt or generally taxable at the rate
lower than 4% is deleted. This deletion is consequential to amendments
in section 8(1) and section 8(2) referred to above.
(d) Section
8(3) is amended to provide inclusion of "telecommunications
network" in the category of goods which can be specified in the
certificate of registration under the Central Sales Tax Act for the
purpose of levy of tax, etc.
(e) Section
8(5) is amended so as to withdraw the powers of the State Government to
waive the requirement of C Form while notifying under section 8(5) of
the Central Sales Tax Act, 1956, total or partial exemption of the
Central Sales Tax rates either under section 8(1) or 8(2).
Thus, powers of the State Government to give total or partial
exemption of Central Sales Tax rate by waving the requirement of C Form
stand withdrawn.
(f) New
sub sections (6), (7) and (8) are added to section 8 to provide for
exemption of Central Sales Tax in case of inter state sales of any goods
by a dealer to a registered dealer who has established
an unit in the special economic zone, for the purpose of
manufacture, production, processing, assembling, repairing,
reconditioning, reengineering, packaging or for use as trading or
packing material or packing ascessories. Such an unit means an unit
authorised to be established in the special economic zone by the
authority specified by the Central Government
and who is a registered dealer. The exemption will be admissible
(i) if such goods are
specified in the purchasing dealers certificate of registration and (ii)
if the purchasing dealer furnishes to the selling dealer a declaration
in a prescribed form and
manner (Form and manner yet to be prescribed).
(D) Section 153
of the Finance Act, 2002 amends section 10 of the Central Sales Tax Act.
The amendments are consequential to the amendment of section 8 providing
for exemption under sub sections (6), (7) and (8).
(E) Section 154
of the Finance Act, 2002 amends section 13 of the Central Sales Tax Act
to amend Rules to provide for form and manner of furnishing declaration
under section 8(8).
(F) Section 155
amends section 15 of the Central Sales Tax Act with a view to allowing
the State Governments to impose tax on declared goods at more than one
stage of sale of declared goods. 3.
Amended provisions and its effect
In this article we propose to discuss the amended provisions and
its effect. The amended
provisions are given and discussed here below:-
(A) Amended section
2(g) "sale"
Definition of "Sale"
in section 2(g) is proposed to be substituted as under:-
(g) "Sale",
with its grammatical variations and cognate expressions, means any
transfer of property in goods by one person to another for cash or
deferred payment or for any other valuable consideration, and includes,
-
(i) a transfer, otherwise
than in pursuance of a contract, of property in any goods for cash,
deferred payment or other valuable consideration;
(ii) a transfer of property
in goods (whether as goods or in some other form) involved in the
execution of a works contract;
(iii) a delivery of goods on
hire purchase or any system of payment by installments;
(iv) a transfer of the right
to use any goods for any purpose (whether or not for a specified period)
for cash, deferred payment or other valuable consideration;
(v) a supply of goods by any
unincorporated association or body of persons to a member thereof for
cash, deferred payment or other valuable consideration;
(vi) a supply, by way of or
as part of any service or in any other manner whatsoever, of goods,
being food or any other article for human consumption or any drink
(whether or not intoxicating), where such supply or service, is for
cash, deferred payment or other valuable consideration;
but does not include a mortgage or hypothecation of or a charge
or pledge on goods;
Comments:
(i) Sale includes certain
inter state deemed sales : Six
sub clauses (i) to (vi) included in the amended definition of "sale"
correspond to the six categories of transactions, known as "nonsales"
which are deemed as "sales"
for the purpose of tax on the sale or purchase of goods under article
366(29A) of the Constitution. Thus the definition of "sale"
is expanded so as to attract the levy of Central Sales Tax on such inter
state deemed sales.
(ii) Inter state deemed sales by hire purchase or by installment payment :
In
relation to sub clause (iii) in the definition of sale in section 2(g),
it may be stated that "a transfer of goods on the hire purchase or
other system of payment by installments" was included in the
erstwhile definition of "sale" in old section 2(g) and hence
such transactions were liable to Central Sales Tax. However, the other
five categories of "non sales" covered under sub-clauses (i),
(ii), (iv), (v) and (vi), in the definition of sale in section 2(g),
having not been included in the erstwhile definition of sale in old
section 2(g) they not being sales were believed as not liable to Central
Sales Tax. With the expansion of the definition of "sale"
these five categories of deemed sales will be sales and hence will
attract liability to Central Sales Tax on and from 13th May, 2002, the
date the Finance Act, 2002 comes into effect.
(iii) Controversy as regards inter state deemed sales resolved:
(a) The expanded definition
of 'sale' in section 2(g) puts at rest the controversy as to whether
there could be or there could not be inter state deemed sales. Supreme
Court had not decided and
had kept the question open as to whether there can be or there cannot
be, in relation to works contract, (i) inter state sale, (ii) a sale outside the State or (iii)
a sale in the course of import/export in resect of a deemed
sale/purchase taking place on account of transfer of property in goods
involved in execution of a works contract. The Supreme Court had
observed that such a question can only be decided on the facts of the
case and on the basis of conditions governed in the works contract.
West Bengal Taxation Tribunal in the case of M/s. Bijoy
Processing Industries (92 STC 503) (WBTT) had held that there could be
no inter state deemed sales in relation to works contract.
However, Punjab High Court in the case of East India Cotton
Manufacturing Co. Ltd. (90 STC 221) had held that there can be inter
state deemed sale in works contract. The Gujarat Sales Tax Tribunal in
its decisions dated 9.8.1995 in the case of M/s. P.S.L. Pipe Coaters
Pvt. Ltd. (1996) GSTB 229 and in the case of Lathia Industrial Supply
(1999) GSTB 28 has held that there can be inter state deemed sale in
works contract.
(b) In relation to transfer
of right to use goods, (leased), the Andhra Pradesh High Court in its
classical judgment in the case of M/s. I.T.C. Classic Finance and
Services (97 STC 330) has held that there could be an inter state deemed
sales in regard to transfer of right to use goods i.e. in regard to
lease of goods. This
judgment of the A.P. High Court has been affirmed by the Supreme Court
in its judgment dated 9.5.2000 in the case of 20th Century Finance
Corporation Ltd. (119 STC 182 (SC) ).
(iv) Conclusion:
(a) Applying the principles
laid down in section 3 of the Central Sales Tax Act, 1956 it can be said
that if on the facts it is evident that the sale/deemed sale, or an
agreement thereof, either (a) has occasioned the movement of goods from
one state to another or (b) is effected by transfer of documents of
title to goods, during their movement from one state to another then
such a sale/deemed sale would be an inter state sale.
(b) Once the transaction is
an inter state sale, the situs of sale, whether it is in one state or
other is irrelevant. In respect of an inter state sale/deemed sale the
Central Sales Tax is levied and collected in the appropriate state as
defined in the Central Sales Tax Act read with provisions in section
9(1) of the Central Sales Tax Act. As such the situs of such an inter
state sale/deemed sale has no relevance as regards liability to pay the
Central Sales Tax.
(c) As regards inter state
deemed sale taking place during execution of a works contract, it can
also be said that the mere fact that the goods are installed in the
works contract in a State does not necessarily empower that State to
levy Sales-tax or Central Sales Tax thereon if the sale as per
principles enunciated in sections 3, 4 and 5 of the Central Sales Tax
Act is an inter state sale, or an outside the state sale or a sale in
the course of import or export.
(d) Similarly, as regards an
inter state deemed sales taking place by transfer of right to use goods,
in our view, it can now be said that the mere fact that the leased goods
are put to use in one state or that the lease agreement is executed in
another state does not necessarily empower that state to levy Central
Sales Tax thereon. The levy
of Central Sales Tax and the appropriate State which can levy and
collect the Central Sales Tax will be governed by the provisions of the
Central Sales Tax Act.
(v) Measure for levy (a) Sale Price :
Even though the definition of "sale" in section 2(g) is
expanded to include "deemed sale" yet the definition of
"sale price" in section 2(h) or definition of
"turnover" in section 2(j) are not amended. Even so,
in our view, the position will be as under:-
(i)
Sale price in relation to deemed inter state sale taking place
during execution of a works contract:
In relation to inter state deemed sale taking place during
execution of the works contract, since the taxable event is a transfer
of property in goods involved in the execution of a works contract and
the said transfer of property in such goods take place when the goods
are incorporated in the works contract, the
value of the goods which constitute the measure for the levy of tax has
to be the value of the goods at the time of incorporation of the goods
in the works and neither the cost of acquisition of the goods by the
contractor nor the entire value of the works contract can constitute a
measure for levy of tax.
The cost of incorporation of the goods in the works contract
cannot be made a part of the measure for levy of tax since the
incorporation of the goods in the works forms part of the contract
relating to work and labour.
Exclusion of labour
charges : The value of the goods involved in the execution of a
works contract will, therefore, have to be determined by taking into
account the value of the entire works
contract and deducting therefrom the charges towards labour and services
which would be as under:
(a) labour charges for
execution of the works;
(b) amount paid to a sub
contractor for labour and services;
(c) charges for planning,
designing and architects fees;
(d) charges for obtaining on
hire or otherwise machinery and tools used for the execution of the
works contract;
(e) cost of consumables,
such as water, electricity, fuel etc. used in the execution of the works
contract, the property in which is not transferred in the course of
execution of a works contract; and
(f) cost of establishment of
the contractor to the extent it is relatable to supply of labour and
services;
(g) other similar expenses
relatable to supply of labour and services;
(h) profit earned by the
contractor to the extent it is relatable to supply of labour and
services.
The
amount deductible under these heads will have to be determined in the
light of the facts of a particular case on the basis of the material
produced by contractor. (88 STC 204 at pg. 235)
The value of goods involved in the execution of works contract
will have to be determined after making these deductions and exclusions
from the value of the works contract. (88 STC 205 at pg. 235) (ii) Sale price in relation to deemed inter state sale either by delivery
of goods on hire purchase or by transfer of the right to use any goods:
In relation to deemed inter state sale taking place by delivery
of goods on a hire purchase or installment payments, or in relation to
transfer of right to use goods, the amount received or receivable during
a given period and not the entire amount payable for the transaction, in
our view, would be the sale
price for that period. (vi)
Subject of levy:
In Gujarat under the Gujarat Sales Tax Act in relation to
transfer of right to use goods tax is levied not on all taxable goods
specified in Schedule II but is levied only on certain goods specified
in a separate schedule, "Schedule III".
The rate of tax leviable thereon is specified by the Governemnt
under a Notification issued in this behalf.
Thus, specific rate of tax for specific goods is specified and
the rate of tax applicable in general to the goods specified in the
normal schedule, Schedule II is not applicable.
Similarly, in some of the States there is a separate enactment
for levy of tax on transfer of right to use goods, different than the
"General Sales Tax Law" levying tax on sale or purchase goods
generally. This therefore
raises a question as to what could be the subject of taxation on inter
state deemed sales taking place by transfer of right to use goods.
In our view taking into consideration the definition of
"Sales-tax Law" in section 3(i), so far as Gujarat is
concerned Central Sales Tax will be leviable on the inter state deemed
sales taking place by the transfer of right to use goods only in respect
of goods specified specifically in Schedule III only and will not be
leviable on inter state deemed sales taking place by transfer of right
to use any other taxable goods specified in Schedule II.
Similarly, for determining the rate of Central Sales Tax u/s. 8
on such inter state deemed sale the rate of tax notified
in relation to goods specified in Shceule III will be rlevant and
not the rate of tax specified in Schedule II.
(B)
Amended section 6A "Burden of Proof, etc. in case of
transfer of goods claimed otherwise than by way of sale"
Amended sub section (1) of section 6A being material for our
discussion is given here below:-
"(1)
Where any dealer claims that he is not liable to pay tax under
this Act, in respect of any goods, on the ground
that the movement of such goods from one State of another was
occasioned by reason of transfer of such goods by him to any other place
of his business or to his agent or principal, as the case may be, and
not by reason of sale, the burden of proving that the movement of those
goods was so occasioned shall be on that dealer and for this purpose he
may furnish to the assessing authority, within the prescribed time or
within such further time as that authority may, for sufficient cause,
permit, a declaration, duly filled and signed by the principal officer
of the other place of business, or his agent or principal, as the case
may be, containing the prescribed particulars in the prescribed form
obtained from the prescribed authority, along with the evidence of
dispatch of such goods. [AND IF THE DEALER FAILS TO FURNISH SUCH
DECLARATION, THEN, THE MOVEMENT OF SUCH GOODS SHALL BE DEEMED FOR ALL
PURPOSES OF THIS ACT TO HAVE BEEN OCCASIONED AS A RESULT OF SALE]
(emphasis representing amendment supplied)
Comments :
(i) Under
the then existing provisions of section 6A though a certificate in Form
F was prescribed as an evidence in support of the claim of deduction as
a transaction of consignment. However,
the Form F was not mandatory. The
transfer of goods other wise than by way of sale could be so proved by
other evidence, to the satisfaction of the assessing authority. Now by
the amendment the declaration in Form F is made compulsory.
If the declaration in Form F is not furnished the transfer of
goods from one State to another will be deemed to be an inter state sale
and such an inter state sale will attract liability to Central Sales
Tax.
(ii) In
view of the deeming fiction transfer of goods from one State to another,
even if other wise than by way of sale -
(a) by Head
Office/Factory/Branch Office to other Branch/HO;
(b) by Principal to Agent or
vice-a-versa;
(c) by a person to another
is deemed as an inter state sale if the recipient to whom the
goods are transferred does not furnish F Form. Thus a transaction which,
in normal parlance may not be a "sale" is by a legal fiction
deemed as an "inter state sale" to attract liability to
Central Sales Tax.
However, the deeming fiction so made in the amended section 6A is
only a Rule of Evidence. A Sales-tax Officer (Revenue) will, in absence
of production of F Form, presume that the movement of goods from one
state to another was as a result of an inter state sale.
However, in our view the presumption is a rebuttable one.
In our view it is open to the transferor of goods to prove, by
substantial evidence, that
the movement of goods from one state to another resulting in goods being
received by the recipient was not as a result of sale, i.e. the basic
requirements of a transaction of a sale i.e. if two parties seller and
purchaser, an agreement, consideration, etc. are absent and hence there
is no inter state sale and hence Central Sales Tax is not exigible to be
levied.
(iii) It may be
mentioned that a real transaction of consignment, in absence of a
declaration in Form F is a deemed inter state sale but converse is not
true. Thus, a transaction
which can be said to be an inter state sale, as per the principles laid
down in section 3, will not be considered as a consignment even if it is
supported by a declaration in Form F.
(C)
Amended section 8 "Rate of Tax on Sales in the course of
inter state trade or commerce" "(1)
Every dealer, who in the course of Inter-state trade or commerce
-
(a) sells to the Government
any goods, or
(b) sells to a registered
dealer other than the Government goods of the description referred to in
sub-section (3); shall be liable to pay tax under this Act, which shall
be four per cent of his turnover [OR AT THE RATE APPLICABLE TO THE
SALE OR PURCHASE OF SUCH GOODS INSIDE THE APPROPRIATE STATE UNDER THE
SALES TAX LAW OF THAT STATE, WHICHEVER IS LOWER] (emphasis
representing amendment supplied)
(2)
The tax payable by any dealer on his turnover in so far as the
turnover or any part thereof relates to the sale of goods in the course
of Inter-State trade or commerce not falling within sub-section (1)
(a) in the case of declared
goods, shall be calculated at twice the rate applicable to the sale or
purchase of such goods inside the appropriate State; [XXX] -
("and" deleted)
(b) in the case of goods
other than declared goods, shall be calculated at the rate of ten per
cent or at the rate applicable to the sale or purchase of such goods
inside the appropriate State, whichever is higher; "[AND]"
(inserted)
["(c) in the case of goods, the sale or, as the case may be, the purchase
of which is, under the sales tax law of the appropriate State, exempt
from tax generally shall be nil,
and for the purpose of making any such calculation under clause
(a) or clause (b), any such dealer shall be deemed to be a dealer liable
to pay tax under the sales tax law of the appropriate State,
notwithstanding that he, in fact, may not be so liable under that law.
Explanation. - For
the purposes of this sub-section, a sale or purchase of any goods shall
not be deemed to be exempt from tax generally under the sales tax law of
the appropriate State if under that law the sale or purchase of such
goods is exempt only in specified circumstances or under specified
conditions or the tax is levied on the sale or purchase of such goods at
specified stages or otherwise than with reference to the turnover of the
goods] (emphasis representing amendment supplied). (2A)
"[XXX]"
(deleted by Finance Act, 2002) (3)
The goods referred to in clause (b) of sub section (1) -
(a) "[XXX]"
(deleted)
(b) are goods of the class
or classes specified in the certificate of registration of the
registered dealer purchasing the goods as being intended for resale by
him or subject to any rules made by the Central Government in this
behalf, for use by him in the manufacture or processing of goods for
sale or "[IN THE
TELECOMMUNICATIONS NETWORK OR]"
in mining or in the generation or distribution of electricity or any
other form of power; (emphasis
supplied).
(c)
-
(d)
(4)
(5)
Notwithstanding anything contained in this section, the State
Government may, "[ON THE FULFILLMENT OF THE REQUIREMENTS LAID DOWN
IN SUB SECTION (4) BY THE DEALER, ]"
if it is satisfied that it is necessary so to do in the public
interest, by notification in the Official Gazette, and subject to such
conditions as may be specified therein direct,
(a) that no tax under this
Act shall be payable by any dealer having his place of business in the
State in respect of the sales by him, in the course of Inter-State trade
or commerce "[TO A REGISTERED DEALER OR THE GOVERNMENT]" from
any such place of business of
any such goods or classes of goods as may be specified in the
notification, or that the tax on sales shall be calculated at such lower
rates than those specified in sub-section (1) or sub section (2) as may
be mentioned in the notification. (emphasis supplied).
(b) that in respect of all
sales of goods or sales of such classes of goods as may be specified in
the notification, which are made, in the course of Inter-State trade or
commerce ["TO A REGISTERED DEALER OR THE GOVERNMENT"] by any
dealer having his place of business in the State or by any class of such
dealers as may be specified in the notification to any person or to such
class of persons as may be specified in the notification, no tax under
this Act shall be payable or the tax on such sales shall be calculated
at such lower rates than those specified in sub-section (1) or sub
section (2) as may be mentioned in the notification. (emphasis
representing amendment supplied).
Following sub sections (6), (7) and (8) and Explanations are
added by the Finance Act, 2002. [(6)
Notwithstanding anything contained in this section, no tax under
this Act shall be payable by any dealer in respect of sale of any goods
made by such dealer, in the course of inter State trade or commerce to a
registered dealer for the purpose of manufacture, production, processing
assembling, repairing, reconditioning, reengineering, packaging or for
use as trading or packing material or packing accessories in an unit
located in any special economic zone, if such registered dealer has been
authorised to establish such unit by the authority specified by the
Central Government in this behalf.
(7) The goods
referred to in sub-section (6) shall
be the goods of such class or classes of goods as specified in the
certificate of registration of the registered dealer referred to in that
sub section.
(8) The
provisions of sub-sections (6) and (7) shall not apply to any sale of
goods made in the course of inter State trade or commerce unless the
dealer selling such goods furnished to the authority referred to in
sub-section (6) a declaration in the prescribed manner on the prescribed
form obtained from the authority referred to in sub-section (5), duly
filled in and signed by the registered dealer to whom such goods are
sold.
Explanation - For the purposes of sub-section (6), the expression
special economic zone has the meaning assigned to it in clause
(iii) to Explanation 2 to the proviso to section 3 of the Central Excise
Act, 1944 (1 of 1944) ]
Comments:
(i) The
then existing section 8(2A) is deleted.
Section 8(2A) provided for the rate of Central Sales Tax on the
inter state sales of goods, the sale or purchase of which under the
Sales-tax law of the State is either exempt from tax generally or is
subject to tax generally at a rate which is lower than 4%.
On the deletion of this sub section the provision relating to the
rate of Central Sales Tax on goods subject to local tax at a rate lower
than 4%, is inserted in the amendment of section 8(1) and the provision
relating to inter state sales of goods generally exempt is inserted in
the amendment of section 8(2).
(ii) The
amendment in section 8(1) provides that the rate of Central Sales Tax on
inter state sales of goods to Government against D Form or to a
registered dealer against C Form shall be 4 % or at the rate applicable
to the goods inside the appropriate State under the Sales-tax law of
that State, which ever is lower. This
means that in case where the local rate of tax is 4% or more the rate of
Central Sales Tax under section 8(1) shall be 4% and where the local
rate of tax is less than 4% the rate of Central Sales Tax under section
8(1) on the inter state sales of goods to Government against D Form or
to a registered dealer against C Form shall be the local rate. In our
view, even if the local rate of tax is less than 4%, conditionally, the
inter state sales of such goods supported by C or D Form will attract
Central Sales Tax u/s. 8(1) at the lower local rate.
(iii) Section 8(2), as
amended provides that where the goods are generally exempt under the
local Sales-tax law the inter state sales thereof will also be exempt.
Thus the provision in erstwhile section 8(2A), in this regard is
incorporated in section 8(2) as amended.
(iv) Goods
required in the Telecommunications Network could be purchased at the
concessional rate of Central Sales Tax under section 8(1) and for this
purpose provision made in section 8(3) to permit the inclusion of such
goods in the Central Sales Tax registration.
(v) (a)
Section 8(5) of the Central Sales Tax Act is amended to withdraw
the powers of the State Government to waive the requirement of C
Form in granting exemption from the rate of Central Sales Tax. The State
Government can, if it is satisfied that it is necessary so to do in the
public interest by Notification reduce the rate of Central Sales Tax
only "on the fulfillment of requirements laid down in section 8(4)
of the Central Sales Tax Act". This means that the State Government can reduce the rate of
Central Sales Tax payable under section 8(1) only. It also implies that
the State Government cannot now reduce the rate of Central Sales Tax
payable under section 8(2) of the Central Sales Tax Act.
(b) The
amendment however is incomplete. It
is provided in clauses (a) and (b) of section 8(5) that the State
Government can, if it is satisfied and it is in the public interest, by
notification, reduce the
rate of Central Sales Tax specified in sub section (1) or sub section
(2). The words or sub
section (2) appearing in these clauses (a) and (b) to section 8(5) is
not deleted though required to be deleted. This is because the State
Government now has power to reduce rate of Central Sales Tax only under
section 8(1) and the power of the State Government to waive requirement
of C Form is withdrawn and hence the State Government cannot reduce the
rate of Central Sales Tax under section 8(2).
Hence the phrase "or sub section (2)" is redundant and
ought to have been deleted.
(vi) As at
present several State Governments and the Government of Gujarat has
issued several Notifications under section 8(5) of the Central Sales Tax
Act to reduce the rate of Central Sales Tax payable under section 8(2)
of the Central Sales Tax Act. Section 8(2) of the Central Sales Tax Act
relates to Central Sales Tax payable by a dealer on inter state sales
which are not covered under section 8(1). With the amendment of section
8(5) as above these Notifications so reducing the rate of Central Sales
Tax under section 8(2), we believe, will be deleted by the State
Governments and by the Government of Gujarat. However, if these
Notifications or some of them are not so deleted a question that may
arise is whether the relief given in reducing the Central Sales Tax
under section 8(2) of the Central Sales Tax Act will continue to be
operative. One view is that if the Notification is not deleted then the
relief given by the Notification will continue to be operative even
after the amended section 8(5) becomes operative. The other view, is
that even if the Notification so reducing the rate of Central
Sales Tax under section 8(2) is not deleted yet the relief given by the
Notification will stand automatically rescinded since it is against the
provisions of amended section 8(5).
(vii) Under
newly inserted section 8(6)(7)and (8) inter state sales of goods by a
dealer to a registered dealer who has established an unit
in the "special economic zone" for the purpose of
manufacture, production, processing, assembling, repairing,
reconditioning, reengineering, packaging or for use as trading or
packing material or packing accessories in such unit is exempt from
whole of Central Sales Tax provided the goods so sold are of such class
or classes as specified in the certificate of registration of the
purchasing registered dealer and the purchasing dealer furnishes a
declaration in the prescribed manner and in the prescribed form obtained
from the specified authority, duly filled and signed. The form of
declaration and the manner in which it is to be furnished is not yet
prescribed. For this purpose Central Sales Tax (Registration and
Turnover) Rules will be amended. (D)
Amended section 10 - Penalties -
10. If any
person -
(a) furnishes
a certificate or declaration under sub-section (2) of section 6 or
sub-section (1) of section 6A or sub-section (4) [OR SUB-SECTION (8)] of
section 8, which he knows, or has reason to believe, to be false; or
(aa)
-
(b) -
(c) -
(d) after
purchasing any goods for any of the purposes specified in clause (b) or
clause (c) or clause (d) of sub-section (3) [OR SUB-SECTION (6)] of
section 8 fails, without reasonable excuse, to make use of the goods for
any such purpose; or
(e) has in his
possession any form prescribed for the purpose of sub-section (4) [OR
SUB-SECTION (8)] of section 8 which has not been obtained by him or by
his principal or by his agent in accordance with the provisions of this
Act or any rules made thereunder; or
(f) -
he shall be punishable with simple imprisonment which may extend
to six months, or with fine or with both; and when the offence is a
continuing offence, with a daily fine which may extend to fifty rupees
for every day during which the offence continues.
Comments:
(i) Section 10
is amended to make a consequential provision for levy of penalty if the
declaration u/s. 8(8) is false or if the goods purchased against
declaration u/s. 8(6) are not used for the purpose certified or if the
declaration u/s. 8(8) has not been obtained in accordance with the
provisions of the Central Sales Tax Act.
(E)
Amendment of section 13 - Power to make Rules -
13.(1) The Central Government may, by notification in the
Official Gazette, make rules providing for-
(a)
[(aa)
THE FORM AND THE MANNER FOR FURNISHING DECLARATION UNDER
SUB-SECTION (8) OF SECTION 8;]
(b) to (j)
-
(2) to (5)
-
Comments
(i) Section
13 is amended to enable Government to prescribe the Form of declaration
u/s. 8(8) and to prescribe the manner for furnishing the said
declaration.
(F)
Amended section 15 - Restrictions and conditions in regard to tax
on sale or purchase of declared goods within a state -
Every sales tax law of a state shall, insofar as it imposes or
authorises the imposition of a tax on the sale or purchase of declared
goods, be subject to the following restrictions and conditions, namely
(a) the
tax payable under that law in respect of any sale or purchase of such
goods inside the State shall not exceed four per cent of the sale or
purchase price thereof. [XXX]
(b)
..
(c)
...
(cc)
(d)
Comments:
(i) (a)
The deleted phrase in clause (a) above, indicated by [XXX]
was and such tax shall not be levied at more than one Stage.
The amendment means that under the state Sales Tax law the tax
payable on any sale or purchase of the declared goods inside the State
cannot exceed 4% and such a tax could now be levied at more than one
stage also, since the restriction that such tax cannot be levied at more
than one stage is removed w.e.f. 13.5.2002. This amendment is intended
possibly to pave way for introduction of the Value Added Tax on declared
goods. In the Value Added
Tax in respect of declared goods tax
could be levied, not exceeding 4 % rate at every stage with a provision
for set off of tax paid at the earlier stage.
(b) However,
in order to ensure that the declared goods are in effect subject to only
single stage tax at the last stage a provision to the following effect
could have been provided.
["WHERE A TAX HAS BEEN LEVIED UNDER THE LAW IN RESPECT OF
THE SALE OR PURCHASE INSIDE THE STATE, OTHER WISE THAN IN THE COURSE OF
INTER STATE TRADE OR COMMERCE, OF ANY DECLARED GOODS, THE TAX LEVIED
UNDER SUCH LAW AT AN EARLIER STAGE OF SUCH SALE OR PURCHASE SHALL BE
REIMBURSED TO THE PERSON MAKING SUCH SUBSEQUENT SALE INSIDE THE STATE,
OTHER WISE THAN IN THE COURSE OF INTER STATE TRADE OR COMMERCE, IN SUCH
MANNER AND SUBJECT TO SUCH CONDITIONS AS MAY BE PROVIDED IN ANY LAW IN
FORCE IN THAT STATE"] In absence of such a provision it would be permissible for the State Government to impose multiple stage local sales tax on declared goods which is not intended. June 2002
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