REVENUE AND FINANCE

the SALES TAX DEPARTMENT.

SALES TAX.

THE SALES TAX has now become the most important source of revenue to the State, as it contributes to the exchequer more than any other head of revenue, and in 1953-54 it yielded 15 crores of rupees and formed 28.45 per cent. of the tax revenue of the State.

A general sales tax was first introduced in 1946 by a Governor's Act, which in the course of time underwent various amendments by the legislature. The Act that now governs the levy of sales tax is the Bombay Sales Tax Act (III of 1953) as amended by the Bombay Sales Tax Laws (Amendment) Act, 1957 (XVI of 1957).

Under section 5 of the Act dealers whose turnover either of all sales or of all purchases in a year exceeds Rs. 25,000 are liable to pay the tax. Dealers who import goods from outside the State of Bombay and dealers who manufacture or process any goods have to pay the tax if their turnover of sales or of purchases exceeds Rs. 10,000 a year, provided the value of the goods imported, or manufactured or processed, respectively, exceeds Rs. 2,500.

The system of tax as embodied in the Act is briefly as follows: -

There are three classes of tax, a "sales tax," a "general sales tax," and a "purchase tax." The "purchase tax" is, however, not a separate tax and is only intended to seal off a loophole for evasion of either of the other two taxes. In effect, therefore, there is only a two point tax system, namely, a tax generally levied at the first stage of sale (sales tax) and a tax levied generally at the last stage of sale (general sales tax).

A dealer registered under the Central Sales Tax Act, 1956, who is not liable to pay tax under Section 5 of the Bombay Sales Tax Act, 1953 is nevertheless liable to pay tax under Section 5A of the Bombay Sales Tax Act, 1953 on his sales of any goods in respect of the purchase of which he has furnished a declaration under subjection (4) of Section 8 of the Central Sales Tax Act, 1956 or on the sales of any goods in the manufacture of which such goods have been used.

No tax is levied on goods specified in Schedule A, containing 42 entries. These entries contain:-

(i) goods required mostly by agriculturists for cultivation, e.g., agricultural implements worked or operated exclusively by human or animal agency of the following kinds: chaff-cutters, clod crushers, harrows, iron and leather mhots, iron ploughs and plough points, pick-axes, rahats, shovels, sickles, spades and wooden seed drills (entry 1); cattle, sheep and goats (5); cattlefeeds including fodder and other concentrates but excluding cotton seed (6); fertilizers (17); and manures including oil cakes (32);

(ii) necessaries of the poorer sections of the community, e.g., betel leaves (2); bread (3); butter-milk and curds (4); cereals and pulses in all forms (7) [Except when sold in sealed containers.]; chillies, chily powder, tamarind and turmeric, whole or powdered (9) [Except when sold in sealed containers.]; eggs (15); firewood and charcoal (18); fish (19) [Except when sold in sealed containers.]; flour including atta, maida, suji and bran (20) [Except when sold in sealed containers.]; flowers (21); food and nonalcoholic drinks consumed at a hotel, restaurant, refreshment room, eating house or other place where such food and drinks are served (except when the cost of food and drinks consumed at one time by one person exceeds one rupee) (22); fresh fruits (23); fresh vegetables and edible tubers (24); Ghongadis, Kambalis or Kambals woven on handlooms exclusively out of hand spun woollen yarn and sold at a rate not exceeding Rs. 12 each; glass bangles sold at a rate not exceeding two annas each (24-A); Ghongadis, Kambalis or Kambals woven on handlooms exclusively out of hand spun woollen yarn and sold at a rate not exceeding Rs. 12 each (25); gur (26); kerosene (28); kum-kum (30); Mangalsutra with a black glass beads sold at a rate not exceeding Rs. 5 each (31); meat (33)[Except when sold in sealed containers.]; milk, whole or separated (34); salt (37); slates and slate pencils; chalk sticks and crayons; foot-rules, exercise and drawing books and lead pencils; and mathematical and drawing instrument boxes used by primary and secondary school students (38); textbooks, books for supplementary reading and school atlases sanctioned by the State Government, Director of Education for the State of Bombay, the Educational Inspectors of Divisions or Secondary School Certificate Examination Board of approved by the Bombay Municipal Schools Committee (41); and water, other than aerated and mineral waters (42);

(iii) implements or raw materials of cottage industries and products of cottage industries, e.g., charkha and other implements used in the production of handspun yarn or handwoven cloth as may be specified by the State Government by notification in the Official Gazette (8); cloth woven in hand-looms sold at a rate not exceeding Rs. 2 per yard (10); clothes and other articles of Khaddar (11) [When sold by dealers recognized for the purpose by the Collector of Sales Tax.]; cotton yarn and cotton thread (13); edible oils manufactured in ghanis by human or animal agency (14); handmade paper (27) [When sold by dealers recognized for the purpose by the Collector of Sales Tax.]; khaddar (29) [When sold by dealers recognized for the purpose by the Collector of Sales Tax.]; Palm products-(1) When sold by a producer recognised for this purpose by the Collector of Sales Tax, Maharashtra, on the recommendation of All India Khadi and Village Industries Board, set-up under Government of India, Ministry of Commerce and Industries. (2) When sold by other dealer where such products have been purchased from a producer recognised by the Collector of Sales Tax in this behalf;

(iv) sources of power, e.g., coal gas (when sold by a gas supply company to a local authority for consumption by such local authority for the purpose of street lighting) (12); electrical energy (16); motor spirit (as defined) (35);

(v) periodical journals published at intervals not exceeding one month (36);

(vi) stamp paper sold by vendors duly authorised under the provision of the Indian Stamp Act, 1899 (39); and

(vii) Sugar-cane (40).

Schedule B lists 79 specific entries and entry 80 " all goods other than those specified from time to time in Schedule A and in the proceeding entries." The first 8 of these entries composed of certain raw materials of industry, viz., raw cotton (whether ginned or unginned) including cotton waste (1); cotton seeds (2); artificial silk yarn (3); hides and skins (4); oil-seeds (5); raw silk and silk yarn (6); raw wool, wool tops and woollen yarn (other than knitting yarn) (7); and staple fibre and staple fibre yarn (8); and entries 9 to 18, which specify those goods out of the goods declared essential by Parliament [under the Essential Goods (Declaration and Regulation of Tax on Sales or Purchase) Act, 1952] which are not specified in Schedule A to the Act, are subject only to the general sales tax and not to the sales tax. On the other hand, entries 19 to 22, viz. betel nuts (19); text-books and periodical journals except such text-books and journals as are declared tax-free under entries 36 and 41 of Schedule A, and other than account books, diaries, calendars, and books containing space exceeding eight pages for being written up (not being exercise books) (20); coal (21); and safety matches (excluding matches used as fire-works) (22); are subject only to the sales tax and not to the general sales tax.

The rate of the general sales tax is only one-fourth per cent., in the case of bullion and specie (23), and one per cent. in the case of entries 1 and 2, i.e., raw cotton and cotton seeds, and only three pies in the rupee in the case of entries 3 to 8 and entry 24 [articles made of gold and silver (of fineness not less than 75 per cent.) not containing any precious stones, synthetic or artificial precious stones, or pearls, real, artificial or cultured]. In all other cases it is six pies in the rupee.

The sales tax, however, is graded from one-fourth per cent. in the case of bullion and specie (23) and articles made of gold and silver, etc. (24) to three pies in the rupee in the case of entries 19 to 22 and entry 80. On several items, which may be said to form middle-class requirements, the rate is six pies in the rupee and on several other entries, which may be classed as " luxuries " it is twelve pies in the rupee. A sales tax of fifteen pies in the rupee is imposed on goods mentioned in entry 79 [textile fabrics of any kind including saries, dhotis, sheets, chaddars, blankets and other similar articles (except (i) cloth woven on handlooms, (ii) coarse and medium cotton cloth woven in mills or on powerlooms, and (iii) tracing cloth) sold at a rate not less than Rs. 3 per yard].

Certain articles like photographic and other cameras and enlargers, lenses, paper, films and plates required for use therewith, X-ray apparatus and equipment and lifts whether operated by electricity or Hydrolic power, have been added to the list of luxury goods and made subject to Sales Tax at the rate of 12 pies in the rupee.

The scheme of the Act is such that the taxes leviable under it do not offend against Article 286 of the Constitution, which makes inter-State trade free, or hamper exports from the State to markets outside India. Suitable provisions have been made both in the Act and in the Rule framed under it to ensure that neither the sales tax nor the general tax has to be paid more than once on the same article even when it is manufactured or processed. Wholesale dealers, intermediaries between wholesalers and retailers, or commission agents will not generally pay any of these taxes and in cases where they have to pay, provision exists for arranging refund of these taxes to them. In cases where dealers carry on processing or manufacture of goods for sale, it has been provided in the Rules that the sales tax paid on the purchase of goods used as raw materials, processing materials, fuel, lubricants, containers or packing materials shall be set off from the sales tax payable on the sale of the manufactured or processed goods.

For the purpose of the administration of the Sales Tax Act in the Kolhapur District, two Sales Tax Officers have been appointed for the Kolhapur District. They have under them 8 Sales Tax Inspectors. The headquarter of these Inspectors is at Kolhapur.

The Sales Tax Officers exercise the powers delegated to them under the Bombay Sales Tax Act and Rules for the general administration of the Act in their charge. They register and grant licences to the dealers who are liable for registration and who are entitled to hold a licence under the provisions of the Act and are invested with powers to assess them. They receive periodical returns from the dealers who are registered showing the turnover during the period and the tax payable by them, and they verify the returns, pass orders of assessment and take steps for the recovery of the tax assessed. They also detect cases of evasion of tax and report them to the Collector of Sales Tax for necessary orders. They are primarily responsible for the general administration of the office.

The Additional Collector is, under the Bombay Sales Tax Act, an authority equivalent to the Collector of Sales Tax and appeals against the orders of Additional Collectors and Collector of Sales Tax would lie before the Sales Tax Tribunal. There is also provision for suo motu revision of orders passed by the Sales Tax Officers. The Assistant Collector of Sales Tax, can of his own motion revise any order passed by any Sales Tax Officer under his jurisdiction. Similarly the Additional Collector of Sales Tax or Collector of Sales Tax, as the case may be, can revise any order passed by the Assistant Collector of Sales Tax or Sales Tax Officer.

The officer next above the Sales Tax Officer, Kolhapur, is the Assistant Collector of Sales Tax of the Central Division, Range III, who has his headquarters at Poona. The Sales Tax Officer seeks clarification and advice from the Assistant Collector in certain matters relating to the administration of the Act. He has also to submit to the Assistant Collector all cases which he is not competent to deal with. Appeals lie from the orders of the Sales Tax Officer to the Assistant Collector, from the Assistant Collector to the Collector of Sales Tax, and from the Collector to the Sales Tax Tribunal.

STATEMENT SHOWING THE SALES TAX RECEIPTS AND COLLECTION CHARGES IN RESPECT OF KOLHAPUR DISTRICT.

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